Accounting Policies of Bombay Dyeing & Manufacturing Company Ltd. Company
Mar 31, 2022
1. GENERAL INFORMATION ABOUT THE COMPANY
The Bombay Dyeing and Manufacturing Company Limited ("the Company") was incorporated on August 23, 1879. It originated as an integrated textile mill however; it is currently engaged primarily in the business of Real Estate Development, Polyester Staple Fibre and Retail. The Company is a public company limited by shares, incorporated and domiciled in India and is listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Global Depository Receipts (GDRs) are listed at Societe de la Bourse Luxembourg. The Company''s registered office is at Neville House, J.N. Heredia Marg, Ballard Estate, Mumbai - 400001.
These aforesaid Financial Statements for the year ended March 31, 2022 are approved by the Company''s Board of Directors and authorised for issue in the meeting held on May 4, 2022.
2. SIGNIFICANT ACCOUNTING POLICIESa. Statement of Compliance
These Financial Statements have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as per the Companies (Indian Accounting Standards) Rules, (Amended) 2015 and notified by Ministry of Corporate Affairs("MCA") pursuant to Section 133 of the Companies Act, 2013 read with Rule 3.
b. Basis of Preparation and Presentation
The Financial Statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair value at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability, if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these Financial Statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 116 ''Leases'' ("Ind AS 116") and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 ''Inventories'' ("Ind AS 2") or value in use in Ind AS 36 ''Impairment of Assets'' ("Ind AS 36").
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, Level 2 or Level 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
All assets and liabilities have been classified as Current and Non-Current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products/ services rendered and the time between the rendering of the products/services and their realisation in cash and cash equivalent, the Company has ascertained its operating cycle as twelve months for the purpose of Current and NonCurrent classification of assets and liabilities.
All the Indian Accounting Standards issued and notified by the MCA are effective and considered for the significant accounting policies to the extent relevant and applicable for the Company.
The Financial Statements are presented in Indian Rupee ("INR"), which is the Company''s functional currency and all values are rounded to the nearest crores upto two decimals, except when otherwise indicated.
c. Key Accounting Estimates and Judgments
The preparation of Financial Statements in conformity with Ind AS requires Management to make judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses at the date of these Financial Statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these 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 if the revision affects only that period, or in the period of revision and future period, if the revision affects current and future periods.
Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year are:
i. Determination of the timing of revenue recognition on the sale of completed and under development property in respect of Real Estate Development activity
Determination of revenue whether over time (Percentage Completion Method) or at a point in time (Project completion method) necessarily involves making judgement as to when the performance obligation under the contracts with customers is satisfied. It has been evaluated and generally concluded that the recognition of revenue over the period of time criteria are not met owing to non-enforceable right to payment for performance completed to date and, therefore, recognises revenue at a point in time. It has further been evaluated and concluded that based on the analysis of the rights and obligations under the terms of the contracts relating to the sale of property, the revenue is to be recognised at a point in time when control transfers which coincides with receipt of Occupancy Certificate and the property is made available for possession to the customers.
ii. Determination of performance obligations
With respect to the sale of property, the Company has evaluated and concluded that the goods and services transferred in each contract constitute a single performance obligation. In particular, the promised goods and services in contracts for the sale of property is to undertake development of property and obtaining the Occupancy Certificate. Generally, the Company is responsible for all these goods and services and the overall management of the project. Although these goods and services are capable of being distinct, the Company accounts for them as a single performance obligation because they are not distinct in the context of the contract.
iii. Useful Lives of Property , Plant and Equipment and Intangible Assets
Management reviews the useful lives of property, plant and equipment at least once a year. Such lives are dependent upon an assessment of both the technical lives of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs. Accordingly, depreciable lives are reviewed annually using the best information available to the Management.
iv. Provisions, Liabilities and Contingencies
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events that can reasonably be estimated. The timing of recognition requires application of judgments to existing facts and circumstances which may be subject to change. The amounts are determined by discounting the expected future cash flows at a pre - tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognised. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
A contingent asset is not recognised, but disclosed in the Financial Statements when an inflow of economic benefit is probable. Provisions, contingent liability and assets are reviewed at each reporting date and are adjusted to reflect the current best estimates.
When the fair value of financial assets or financial liabilities recorded or disclosed in the Financial Statements cannot be measured at the quoted price in the active markets, their fair value is measured using the valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include consideration of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
vi. Recognition and Measurement of defined benefit obligation
The obligation arising from defined benefit plans is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The Company''s tax jurisdiction is India. Significant judgements are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions. Significant management judgements is also required in determining deferred tax assets and liabilities and recoverability of deferred tax assets which is based on estimates of taxable income.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgement. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the noncancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.
The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
The Ministry of Corporate Affairs ("MCA") MCA through a notification of March 23, 2022, introduced the Companies (Indian Accounting Standards) Amendment Rules, 2022 to amend the Companies (Indian Accounting Standards) Rules, 2015 which come into force with effect from April 1, 2022. The following are the amendments :
i. Ind AS 103 - Business Combination
The amendment specifies that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date.
For example, costs the acquirer expects but is not obliged to incur in the future to effect its plan to exit an activity of an acquiree or to terminate the employment of or relocate an acquiree''s employees are not liabilities at the acquisition date.
Therefore, the acquirer does not recognise those costs as part of applying the acquisition method and instead, the acquirer recognises those costs in its post combination financial statements in accordance with other Ind AS.
This amendment does not significantly change the requirements of Ind AS 103 and the Company does not expect the amendment to have any significant impact in its financial statements.
ii. Ind AS 109 - Financial Instruments
The amendment clarifies that while performing the ''10 percent test'' for derecognition of a financial liability, for computing the discounted present value of the cash flows under the new terms, for determining fees paid net of fees received, a borrower should include only fees paid or received between borrower and lender, including fees paid or received by either the borrower or lender on the other''s behalf.
This amendment is under Annual Improvements to Ind AS (2021).
The Company does not expect the above amendment/ improvement to have any significant impact on its standalone financial statements.
iii. Ind AS 16 - Property Plant and Equipment
The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, is not to be recognised in the profit or loss but is to be deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The Company does not expect this amendment to have any impact its recognition of its property, plant and equipment in its standalone financial statements.
iv. Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets.
The amendment specifies that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract consist of both, the incremental costs of fulfilling that contract (examples would be direct labour, materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The amendment also provides for transitional provisions for contracts for which the entity has not yet fulfilled its obligations. The Company does not expect this amendment to have any significant impact in its standalone financial statements.
The amendments to Ind AS 101 - First Time Adoption and Ind AS 41 - Agriculture have not been specified here since both Standards are presently not applicable to the Company.
e. Property, Plant and Equipmenti. Recognition and Measurement
Property, Plant and Equipment ("PPE") are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is measured at cost and is not depreciated.
Cost includes purchase price, taxes and duties and other direct costs incurred for bringing the asset to the condition of its intended use. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are recognised in Statement of Profit and Loss as incurred. Borrowing
costs attributable to the acquisition or construction of a qualifying asset is also capitalised as part of the cost of the asset.
Depreciation on PPE other than Furniture & Fixtures and Motor Vehicles, is provided on the straight-line method, pro-rata to the period of use, over their useful life. Depreciation on Furniture & Fixtures and Motor Vehicles is provided on the written down value method, pro rata to the period of use, over their useful life. The estimated useful lives and residual values are as prescribed in Schedule II to the Companies Act, 2013 except for movable site offices and assets of retail shops (including leasehold improvements), which are based on technical evaluation of useful life by the management.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
|
Estimated useful lives of the assets are as follows: |
|
|
Asset |
Useful Life |
|
Buildings |
30 to 60 Years |
|
Movable site offices |
10 Years |
|
Plant and Machinery |
15 to 25 Years |
|
Assets of retail shops including leasehold improvements |
6 Years |
|
Computers |
3 to 6 Years |
|
Furniture and fixture |
10 Years |
|
Office equipment |
5 Years |
|
Vehicles |
8 Years |
The PSF manufacturing plant at Patalganga is treated as a Continuous process plants based on technical assessment.
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss.
iii. Capital Work-in-progress and Capital Advances
Cost of assets not ready for intended use, as on Balance Sheet date, is shown as Capital Work-inprogress. Advances given towards acquisition of PPE outstanding at each Balance Sheet date are disclosed as Other Non-current Assets.
f. Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost includes purchase price, taxes and duties and other direct costs incurred for bringing the asset to the condition of its intended use. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are recognised in Statement of Profit and Loss as incurred. Borrowing costs attributable to the acquisition or construction of a qualifying asset is also capitalised as part of the cost of the asset.
Depreciation on investment property is provided on the straight-line method, pro-rata to the period of use, over the useful life as prescribed in Schedule II to the Companies Act, 2013.
An investment property is de-recognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de-recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Statement of Profit and Loss in the period in which the property is de-recognised.
g. Intangible Assets
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is recognised on a straight-line basis over their estimated useful lives.
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses.
An intangible asset is de-recognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, is recognised in Statement of Profit and Loss when the asset is de-recognised.
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are
amortised on a straight-line basis over the period of their expected useful lives.
Estimated useful lives of the finite-life intangible assets are as follows:
|
Asset |
Useful Life |
|
Computer Software |
5 years |
|
Technical know-how |
10 years |
An intangible asset having indefinite useful life is not amortised but is tested for impairment annually. Indefinite life intangibles mainly consist of brands/trademarks. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues, if not, it is impaired or changed prospectively basis revised estimates.
The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
h. Impairment of Tangible Assets and Intangible Assets other than Goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately in Statement of Profit and Loss. An impairment loss recognised for goodwill is not reversed in a subsequent period.
i. Investments in Subsidiaries, Joint Venture and Associates:
Investments in subsidiaries, joint venture and associates are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, joint venture and associates, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.
j. Inventories
Inventories are valued at lower of cost and net realisable value. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
Cost is determined as follows:
i. Raw materials, stores & spares, finished goods and stock-in-trade on a weighted average method.
ii. Work-in-progress PSF division
Material cost included in the valuation is determined on the basis of the weighted average rate and cost of conversion and other costs are determined on the basis of average cost of conversion of the preceding month.
iii. Real Estate Under Development
Real estate under development comprises cost of land, premium for development rights, rates & taxes, construction costs, borrowing costs, overheads and expenses incidental to the projects undertaken by the Company. Cost of land and construction / development costs are charged to Statement of Profit and Loss proportionate to area sold and at the time when corresponding revenue is recognised.
k. Cash and Cash Equivalents
Cash and cash equivalents includes cash in hand, demand deposits with banks and other short term highly liquid
investments, which are readily convertible into cash and which are subject to an insignificant risk of change in value and have original maturities of three months or less.
Cash flows are reported using the indirect method, whereby net profit for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents include cash on hand, cash at banks, other short-term deposits and highly liquid investments with original maturity of three months or less that are readily convertible into cash.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss ("FVTPL") are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised immediately in Statement of Profit and Loss.
On initial recognition, a financial asset is recognised at fair value. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI") depending on the classification of the financial assets.
Financial assets are not reclassified subsequent to their recognition, except if and in the period the Company changes its business model for managing financial assets.
Trade Receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost, using the Effective Interest Rate ("EIR") method net of
any Expected Credit Losses ("ECL"). The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument.
Debt instruments are initially measured at amortised cost, FVOCI or FVTPL till derecognition, on the basis of (i) the entity''s business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.
i. Measured at amortised cost: Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the EIR method less impairment, if any. The amortisation of EIR and loss arising from impairment, if any, is recognised in the Statement of Profit and Loss.
ii. Measured at fair value through other comprehensive income: Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognised in the Other Comprehensive Income ("OCI"). Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the Statement of Profit and Loss.
iii. Measured at fair value through profit or loss: A
financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised in the Statement of Profit and Loss.
All investments in equity instruments classified under financial assets are initially measured at fair value. The Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.
The Company makes such election on an instrument-byinstrument basis. Fair value changes on an equity instrument are recognised in the Statement of Profit and Loss unless
the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in OCI. Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised in the Statement of Profit and Loss.
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of Financial Asset
Expected credit losses are recognised for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.
Expected credit losses is the weighted-average of difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company is required to consider:
⢠All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement ofloss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
For financial assets other than trade receivables, as per Ind AS 109, the Company recognises 12 month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
Financial Liabilities and Equity InstrumentsClassification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
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.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as FVTPL. In case of trade payables, they are initially recognised at fair value and subsequently, these liabilities are held at amortised cost, using the effective interest method.
All financial liabilities are subsequently measured at amortised cost using the effective interest method. Financial liabilities carried at FVTPL are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss. Interest expense are included in the ''Finance costs'' line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The EIR is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and are subsequently measured at the higher of:
⢠the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
⢠the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 115.
When guarantee in relation to loans or other payables of subsidiaries are provided for no compensation, the fair values are accounted for as contributions and recognised as cost of investment.
Derecognition of Financial Liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired.
Derivative Financial Instruments
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in Statement of Profit and Loss immediately. The Company has not designated any derivative instruments as a hedging instrument.
n. Provisions, Liabilities and Contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is
virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
The Company derives revenues primarily from Sale of Polyester Staple Fibre and Retail/Textile and business of Real Estate Development; its other operating revenues include Lease Rentals and Subvention Income.
Revenue from contracts with customers for sale of goods or services is recognised when the Company satisfies performance obligation by transferring promised goods or services to the customer at an amount that reflects the consideration which the Company is expected to be entitled to in exchange for those goods or services.
Revenue is measured based on the transaction price, which is the consideration, adjusted for trade discounts, incentives and returns, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers. The trade discounts incentives and right of return are estimated and provided for, based on historical, current and forecast information available. A refund liability is recognised for expected returns in relation to sales made, corresponding assets are recognised for the products expected to be returned.
The Company does not expect to have any contract where the period between the transfer of the promised goods or services to the customer and payment by the customer exceed one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.
Revenue from sale of goods is recognised at a point in time when the control of the goods is transferred to the customer involving single performance obligation. The control of goods is transferred to the customer depending upon the incoterms or as agreed with customer, delivery basis or dispatch, as the case may be (i.e. at the point in time when goods are delivered at the dealer site or when the customer purchases the goods at the retail outlet). In case of Export of goods, the control of goods is transferred on receipt of Bill of Lading / Mate Receipt.
Revenue from services, which mainly consists of lease rentals from letting of space, is recognised over time on satisfying performance obligations as per the terms of agreement, that is, by reference to the period in which services are being rendered. Revenue from services, if any, involving single performance obligation is recognised at a point in time.
Revenue from Export Incentives under various schemes of the Government of India is recognised in the year in which the revenue from related export sales is accounted for. Advance License Benefits on exports are recognised in the year of utilisation of license.
The Company develops and sel ls residential and commercial properties. Revenue is recognised when the control over the property is transferred to the customer. An enforceable right to payment does not arise for performance completed to date and it arises only on the development of the property is completed. Therefore, revenue is recognised at a point in time when the legal title has passed to the customer and the development of property is completed, that is, on the receipt of the Occupancy Certificate. The revenue is measured at the transaction price agreed under the contract. The Company invoices the customers for construction contracts based on achieving performance-related milestones. For other cases, the consideration is due when legal title has been transferred.
For certain contracts involving the sale of property under development, the Company offers deferred payment schemes to its customers. The Company adjusts the transaction price for the effects of the significant financing component.
Revenue from Sale of land and other rights is generally a single performance obligation and the Company has determined that this is satisfied at the point in time when control transfers as per the terms of the contract entered into with the buyers, which generally are with the firmity of the sale contracts / agreements. The determination of transfer of control did not change upon the adoption of Ind AS 115 - Revenue from Contracts with Customers.
Trade Receivables, Contract Assets and Contract LiabilitiesTrade Receivables
A receivable is recognised by the Company when the control over the goods and services is transferred to the customer such as when goods and services are delivered as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is due (which is referred to as "Trade Receivable").
A receivable is recognised when the Company''s right to an amount of consideration under the contract with the customer that is unconditional, as only the passage of time is required before payment is due.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
A contract liability is the obligation to transfer goods or services to the customer for which the consideration (or the amount is due) has been received from the customer. If the customer pays the consideration before the transfer of goods or services to the customer, a contract liability is recognised when the payment is made. Contract liabilities are recognised as revenue when the Company performs under the contract.
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rates. Interest income is included under the head "Other Income" in the Statement of Profit and Loss.
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 from a financial asset is recognised using the effective interest rate (EIR), 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.
Dividend Income is recognised when the right to receive the payment is established. Incomes from investments are accounted on an accrual basis.
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether:
⢠The contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, the asset is not identified.
⢠The Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
⢠The Company has the right to direct the use of the asset. The Company has the right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases, where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:
⢠The Company has the right to operate the asset; or
⢠The Company designed the asset in a way that predetermined how and for what purpose it will be used
This policy is applied to all contracts entered into, or changed, on or after April 1, 2019.
The Company recognises a Right-of-Use (ROU) asset and a lease liability at the lease commencement date. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The ROU asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. The estimated useful lives of ROU assets are determined on the same basis as those of property and equipment. In addition, the ROU asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, and the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
⢠fixed payments, including in-substance fixed payments;
⢠variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
⢠amounts expected to be payable under a residual value guarantee; and
⢠the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the ROU asset, or is recorded in the Statement of profit or loss if the carrying amount of the ROU asset has been reduced to zero.
The Company presents ROU assets that meet the definition of investment property are presented within investment property otherwise under "Property, Plant and Equipment" and lease liabilities under "Financial Liabilities" in the Balance Sheet.
Short-term leases and leases of low-value assets
The Company has elected not to recognise ROU assets and lease liabilities for short-term lease of Property, Plant and Equipment that have a lease term of 12 months or less and leases of low-value assets. The Company recognise the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sublease with reference to the ROU asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sublease as an operating lease.
If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 to allocate the consideration in the contract.
The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of ''Other Operating Income under Revenue from Operation'' in the Statement of Profit and Loss.
However, when the Company was an intermediate lessor the sub-leases were classified with reference to the underlying asset.
q. Cost recognition
Costs and expenses are recognised when incurred and are classified according to their nature.
r. Employee Benefits
Long Term Post-employment benefits
Contributions to defined contribution schemes are recognised as an expense when employees have rendered service entitling them to the contributions.
i. Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post-employment benefits in respect of provident and family pension fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employees'' eligible salary (currently 12% of employees'' eligible salary). The contributions are made to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner. The Company has no further obligations beyond making the contribution, except that any shortfall in the fund assets based on the Government specified minimum rates of return in respect of provident fund set up by the Company. The Company does not expect a shortfall in the fund assets in the near term and has consequently classified the scheme as a defined contribution scheme and is committed to recognise such contributions and shortfall, if any, as an expense in the year it is incurred.
The eligible employees of the Company who have opted for superannuation are entitled to receive post-employment benefits in respect of superannuation fund in which the Company makes annual contribution at a specified percentage of the employees'' eligible salary (currently 10% or 15 % of employees'' eligible salary). The contributions are made to the Superannuation fund set up as irrevocable trust by the Company. Superannuation is classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Company''s contribution to Defined Contribution Plan is charged to Statement of Profit and Loss as incurred.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to Statement of Profit and Loss. Past service cost is recognised in Statement of Profit and Loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost,
past service cost, as well as gains and losses on
curtailments and settlements);
⢠net interest expense or income; and
⢠re-measurement
The Company presents the first two components of defined benefit costs in Statement of Profit and Loss in the line item ''Employee Benefits Expense''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
The Company has the following Defined Benefit Plans:
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment, of an amount equivalent to 15 days or 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Contributions are made to the Gratuity Fund set up as irrevocable trust by the Company.
ii. Other long-term employee benefits - Compensated absences
The Company provides for encashment of leave or leave with pay subject to certain rules. Earlier, post 2014,
Mar 31, 2018
(a) Statement of compliance
These Financial Statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) (Amendment) Rules, 2016.
These financial statements for the year ended March 31, 2018 are the first the Company has prepared under Ind AS and the date of transition to Ind AS is April 1, 2016. For all periods up to and including the year ended March 31, 2017, the Company had prepared its financial statements in accordance with the accounting standards notified under section 133 of Act, read with the Companies (Accounts) Rules, 2014 (âPrevious GAAPâ). The financial statements for the year ended March 31, 2017 and the opening Balance Sheet as at April 31, 2016 have been restated in accordance with Ind AS for comparative information. Reconciliation and explanations of the effect of the transition from Previous GAAP to Ind AS on the Companyâs Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows are provided in note.
The aforesaid financial statements have been approved by the Board of Directors and authorised for issue in the meeting held on May 14, 2018.
(b) Basis of Preparation & Presentation
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair value at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability, if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17 âLeasesâ (âInd AS 17â) and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 âInventoriesâ (âInd AS 2â) or value in use in Ind AS 36 âImpairment of Assetsâ (âInd AS 36â).
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, Level 2 or Level 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
All assets and liabilities have been classified as Current and Non-Current as per the Companyâs normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of services rendered and the time between the rendering of the services and their realisation in cash and cash equivalent, the Company has ascertained its operating cycle as twelve months for the purpose of Current and Non-Current classification of assets and liabilities.
All the Indian Accounting Standards (âInd ASâ) issued and notified by the Ministry of Corporate Affairs are effective and considered for the significant accounting policies to the extent relevant and applicable for the Company.
The financial statements are presented in INR and all values are rounded to the nearest crores upto two decimals, except when otherwise indicated.
(c) Key Accounting Estimates and Judgements
In the course of applying the policies outlined in all notes under Note 2 above, the Company is required to make judgments, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future period, if the revision affects current and future period.
Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year are:
i) Evaluation of percentage completion
Determination of revenues under the percentage of completion method necessarily involves making estimates, some of which are of a technical nature, concerning, where relevant, the percentage of completion, costs to completion, the expected revenues from the project or activity and the foreseeable losses to completion. Estimates of project income, as well as project costs, are reviewed periodically. The effect of changes, if any, to estimates is recognised in the financial statements for the period in which such changes are determined.
ii) Useful Lives of property , plant and equipment
Management reviews the useful lives of property, plant and equipment at least once a year. Such lives are dependent upon an assessment of both the technical lives of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs. Accordingly, depreciable lives are reviewed annually using the best information available to the Management.
iii) Provisions, liabilities and contingencies
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events that can reasonably be estimated. The timing of recognition requires application of judgments to existing facts and circumstances which may be subject to change. The amounts are determined by discounting the expected future cash flows at a pre - tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognized.
iv) Fair Value Measurements
When the fair value of financial assets or financial liabilities recorded or disclosed in the financial statements cannot be measured at the quoted price in the active markets, their fair value is measured using the valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values, judgments includes consideration of inputs such as liquidity risk , credit risk and volatility.
v) Recognition and Measurement of defined benefit obligation
The obligation arising from defined benefit plans is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Critical accounting Judgments
Merger of archway on the morning hours of the transition date i.e. 01st April, 2016
During the year 2016-17, the Companyâs wholly owned subsidiary Archway Investments Company Limited, a Non-Banking Finance Company, has been amalgamated with the Company in terms of the scheme of amalgamation (âSchemeâ) sanctioned by the National Company Law Tribunal (NCLT) vide its Order dated June 20, 2017.
The Scheme became effective on June 28, 2017 with appointed date of April 1, 2016 when the sanction of the NCLT was received and certified copy of the same filed with the Registrar of Companies. The Scheme has been accounted for under the âPooling of Interests Methodâ as prescribed in Appendix C of Ind AS 103 for business combinations of entities under common control.
(d) Recent Accounting Developments
Standards issued but not yet effective
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018.
Ind AS 115- Revenue from Contract with Customers:
On March 28, 2018, MCA has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach). The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.
The Company will adopt the standard on April 1, 2018.
(e) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is measured at cost and is not depreciated.
Cost includes purchase price, taxes and duties and other direct costs incurred for bringing the asset to the condition of its intended use. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are recognized in statement of profit and loss as incurred. Borrowing costs attributable to the acquisition or construction of a qualifying asset is also capitalised as part of the cost of the asset.
Depreciation on property, plant and equipment other than furniture & fixtures and motor vehicles, is provided on the straight-line method, pro-rata to the period of use, over their useful life. Depreciation on furniture & fixtures and motor vehicles is provided on the written down value method, pro rata to the period of use, over their useful life. The estimated useful lives and residual values are as prescribed in Schedule II to the Companies Act, 2013 except for movable site offices and assets of retail shops (including leasehold improvements), which are based on technical evaluation of useful life by the management.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Estimated useful lives of the assets are as follows:
The PSF manufacturing plant at Patalganga is treated as a Continuous process plants based on technical assessment.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in statement of profit and loss.
Transition to Ind AS
For transition to Ind AS, the Company has elected to measure all its property, plant and equipment at the previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e. April 01, 2016.
(f) Investment Property
Investment properties are properties held to earn rentals and/ or for capital appreciation. Investment properties are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost includes purchase price, taxes and duties and other direct costs incurred for bringing the asset to the condition of its intended use. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are recognized in statement of profit and loss as incurred.
Borrowing costs attributable to the acquisition or construction of a qualifying asset is also capitalised as part of the cost of the asset.
Depreciation on investment property is provided on the straight-line method, pro-rata to the period of use, over the useful life as prescribed in Schedule II to the Companies Act, 2013
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in statement of profit and loss in the period in which the property is derecognized.
Transition to Ind AS
For transition to Ind AS, the Company has elected to measure all its investment property at the previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e. April 1, 2016.
(g) Intangible assets
Intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Amortization is recognized on a straight-line basis over their estimated useful lives.
Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses.
An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in statement of profit and loss when the asset is de-recognized.
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortised on a straight-line basis over the period of their expected useful lives.
Estimated useful lives of the finite-life intangible assets are as follows:
An intangible asset having indefinite useful life is not amortized but is tested for impairment annually. Indefinite life intangibles mainly consist of brands/trademarks. The assessment of i ndefinite life is reviewed annually to determine whether the indefinite life continues, if not, it is impaired or changed prospectively basis revised estimates.
The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Transition to Ind AS
For transition to Ind AS, the Company has elected to measure all its intangible assets at the previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e. April 1, 2016.
(h) Impairment of tangible assets and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in statement of profit and loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in statement of profit and loss. An impairment loss recognized for goodwill is not reversed in a subsequent period.
(i) Investments in Subsidiaries, Joint Venture and Associates:
Investments in subsidiaries, joint venture and associates are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, joint venture and associates, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
Upon first-time adoption of Ind AS, the Company has elected to measure its investments in subsidiaries, joint ventures and associates at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e., 1st April, 2016.
(j) Inventories
Inventories are valued at lower of cost and net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
Cost is determined as follows:
i. Raw materials, stores & spares, finished goods and stock-in-trade on a weighted average method.
ii. Work-in-progress PSF division
Material cost included in the valuation is determined on the basis of the weighted average rate and cost of conversion and other costs are determined on the basis of average cost of conversion of the preceding month.
iii. Real estate under development
Real estate under development comprises cost of land, premium for development rights, rates & taxes, construction costs, borrowing costs, overheads and expenses incidental to the projects undertaken by the Company. Cost of land and construction / development costs are charged to Statement of Profit and Loss proportionate to area sold and at the time when corresponding revenue is recognized.
(k) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, demand deposits with banks and other short term highly liquid investments, which are readily convertible into cash and which are subject to an insignificant risk of change in value and have original maturities of three months or less.
(l) Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss (âFVTPLâ)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in statement of profit and loss.
Financial Assets:
On initial recognition, a financial asset is recognised at fair value. All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value through profit or loss (FVTPL) or fair value through other comprehensive income (FVOCI) depending on the classification of the financial assets.
Financial assets are not reclassified subsequent to their recognition, except if and in the period the Company changes its business model for managing financial assets.
Trade Receivables and Loans:
Trade receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost, using the effective interest rate (EIR) method net of any expected credit losses. The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument.
Debt Instruments:
Debt instruments are subsequently measured at amortised cost, fair value through other comprehensive income (âFVOCIâ) or fair value through profit or loss (âFVTPL) till derecognition, on the basis of (i) the entityâs business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.
(a) Measured at amortised cost: Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (âEIRâ) method less impairment, if any. The amortisation of EIR and loss arising from impairment, if any, is recognised in the Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income: Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the Statement of Profit and Loss.
(c) Measured at fair value through profit or loss: A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised in the Statement of Profit and Loss.
Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at fair value. The Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.
The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument is recognised in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in OCI. Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised in the Statement of Profit and Loss.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of Financial Asset
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.
ECL is the weighted-average of difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company is required to consider:
- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
For financial assets other than trade receivables, as per Ind AS 109, the Company recognises 12 month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
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 recognized at the proceeds received, net of direct issue costs.
Repurchase of the Companyâs own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in statement of profit and loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
Financial liabilities
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit or loss. In case of trade payables, they are initially recognised at fair value and subsequently, these liabilities are held at amortised cost, using the effective interest method.
All financial liabilities are subsequently measured at amortized cost using the effective interest method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss. Interest expense are included in the âFinance costsâ line item.
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 (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 18.
When guarantee in relation to loans or other payables of subsidiaries are provided for no compensation, the fair values are accounted for as contributions and recognized as cost of investment.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired.
Derivative financial instruments
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in statement of profit and loss immediately. The Company has not designated any derivative instruments as a hedging instrument.
(m) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
(n) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated rebates and similar allowances.
Revenue from sale of goods is recognised when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract, there is no continuing managerial involvement with the goods and the amount of revenue can be measured reliably. The Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales.
Income from export incentives such as duty drawback and premium on sale of import licenses, and lease license fee are recognised on accrual basis.
Rendering of services
Revenue from contract to provide services is recognized by reference to the stage of completion of the contract. The stage of completion of the contract is determined as the proportion of the total time expected to complete the service that has elapsed at the end of reporting period.
Income from Real Estate Activity
Revenue from real estate activity is recognized to the extent that it is probable that the economic benefits will flow to the Company, all significant risks and rewards of ownership are transferred to the customers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration.
Revenue from real estate development activity is recognized in accordance with the Guidance Note on Accounting for Real Estate Transactions (for entities to whom Ind AS is applicable) issued by the institute of Chartered Accountants of India. Accordingly, where the Company still has obligations to perform substantial acts even after the transfer of all significant risks and rewards, revenue is recognized on the âPercentage of Completion Methodâ. Revenue is recognized in relation to the sold areas, on the basis of percentage of actual cost incurred to the total estimated cost of project.
In accordance with the Guidance Note, revenues from real estate projects are recognized only when:
i. all critical approvals necessary for commencement of the project have been obtained, and
ii. the actual construction and development cost incurred is at least 25% of the total construction and development cost (excluding cost of land), and
iii. at least 10% of the sales consideration is realized, and
iv. at least 25% of the total saleable area of the project is secured by contracts or agreements with buyers.
Cost of Construction / Development (including cost of land) incurred is charged to the statement of profit and loss proportionate to area sold and the balance cost is carried over under Inventory as part of Development Work-in-Progress. Cost of construction / development includes all costs directly related to the Project and other expenditure as identified by the management which are reasonably allocable to the project.
Unbilled revenue disclosed under other non-current and other current assets represents revenue recognized over and above amount due as per payment plans agreed with the customers. Progress billings which exceed the costs and recognized profits to date on projects under construction are disclosed as advance received from customers under other current liabilities. Any billed amount that has not been collected is disclosed under trade receivables.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, relating to the percentages of completion, costs to completion, the expected revenues from the project and the foreseeable losses to completion.
The estimates of saleable area and cost of construction are reviewed periodically by the management and the effect of such changes to estimates is recognized in the period such changes are determined. However, when the total project cost is estimated to exceed total revenues from the project, the loss is recognized immediately.
Dividend and interest income
Dividend income from investments is recognized when the Companyâs right to receive payment has been established.
Interest income from a financial asset is recognized using the effective interest rate (EIR), 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.
(o) Cost recognition
Costs and expenses are recognized when incurred and are classified according to their nature.
(p) Employee Benefits
Post-employment benefits
Contributions to defined contribution schemes are recognised as an expense when employees have rendered service entitling them to the contributions.
a. Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post-employment benefits in respect of provident and family pension fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employeesâ eligible salary (currently 12% of employeesâ eligible salary). The contributions are made to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner. The Company has no further obligations beyond making the contribution, except that any shortfall in the fund assets based on the Government specified minimum rates of return in respect of provident fund set up by the Company. The Company does not expect a shortfall in the fund assets in the near term and has consequently classified the scheme as a defined contribution scheme and is committed to recognise such contributions and shortfall, if any, as an expense in the year it is incurred.
b. Superannuation
The eligible employees ofthe Company are entitled to receive post-employment benefits in respect of superannuation fund in which the Company makes annual contribution at a specified percentage of the employeesâ eligible salary (currently 10% or 15 % of employeesâ eligible salary). The contributions are made to the Superannuation fund set up as irrevocable trust by the Company. Superannuation is classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Companyâs contribution to Defined Contribution Plan is charged to Statement of Profit and Loss as incurred.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to statement of profit and loss. Past service cost is recognised in statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- re-measurement
The Company presents the first two components of defined benefit costs in statement of profit and loss in the line item âEmployee benefits expenseâ. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
The company has the following Defined Benefit Plans:
a. Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment, of an amount equivalent to 15 days or 30 days salary payable for each completed year of service. Ves/ting occurs upon completion of five years of service. The Contributions are made to the Gratuity Fund set up as irrevocable trust by the Company.
b. Other long-term employee benefits - compensated absences
The Company provides for encashment of leave or leave with pay subject to certain rules. The leave accumulated to the credit of the employees up to Dec 31, 2014 is available for carry forward and encashment on separation. The Company makes provision for such compensated absences based on an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit Method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognised in the Statement of Profit and Loss.
Post 2014, leave earned during the year has to be utilized by the employees within the following year. Such leave is a short term employee benefit and is provided at the undiscounted amount in the period in which it is incurred.
c. Termination Benefits
The Company provides for compensation payable as part of termination benefits when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Termination benefits falling due more than twelve months after the balance sheet date are provided on the basis of an actuarial valuation by an independent actuary as at the year-end using Project Unit Credit Method.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, performance incentives and similar benefits other than compensated absences in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
(q) Share-based payment arrangements
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
(r) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in statement of profit and loss in the period in which they are incurred.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs.
(s) Government Grants
Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognized in statement of profit and loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue in the balance sheet and transferred to statement of profit and loss on a systematic and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in statement of profit and loss in the period in which they become receivable.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
(t) Foreign Currency Transactions
The management of the Company has determined Indian rupee (âINRâ) as the functional currency of the Company. In preparing the financial statements of the Company, transactions in currencies other than the Companyâs functional currency (âforeign currenciesâ) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
(u) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus issue, bonus element in a rights issue and shares split that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating Diluted Earnings per share, the net profit or loss for the period attributable to the equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
(v) Taxation Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using tax rates that have been enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against those deductible temporary differences which can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
(w) Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
The Company as lessor
Rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the Companyâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
The Company as lessee
Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
(x) Segment Reporting
Ind AS 108 establishes standards for the way that public enterprises report information about operating segments and related disclosures about products, services, geographic areas, and major customers. Based on the âmanagement approachâ as defined in Ind AS 108, the company is required to present information in the manner which the Chief Operating Decision Maker (CODM) evaluates the companyâs performance and allocates resources. The analysis is general ly based on an analysis of various performance indicators by business segments.
The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments, and are as set out in the relevant applicable accounting policies above. Revenue and identifiable operating expenses in relation to segments are categorized based on items that are individually identifiable to that segment.
Segment assets include all operating assets used by the business segments and consist principally of fixed assets, debtors and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income / expenses. Inter-segment transfers are accounted at prevailing market prices.
Mar 31, 2017
NOTE NO.1 :- SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of accounting
The financial statements are prepared under the historical cost convention, except for revaluation of certain freehold land on conversion to stock-in-trade, on the accrual basis of accounting and in accordance with the generally accepted accounting principles in India, the financial statements have been prepared to comply in all material aspects with the accounting standards specified under section 133 of the Companies Act, 2013 (âthe Act") read with Rule 7 of the Companies (Accounts) Rules, 2014 and the provisions of the Act, to the extent applicable.
The classification of assets and liabilities of the Company into current or non-current is based on the Company''s normal operating cycle and other criterion specified in the Schedule III to the Companies Act, 2013. the Company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent classification of assets and liabilities.
(b) Use of Estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported balances of assets, liabilities and contingent liabilities as of the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. However, uncertainty about these assumptions and estimates could result in the outcomes requiring material adjustment to the carrying amounts of assets and liabilities in future periods.
(c) Revenue recognition
Revenue from sales is recognized when the significant risks and rewards of ownership of the goods are transferred to the customers/dealers. Revenue from sale of products is recognized net of discounts.
Revenue from real estate activity
Revenue from real estate activity is recognized to the extent that it is probable that the economic benefits will flow to the Company, all significant risks and rewards of ownership are transferred to the customers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration.
The freehold land (including FSI entitlement thereon) under Real Estate Development planned for sale is converted from fixed assets into stock-in-trade at market value, the difference between the market value and cost of that part of freehold land is credited to revaluation reserve and is released to the Statement of Profit and Loss in the proportion of revenue recognized under the percentage of completion method on entering into agreements / contracts for sale.
Revenue from real estate development activity where the Company still has obligations to perform substantial acts even after the transfer of all significant risks and rewards, is recognized on the âPercentage of Completion Method''. Revenue is recognized in relation to the sold areas, on the basis of percentage of actual cost incurred, including land at market value determined at the rate at which it was converted from fixed assets to stock-in-trade, development and construction costs as against the total estimated cost of project. Revenue is recognized, if the cost incurred is in excess of 25% of the total estimated cost and the outcome of the project can be reliably ascertained, the company continues to recognize revenue in accordance with the Guidance Note on Recognition of Revenue by Real Estate Developers (Issued 2006) for the projects commenced before 1st April, 2012.
Cost of Construction / Development (including cost of land) incurred is charged to the statement of profit and loss proportionate to area sold and the balance cost is carried over under Inventory as part of Development Work-in-Progress. Cost of construction / development includes all costs directly related to the Project and other expenditure as identified by the management which are reasonably allocable to the project.
Unbilled revenue disclosed under other non-current and other current assets represents revenue recognized over and above amount due as per payment plans agreed with the customers. Progress billings which exceed the costs and recognized profits to date on projects under construction are disclosed as advance received from customers under other current liabilities. Any billed amount that has not been collected is disclosed under trade receivables.
The estimates of saleable area and cost of construction are revised periodically by the management, the effect of such changes to estimates is recognized in the period such changes are determined, the estimated cost of construction as determined is based on management''s estimate of the cost expected to be incurred till the final completion and includes cost of materials, service and other related overheads. Unbilled costs are carried as real estate development work in progress.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project / activity and the foreseeable losses to completion.
(d) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever applicable) less accumulated depreciation and impairment losses, if any. the cost includes cost of acquisition, construction, erection, installation etc, preoperative expenses (including trial run) and borrowing costs incurred during construction period.
(e) Depreciation
Depreciation on fixed assets other than furniture & fixtures and motor vehicles is provided on the straight line method, pro rata to the period of use, over the useful life as prescribed in Schedule II to the Companies Act, 2013 or as estimated by the management, whichever is lower. Depreciation on furniture & fixtures and motor vehicles is provided on the written down value method over the useful life as prescribed in Schedule II. ^ie asset categories and their useful lives over which depreciation is provided are as under:
The PSF manufacturing plant at Patalganga is treated as a Continuous process plant based on technical assessment.
(f) Impairment
The carrying amounts of the Company''s tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset''s recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount, the impairment loss, if any, is recognized in the Statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.
(g) Borrowing costs
Borrowing costs include interest, amortization of ancillary costs, amortization of discounts related to borrowings and foreign exchange to the extent they are regarded as adjustment to interest costs. Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such asset till such time that the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognized as an expense in the period in which they are incurred.
(h) Investments
(i) Investments that are readily realizable and are intended to be held for not more than one year from the date on which such investments are made are classified as current investments. All other investments are classified as long term investments.
(ii) Long term investments are stated at cost. Provision for diminution is made to recognize a decline, other than temporary, in value of each long term investment, where applicable.
(iii) Current investments are stated at lower of cost and fair value and the resultant decline, if any, is charged to revenue.
(i) Inventories
(i) Inventories are valued at lower of cost and net realizable value.
(ii) Cost is determined as follows:
(a) Raw materials, stores & spares, finished goods and stock-in-trade on a weighted average method.
(b) Work-in-progress PSF division-
Material cost included in the valuation is determined on the basis of the weighted average rate and cost of conversion and other costs are determined on the basis of average cost of conversion of the preceding month.
(c) Real estate under development
Real estate under development comprises undivided interest in the freehold land at market value, determined at the rate at which it was converted from fixed assets into stock-in-trade for present and future development, expenditure relating to construction and allocated expenses incidental to the projects undertaken by the Company. Cost of land and construction / development is charged to Statement of Profit and Loss proportionate to area sold and at the time when corresponding revenue is recognized.
(j) Foreign currency transactions
(i) Transactions in foreign currency are recorded at standard exchange rates determined monthly. Monetary assets and liabilities denominated in foreign currency, remaining unsettled at the period end are translated at closing rates, ^e difference in translation of all monetary assets and liabilities and realized gains and losses on foreign currency transactions are recognized in the Statement of Profit and Loss.
(ii) Forward exchange contracts other than those entered into to hedge foreign currency risk of firm commitments or highly probable forecast transactions are translated at period end exchange rates and the resultant gains and losses as well as the gains and losses on cancellation of such contracts are recognized in the Statement of Profit and Loss. Premium or discount on such forward exchange contracts is amortized as income or expense over the life of the contract. Forward exchange contracts entered into to hedge foreign currency risk of firm commitments or highly probable forecast transactions are treated as derivative financial instruments.
(iii) The company uses forward foreign exchange contracts to hedge its exposure against movements in foreign exchange rates.
(k) Derivative Financial Instruments and Hedging
The Company enters into derivative financial instruments to hedge foreign currency risk of firm commitments and highly probable forecast transactions, the method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged, the carrying amount of a derivative designated as a hedge is presented as a current asset or liability, the company does not enter into any derivatives for trading purposes.
Cash Flow Hedge
Forward exchange contracts entered into to hedge foreign currency risks of firm commitments or highly probable forecast transactions, that qualify as cash flow hedges are recorded in accordance with the principles of hedge accounting enunciated in Accounting Standard (AS) 30 - Financial Instruments Recognition and Measurement, the gains or losses on designated hedging instruments that qualify as effective hedges is recorded in the Hedging Reserve account and is recognized in the Statement of Profit and Loss in the same period or periods during which the hedged transaction affects profit or loss.
Gains or losses on ineffective hedge transactions are immediately recognized in the Statement of Profit and Loss. When a forecasted transaction is no longer expected to occur, the gains and losses that were previously recognized in the Hedging Reserve are transferred to the Statement of Profit and Loss immediately.
(I) Employees benefits
(i) Short term employee benefits:
Short term employee benefits are recognized as expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.
(ii) Post-employment benefits:
(I) Defined Contribution Plan:
a) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post-employment benefits in respect of provident and family pension fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employees'' eligible salary (currently 12% of employees'' eligible salary), the contributions are made to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner, the Company has no further obligations beyond making the contribution, except that any shortfall in the fund assets based on the Government specified minimum rates of return in respect of provident fund set up by the Company, and the Company recognizes such contributions and shortfall, if any, as an expense in the year it is incurred.
b) Superannuation
The eligible employees of the Company are entitled to receive post-employment benefits in respect of superannuation fund in which the Company makes annual contribution at a specified percentage of the employees'' eligible salary (currently 10% or 15 % of employees'' eligible salary), the contributions are made to the Superannuation fund set up as irrevocable trust by the Company. Superannuation is classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution, the Company''s contribution to Defined Contribution Plan is charged to Statement of Profit and Loss as incurred.
(II) Defined Benefit Plan:
a) Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees, the plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment, of an amount equivalent to 15 days or 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service, the Contributions are made to the Gratuity Fund set up as irrevocable trust by the Company, the Company accounts for gratuity benefits payable in future on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit Method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognized in the Statement of Profit and Loss.
b) Other long-term employee benefits -compensated absences
The Company provides for encashment of leave or leave with pay subject to certain rules, the leave accumulated to the credit of the employees up to Dec 31, 2014 is available for carry forward and encashment on separation. the Company makes provision for such compensated absences based on an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit Method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognized in the Statement of Profit and Loss.
Post 2014, leave earned during the year has to be utilized by the employees within the following year. Such leave is a short term employee benefit and is provided at the undiscounted amount in the period in which it is incurred.
c) Termination Benefits
The Company provides for compensation payable as part of termination benefits when it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation. Termination benefits falling due more than twelve months after the balance sheet date are provided on the basis of an actuarial valuation by an independent actuary as at the year-end using Project Unit Credit Method.
(m) Employee share based payments
Equity settled stock options granted under the Company''s Employee Stock Option Scheme (ESOP) are accounted as per the accounting treatment prescribed by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share based payments issued by ICAI. the Company measures compensation cost relating to employee stock options using the intrinsic value method and compensation expense, if any, is amortized over the vesting period of the option on a straight line basis.
(n) Taxation
Tax expense comprises current and deferred tax. Current tax is measured at the amount expected to be paid in accordance with the Income-tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets and MAT credit entitlement are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
(o) Provisions and Contingent Liabilities
A provision is recognized when the enterprise has a present obligation as a result of a 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 their present values and are determined based on management estimate required to settle the obligation at the balance sheet date, "frieze are reviewed at each balance sheet date and adjusted to reflect the current management estimates.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. No disclosure is made in case of possible obligations in respect of which likelihood of outflow of resources is remote.
(p) Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments / receipts are recognized as an expense /income in the Statement of Profit and Loss on a straight-line basis over the lease term.
(q) Government Grants
Grants in the nature of subsidies related to revenue are recognized in the Statement of Profit and Loss over the period in which the corresponding costs are incurred and are recorded on accrual basis.
(r) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits with banks and short-term highly liquid investments, which are readily convertible into cash and have original maturities of three months or less.
(s) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period, the weighted average number of equity shares outstanding during the period is adjusted for events, such as bonus issue, bonus element in a rights issue and shares split that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating Diluted Earnings per share, the net profit or loss for the period attributable to the equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
(t) Segment Reporting
The Accounting Policies adopted for segment reporting are in line with the Accounting Policies of the Company. Segment assets include all operating assets used by the business segments and consist principally of fixed assets, debtors and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income / expenses. Inter-segment transfers are accounted at prevailing market prices.
(b) Rights, preferences and restrictions attached to Equity shares
The company has one class of equity shares having a par value of'' 2 per share. Each shareholder is eligible for one vote per share held, the dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(d) Shares reserved for issue under options
Pursuant to the Employee Stock Option Scheme (ESOS) approved by the shareholders on 13th August, 2002 and as further amended by the shareholders on 07th August, 2012, the Company had granted 14,000 options, (70,000 options post sub-division) to the Ex-Joint Managing Director of the Company at an exercise price of''528.25 (''105.65 post sub-division) per share. As per the terms of the ESOS, the outstanding options have lapsed during the year and no options are outstanding at the year end.
(e) Information regarding issue of shares during last five years
(i) No shares were allotted pursuant to contracts without payment being received in cash.
(ii) No bonus shares have been issued.
(iii) No shares have been bought back.
(f) Shares held in Abeyance
Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment of Nil shares (201516- Nil shares) of face value of Rs, 2/- each against warrants carrying rights of conversion into equity shares of the Company has been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonfire owner is certified by the concerned Stock Exchanges.
a) Nature of Security and terms of repayment of secured borrowing:
i) Term loans aggregating Rs,251.55 crores (2015-16 Rs,407.20 crores) are secured by first / secondary pari-passu charge over the part of land of the Company at Textile Mills at Mumbai and plant & machinery, buildings and structure thereon. Repayable in quarterly installments over the next year.
ii) Term loan amounting to Rs, 60 crores (2015-16 Rs,108 crores) is secured by first pari-passu charge on Company''s plant and machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga and first pari-passu charge of portion of Spring Mills land & buildings and structure thereon. Repayable in monthly installments over the next one year.
iii) Term loan amounting to Rs,17.10 crores (2015-16 Rs, 26.40 crores) is secured by first pari-passu charge of rent receivables from premises given on lease by the Company and second charge of portion of Spring Mills land and buildings and structures thereon. Repayable in monthly installments over the remaining 2 years.
iv) Term loan amounting to Rs, 361.64 crores (2015-16 Rs, 342.32 crores) are secured by first pari-passu charge over part of land of the Company at Worli. Repayable over 2to3 years in quarterly installments with a bullet payment ofRs, 100 crores in 01st July, 2018.
v) Term loans amounting to 631.17 crores (2015-16 Rs, 571.87 crores) are secured by first pari-passu charge /escrow of receivables of One ICC and Two ICC Tower at Spring Mills, Dadar and first pari-passu charge over part of land of the Company at Textile Mills at Mumbai and buildings and structures thereon. Repayable in quarterly installments over a period of3to4 years.
vi) Term Loans aggregating Rs, Nil crores (2015-16 Rs, 7.80 croresjare secured by first pari-passu charge on the Company''s existing as well as future fixed assets at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga other than fixed assets charged exclusively to term lenders.
vii) Term loan amounting to Rs, Nil crores (2015-16 Rs, 66.64 crores) is secured by first pari-passu charge on Company''s plant & machinery at Textile Processing Unit at Ranjangaon and the Polyester Division at Patalganga.
b) Terms of repayment of unsecured borrowing:
Fixed Deposits from shareholders and public are repayable over a period of 3 years from the date of deposit, maturing between July 2016 and March 2019.
a) Nature of Security for Short term borrowings
(i) Short-term loans from bankRs, 70.93 crores (2015-16 Rs, Nil) are secured by mortgage of the company''s property ''Jorbagh'' and first pari-passu charge over part of the company''s land, building and structures atWorli.
(ii) Working Capital loans of Rs, 104.38 crores (2015-16: Rs, 237.58 crores) and Buyer''s Credit amounting to Rs, 9.86 crores (2015-16 Rs, 29.83 crores) from banks under consortium arrangement is secured by hypothecation of present and future stocks, book debts and other current assets on pari-passu basis and a second charge over part of the land of the Company at Textile Mills at Mumbai admeasuring 89,819.85 square metres and plant and machinery and buildings thereon on pari-passu basis.
(iii) Packing credit from bank of Rs, 92.81 crores (2015-16 Rs, 110.84 crores) is secured by way of registered mortgage on the immovable properties in Wadia International Centre (Text rising Building and Hemming Building) located at Worli, Mumbai.
(iv) Buyer''s Credit aggregating Rs, 62.89 crores (2015-16 Rs, 46.61 crores) is secured by first pari-passu charge on land of the Company at Spring Mills at Mumbai admeasuring 36,617.13 square metres.
(v) Inter corporate deposits are secured by pledge of 7,538,600 equity shares of Bombay Burmah Trading Company Limited.
(vi) Packing credit from bank of Rs, Nil crores (2015-16 Rs, 20.50 crores) is secured by way of current assets of the company (excluding the real estate division) and on the Textile mill land at Worli admeasuring 89,819.85 square metres and plant and building on pari-passu basis with other lenders.
(vii) Packing credit from bank of Rs, Nil crores (2015-16 Rs, 35 crores) is secured by first pari-passu charge over part of the land of the Company at Textile Mills at Mumbai and plant and machinery, buildings and structures thereon.
a) The dues payable to Micro and Small enterprises is based on the information available with the Company and takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose (Refer Note 46)
(b) Bank deposits include restricted deposits as under:
- Fixed deposits under lean towards security for guarantees issued on behalf of the Company and as security against a claim on the Company - Rs, 38.05 crores (2015-16 Rs,19.31 crores).
- Short term deposits relating to amounts held under Escrow in accordance with the loan arrangements with a consortium of bankers Rs,13.27 crores (2015-16 Rs, 6.32 crores)
Mar 31, 2016
(a) Basis of accounting
The financial statements are prepared under the historical cost
convention, except for revaluation of certain freehold land on
conversion to stock-in-trade, on the accrual basis of accounting and in
accordance with the generally accepted accounting principles in India.
The financial statements have been prepared to comply in all material
aspects with the accounting standards specified under section 133 of
the Companies Act, 2013 read with Rule 7 of the Companies (Accounts)
Rules, 2014 and the provisions of the Act, to the extent applicable.
The classification of assets and liabilities of the Company into
current or non-current is based on the Company''s normal operating cycle
and other criterion specified in the Schedule III to the Companies Act,
2013. The Company has ascertained its operating cycle as 12 months for
the purpose of current - non- current classification of assets and
liabilities.
(b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires the management to make
judgments, estimates and assumptions that affect the application of
accounting policies and the reported balances of assets, liabilities
and contingent liabilities as of the date of the financial statements
and reported amounts of income and expenses during the period.
Management believes that the estimates used in the preparation of
financial statements are prudent and reasonable. However, uncertainty
about these assumptions and estimates could result in the outcomes
requiring material adjustment to the carrying amounts of assets and
liabilities in future periods.
(c) Revenue recognition
Revenue from sales is recognized when the significant risks and rewards
of ownership of the goods are transferred to the customers/dealers.
Revenue from sale of products is recognized net of discounts.
Revenue from real estate activity
Revenue from real estate activity is recognized to the extent that it
is probable that the economic benefits will flow to the Company, all
significant risks and rewards of ownership are transferred to the
customers and it is not unreasonable to expect ultimate collection and
no significant uncertainty exists regarding the amount of
consideration.
The freehold land (including FSI entitlement thereon) under Real Estate
Development planned for sale is converted from fixed assets into
stock-in-trade at market value. The difference between the market value
and cost of that part of freehold land is credited to revaluation
reserve and is released to the Statement of Profit and Loss in the
proportion of revenue recognized under the percentage of completion
method on entering into agreements / contracts for sale.
Revenue from real estate development activity where the Company still
has obligations to perform substantial acts even after the transfer of
all significant risks and rewards, is recognized on the ''Percentage of
Completion Method''. Revenue is recognized in relation to the sold
areas, on the basis of percentage of actual cost incurred, including
land, development and construction costs as against the total estimated
cost of project. Revenue is recognized, if the cost incurred is in
excess of 25% of the total estimated cost and the outcome of the
project can be reliably ascertained. The company continues to recognize
revenue in accordance with the Guidance Note on Recognition of Revenue
by Real Estate Developers (Issued 2006) for the projects commenced
before 1st April 2012.
Cost of Construction / Development (including cost of land) incurred is
charged to the statement of profit and loss proportionate to area sold
and the balance cost is carried over under Inventory as part of
Development Work-in-Progress. Cost of construction / development
includes all costs directly related to the Project and other
expenditure as identified by the management which are reasonably
allocable to the project.
Unbilled revenue disclosed under other non-current and other current
assets represents revenue recognized over and above amount due as per
payment plans agreed with the customers. Progress billings which
exceed the costs and recognized profits to date on projects under
construction are disclosed as advance received from customers under
other current liabilities. Any billed amount that has not been
collected is disclosed under trade receivables.
The estimates of saleable area and cost of construction are revised
periodically by the management. The effect of such changes to estimates
is recognized in the period such changes are determined. The estimated
cost of construction as determined is based on management''s estimate of
the cost expected to be incurred till the final completion and includes
cost of materials, service and other related overheads. Unbilled costs
are carried as real estate development work in progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the project
/ activity and the foreseeable losses to completion.
(d) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever
applicable) less accumulated depreciation and impairment losses, if
any. The cost includes cost of acquisition, construction, erection,
installation etc, preoperative expenses (including trial run) and
borrowing costs incurred during construction period.
(e) Depreciation
Depreciation on fixed assets other than furniture & fixtures and motor
vehicles is provided on the straight line method, prorata to the period
of use, over the useful life as prescribed in Schedule II to the
Companies Act, 2013 or as estimated by the management, whichever is
lower. Depreciation on furniture & fixtures and motor vehicles is
provided on the written down value method over the useful life as
prescribed in Schedule II. The asset categories and their useful lives
over which depreciation is provided are as under:
The Textile processing plant at Ranjangaon and the PSF manufacturing
plant at Patalganga are treated as a Continuous process plants based on
technical assessment.
(f) Impairment
The carrying amounts of the Company''s tangible and intangible assets
are reviewed at each balance sheet date to determine whether there is
any indication of impairment. If any such indication exists, the
asset''s recoverable amounts are estimated in order to determine the
extent of impairment loss, if any. An impairment loss is recognized
whenever the carrying amount of an asset exceeds its recoverable
amount. The impairment loss, if any, is recognized in the Statement of
Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of
the asset is increased to the revised estimate of its recoverable
amount, however subject to the increased carrying amount not exceeding
the carrying amount that would have been determined (net of
amortization or depreciation) had no impairment loss been recognized
for the asset in prior accounting periods.
(g) Borrowing costs
Borrowing costs include interest, amortization of ancillary costs,
amortization of discounts related to borrowings and foreign exchange to
the extent they are regarded as adjustment to interest costs. Borrowing
costs that are directly attributable to the acquisition or construction
of qualifying assets are capitalized as part of the cost of such asset
till such time that the asset is ready for its intended use or sale. A
qualifying asset is an asset that necessarily takes substantial period
of time to get ready for its intended use. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
(h) Investments
(i) Investments that are readily realizable and are intended to be held
for not more than one year from the date on which such investments are
made are classified as current investments. All other investments are
classified as long term investments.
(ii) Long term investments are stated at cost. Provision for diminution
is made to recognize a decline, other than temporary, in value of each
long term investment, where applicable.
(iii) Current investments are stated at lower of cost and fair value
and the resultant decline, if any, is charged to revenue.
(i) Inventories
(i) Inventories are valued at lower of cost and net realizable value.
(ii) Cost is determined as follows:
(a) Raw materials, stores& spares, finished goods and stock-in-trade on
a weighted average method.
(b) Work-in-progress PSF division- Material cost included in the
valuation is determined on the basis of the weighted average rate and
cost of conversion and other costs are determined on the basis of
average cost of conversion of the preceding month.
(c) Real estate under development
Real estate under development comprises undivided interest in the
freehold land at market value, determined at the rate at which it was
converted from fixed assets into stock-in-trade for present and future
development, expenditure relating to construction and allocated
expenses incidental to the projects undertaken by the Company. Cost of
land and construction / development is charged to Statement of Profit
and Loss proportionate to area sold and at the time when corresponding
revenue is recognized.
(j) Foreign currency transactions
(i) Transactions in foreign currency are recorded at standard exchange
rates determined monthly. Monetary assets and liabilities denominated
in foreign currency, remaining unsettled at the period end are
translated at closing rates. The difference in translation of all
monetary assets and liabilities and realized gains and losses on
foreign currency transactions are recognized in the Statement of Profit
& Loss.
(ii) Forward exchange contracts other than those entered into to hedge
foreign currency risk of firm commitments or highly probable forecast
transactions are translated at period end exchange rates and the
resultant gains and losses as well as the gains and losses on
cancellation of such contracts are recognized in the Statement of
Profit and Loss. Premium or discount on such forward exchange contracts
is amortized as income or expense over the life of the contract.
Forward exchange contracts entered into to hedge foreign currency risk
of firm commitments or highly probable forecast transactions are
treated as derivative financial instruments.
(iii) The company uses forward foreign exchange contracts to hedge its
exposure against movements in foreign exchange rates.
(k) Derivative Financial Instruments and Hedging
The Company enters into derivative financial instruments to hedge
foreign currency risk of firm commitments and highly probable forecast
transactions. The method of recognizing the resulting gain or loss
depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The
carrying amount of a derivative designated as a hedge is presented as a
current asset or liability. The company does not enter into any
derivatives for trading purposes.
Cash Flow Hedge
Forward exchange contracts entered into to hedge foreign currency risks
of firm commitments or highly probable forecast transactions, that
qualify as cash flow hedges are recorded in accordance with the
principles of hedge accounting enunciated in Accounting Standard (AS)
30 - Financial Instruments Recognition and Measurement. The gains or
losses on designated hedging instruments that qualify as effective
hedges is recorded in the Hedging Reserve account and is recognized in
the Statement of Profit and Loss in the same period or periods during
which the hedged transaction affects profit or loss.
Gains or losses on ineffective hedge transactions are immediately
recognized in the Statement of Profit and Loss. When a forecasted
transaction is no longer expected to occur, the gains and losses that
were previously recognized in the Hedging Reserve are transferred to
the Statement of Profit and Loss immediately.
(I) Employees benefits
(i) Short term employee benefits:
Short term employee benefits are recognized as expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the related service is rendered.
(ii) Post-employment benefits:
(I) Defined Contribution Plan:
a) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive
post-employment benefits in respect of provident and family pension
fund, in which both the employees and the Company make monthly
contributions at a specified percentage of the employees'' eligible
salary (currently 12% of employees'' eligible salary). The contributions
are made to the provident fund and pension fund set up as irrevocable
trust by the Company or to respective Regional Provident Fund
Commissioner. The Company has no further obligations beyond making the
contribution, except that any shortfall in the fund assets based on the
Government specified minimum rates of return in respect of provident
fund set up by the Company, and the Company recognizes such
contributions and shortfall, if any, as an expense in the year it is
incurred.
b) Superannuation
The eligible employees of the Company are entitled to receive
post-employment benefits in respect of superannuation fund in which the
Company makes annual contribution at a specified percentage of the
employees'' eligible salary (currently 10% or 15 % of employees''
eligible salary). The contributions are made to the Superannuation fund
set up as irrevocable trust by the Company. Superannuation is
classified as Defined Contribution Plan as the Company has no further
obligations beyond making the contribution. The Company''s contribution
to Defined Contribution Plan is charged to Statement of Profit and Loss
as incurred.
(II) Defined Benefit Plan:
a) Gratuity
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in
employment or on termination of employment, of an amount equivalent to
15 days or 30 days salary payable for each completed year of service.
Vesting occurs upon completion of five years of service. The
Contributions are made to the Gratuity Fund set up as irrevocable trust
by the Company. The Company accounts for gratuity benefits payable in
future on the basis of an actuarial valuation by an independent actuary
at the year end, which is calculated using Project Unit Credit Method.
Actuarial gains and losses which comprise experience adjustment and the
effect of change in actuarial assumptions are recognized in the
Statement of Profit and Loss.
b) Other long-term employee benefits - compensated absences
The Company provides for encashment of leave or leave with pay subject
to certain rules. The leave accumulated to the credit of the employees
up to Dec 31, 2014 is available for carry forward and encashment on
separation. The Company makes provision for such compensated absences
based on an actuarial valuation by an independent actuary at the year
end, which is calculated using Project Unit Credit Method. Actuarial
gains and losses which comprise experience adjustment and the effect of
change in actuarial assumptions are recognized in the Statement of
Profit and Loss.
Post 2014, leave earned during the year has to be utilized by the
employees within the following year. Such leave is a short term
employee benefit and is provided at the undiscounted amount in the
period in which it is incurred.
c) Termination Benefits
The Company provides for compensation payable as part of termination
benefits when it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation.
Termination benefits falling due more than twelve months after the
balance sheet date are provided on the basis of an actuarial valuation
by an independent actuary as at the year-end using Project Unit Credit
Method.
(m) Employee share based payments
Equity settled stock options granted under the Company''s Employee Stock
Option Scheme (ESOP) are accounted as per the accounting treatment
prescribed by SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting
for Employee Share based payments issued by ICAI. The Company measures
compensation cost relating to employee stock options using the
intrinsic value method and compensation expense, if any, is amortized
over the vesting period of the option on a straight line basis.
(n) Taxation
Tax expense comprises current and deferred tax. Current tax is measured
at the amount expected to be paid in accordance with the Income-tax
Act, 1961. Deferred income taxes reflects the impact of current year
timing differences between taxable income and accounting income for the
year and reversal of timing differences of earlier years. Deferred tax
is measured based on the tax rate and tax laws enacted or substantially
enacted at the balance sheet date. Deferred tax assets and MAT credit
entitlement are recognized only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. Deferred tax
assets are not recognized on unabsorbed depreciation and carry forward
of losses unless there is virtual certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized.
(o) Provisions and Contingent Liabilities
A provision is recognized when the enterprise has a present obligation
as a result of a 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
their present values and are determined based on management estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Company. . No disclosure is made in
case of possible obligations in respect of which likelihood of outflow
of resources is remote.
(p) Leases
Leases where the less or effectively retains substantially all the
risks and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments/receipts are recognized as
an expense/income in the Statement of Profit and Loss on a
straight-line basis over the lease term.
(q) Government Grants
Grants in the nature of subsidies related to revenue are recognized in
the Statement of Profit and Loss over the period in which the
corresponding costs are incurred and are recorded on accrual basis.
(r) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits with banks
and short term highly liquid investments, which are readily convertible
into cash and have original maturities of three months or less.
(s) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to the equity shareholders by the
weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the
period is adjusted for events, such as bonus issue, bonus element in a
rights issue and shares split that have changed the number of equity
shares outstanding, without a corresponding change in resources. For
the purpose of calculating Diluted Earnings per share, the net profit
or loss for the period attributable to the equity shareholders and the
weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
(t) Segment Reporting
The Accounting Policies adopted for segment reporting are in line with
the Accounting Policies of the Company. Segment assets include all
operating assets used by the business segments and consist principally
of fixed assets, debtors and inventories. Segment liabilities include
the operating liabilities that result from the operating activities of
the business. Segment assets and liabilities that cannot be allocated
between the segments are shown as part of unallocated corporate assets
and liabilities respectively. Income/Expenses relating to the
enterprise as whole and not allocable on a reasonable basis to business
segments are reflected as unallocated corporate income/expenses.
Inter-segment transfers are accounted at prevailing market prices.
Mar 31, 2015
(a) Basis of accounting
The financial statements are prepared under the historical cost
convention, except for revaluation of certain freehold land on
conversion to stock-in-trade, on the accrual basis of accounting and in
accordance with the generally accepted accounting principles in India.
The financial statements have been prepared to comply in all material
aspects with the accounting standards specified under section 133 of
the Companies Act, 2013 read with Rule 7 of the Companies (Accounts)
Rules, 2014 and the provisions of the Act, to the extent applicable.
The classification of assets and liabilities of the Company into
current or non-current is based on the Company''s normal operating cycle
and other criterion specified in the Schedule III to the Companies Act,
2013. The Company has ascertained its operating cycle as 12 months for
the purpose of current - non- current classification of assets and
liabilities.
(b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires the management to make
estimates and assumptions that affect the reported balances of assets,
liabilities and contingent liabilities as of the date of the financial
statements and reported amounts of income and expenses during the
period. Management believes that the estimates used in the preparation
of financial statements are prudent and reasonable. However,
uncertainty about these assumptions and estimates could result in the
outcomes requiring material adjustment to the carrying amounts of
assets and liabilities in future periods.
(c) Revenue recognition
Revenue from sales is recognised when the significant risks and rewards
of ownership of the goods are transferred to the customers/dealers.
Revenue from real estate activity
Revenue from real estate activity is recognised to the extent that it
is probable that the economic benefits will flow to the Company, all
significant risks and rewards of ownership are transferred to the
customers and it is not unreasonable to expect ultimate collection and
no significant uncertainty exists regarding the amount of
consideration.
The freehold land (including FSI entitlement thereon) under Real Estate
Development planned for sale, is converted from fixed assets into
stock-in-trade at market value. The difference between the market value
and cost of that part of freehold land is credited to revaluation
reserve and is released to the Statement of Profit and Loss in the
proportion of revenue recognized under the percentage of completion
method on entering into an agreement / contracts for sale.
Revenue from real estate development activity where the Company still
has obligations to perform substantial acts even after the transfer of
all significant risks and rewards, is recognised on the ''Percentage of
Completion Method''. Revenue is recognised in relation to the sold
areas, on the basis of percentage of actual cost incurred, including
land, development and construction costs as against the total estimated
cost of project. Revenue is recognised, if the cost incurred is in
excess of 25% of the total estimated cost and the outcome of the
project can be reliably ascertained. The company continues to recognize
revenue in accordance with the Guidance Note on Recognition of Revenue
by Real Estate Developers (Issued 2006) for the projects commenced
before 1st April 2012.
Cost of Construction / Development (including cost of land) incurred is
charged to the statement of profit and loss proportionate to area sold
and the balance cost is carried over under Inventory as part of
Development Work-in-Progress. Cost of construction / development
includes all costs directly related to the Project and other
expenditure as identified by the management which are reasonably
allocable to the project.
Unbilled revenue disclosed under other non-current and other current
assets represents revenue recognized over and above amount due as per
payment plans agreed with the customers. Progress billings which
exceed the costs and recognized profits to date on projects under
construction are disclosed as advance received from customers under
other current liabilities. Any billed amount that has not been
collected is disclosed under trade receivables.
The estimates of saleable area and cost of construction are revised
periodically by the management. The effect of such changes to estimates
is recognised in the period such changes are determined. The estimated
cost of construction as determined is based on management''s estimate of
the cost expected to be incurred till the final completion and includes
cost of materials, service and other related overheads. Unbilled costs
are carried as real estate development work in progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the project
/ activity and the foreseeable losses to completion.
(d) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever
applicable) less accumulated depreciation and impairment losses, if
any. The cost includes cost of acquisition, construction, erection,
installation etc, preoperative expenses (including trial run) and
borrowing costs incurred during construction period.
(e) Depreciation
Depreciation on fixed assets other than furniture & fixtures and motor
vehicles is provided on the straight line method, prorata to the period
of use, over the useful life as prescribed in Schedule II to the
Companies Act, 2013 or as estimated by the management, whichever is
lower. Depreciat ion on furniture & fixtures and motor vehicles is
provided on the written down value method over the useful life as
prescribed in Schedule II. The asset categories and their useful lives
over which depreciation is provided are as under:
Asset Useful life
Leasehold land Lease period namely 95 years
Buildings 30 to 60 years
Office equipment 5 years
Computers 3 to 6 years
Plant & machinery 15 to 25 years
Furniture & fixtures 10 years
Assets of retail shops 6 years
including leasehold
improvements
Movable site offices 10 years
Motor vehicles 8 years
Computer software 5 years
Technical know-how 10 years
The Textile processing plant at Ranjangaon and the PSF manufacturing
plant at Patalganga are treated as a Continuous process plants based on
technical assessment.
Change in Estimates
Pursuant to notification of Schedule II to the Companies Act, 2013, the
Company has, with effect from April 1, 2014, realigned the useful life
of its Fixed Assets, other than assets of retail shops and movable site
offices, with the useful life prescribed in schedule II.
Pursuant to such change, the carrying amount of such assets as on April
1, 2014 has been depreciated over the remaining useful life, resulting
in the depreciation charge for the year being lower by Rs. 11.65 crores
and where the remaining useful life has been exhausted, the carrying
amount of such assets amounting to Rs. 1.54 crores has been charged
against the opening balance of Retained Earnings.
(f) Impairment
The carrying amounts of the Company''s tangible and intangible assets
are reviewed at each balance sheet date to determine whether there is
any indication of impairment. If any such indication exists, the
asset''s recoverable amounts are estimated in order to determine the
extent of impairment loss, if any. An impairment loss is recognised
whenever the carrying amount of an asset exceeds its recoverable
amount. The impairment loss, if any, is recognized in the Statement of
Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of
the asset is increased to the revised estimate of its recoverable
amount, however subject to the increased carrying amount not exceeding
the carrying amount that would have been determined (net of
amortization or depreciation) had no impairment loss been recognized
for the asset in prior accounting periods.
(g) Borrowing costs
Borrowing costs include interest, amortization of ancillary costs,
amortization of discounts related to borrowings and foreign exchange to
the extent they are regarded as adjustment to interest costs. Borrowing
costs that are directly attributable to the acquisition or construction
of qualifying assets are capitalised as part of the cost of such asset
till such time that the asset is ready for its intended use or sale. A
qualifying asset is an asset that necessarily takes substantial period
of time to get ready for its intended use. Other borrowing costs are
recognised as an expense in the period in which they are incurred.
(h) Investments
(i) Investments that are readily realisable and are intended to be held
for not more than one year from the date on which such investments are
made are classified as current investments. All other investments are
classified as long term investments.
(ii) Long term investments are stated at cost. Provision for diminution
is made to recognise a decline, other than temporary, in value of each
long term investment, where applicable.
(iii) Current investments are stated at lower of cost and fair value
and the resultant decline, if any, is charged to revenue.
(I) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on a weighted average method.
(b) Raw Materials
- cotton, fibre, cloth, yarn, purified terepthalic acid, mono ethylene
glycolon, dyes & chemicals and other materials on a weighted average
method.
(c) Work-in-process and finished goods (including stock lying at our
own retail store)
Textile division-
Material costs included in the valuation are determined on the basis of
the average consumption rates closer to the year end so as to reflect
the fair approximation to the costs incurred. Costs of conversion and
other costs are determined on the basis of standard costs, adjusted for
variances between standard and actual costs, if material. Cost of ready
finished goods is determined on weighted average method.
PSF division-
Material cost included in the valuation are determined on the basis of
the weighted average rate and cost of conversion and other costs are
determined on the basis of average cost of conversion of the last
month.
(d) Real estate under development
Real estate under development comprises undivided interest in the
freehold land at market value, determined at the rate at which it was
converted from fixed assets into stock-in-trade for present and future
development, expenditure relating to construction and allocated
expenses incidental to the projects undertaken by the Company. Cost of
land and construction / development is charged to Statement of Profit
and Loss proportionate to area sold and at the time when corresponding
revenue is recognised.
(j) Foreign currency transactions
(i) Transactions in foreign currency are recorded at standard exchange
rates determined monthly. Monetary assets and liabilities denominated
in foreign currency, remaining unsettled at the period end are
translated at closing rates. The difference in translation of all
monetary assets and liabilities and realised gains and losses on
foreign currency transactions are recognised in the Statement of Profit
& Loss.
(ii) Forward exchange contracts other than those entered into to hedge
foreign currency risk of firm commitments or highly probable forecast
transactions are translated at period end exchange rates and the
resultant gains and losses as well as the gains and losses on
cancellation of such contracts are recognised in the Statement of
Profit and Loss. Premium or discount on such forward exchange contracts
is amortised as income or expense over the life of the contract.
Forward exchange contracts entered into to hedge foreign currency risk
of firm commitments or highly probable forecast transactions are
treated as derivative financial instruments.
(iii) The company uses forward foreign exchange contracts to hedge its
exposure against movements in foreign exchange rates.
(k) Derivative Financial Instruments and Hedging
The Company enters into derivative financial instruments to hedge
foreign currency risk of firm commitments and highly probable forecast
transactions. The method of recognizing the resulting gain or loss
depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The
carrying amount of a derivative designated as a hedge is presented as a
current asset or liability. The company does not enter into any
derivatives for trading purposes.
Cash Flow Hedge
Forward exchange contracts entered into to hedge foreign currency risks
of firm commitments or highly probable forecast transactions, that
qualify as cash flow hedges are recorded in accordance with the
principles of hedge accounting enunciated in Accounting Standard (AS)
30 - Financial Instruments Recognition and Measurement. The gains or
losses on designated hedging instruments that qualify as effective
hedges is recorded in the Hedging Reserve account and is recognized in
the Statement of Profit and Loss in the same period or periods during
which the hedged transaction affects profit or loss.
Gains or losses on the ineffective hedge transactions are immediately
recognized in the Statement of Profit and Loss. When a forecasted
transaction is no longer expected to occur, the gains and losses that
were previously recognized in the Hedging Reserve are transferred to
the Statement of Profit and Loss immediately.
(l) Employees benefits
(i) Short term employee benefits:
Short term employee benefits 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.
(ii) Post-employment benefits:
(I) Defined Contribution Plan:
a) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post
employment benefits in respect of provident and family pension fund, in
which both the employees and the Company make monthly contributions at
a specified percentage of the employees'' eligible salary (currently 12%
of employees'' eligible salary). The contributions are made to the
provident fund and pension fund set up as irrevocable trust by the
Company or to respective Regional Provident Fund Commissioner. The
Company has no further obligations beyond making the contribution,
except that any shortfall in the fund assets based on the Government
specified minimum rates of return in respect of provident fund set up
by the Company, and the Company recognises such contributions and
shortfall, if any, as an expense in the year incurred.
b) Superannuation
The eligible employees of the Company are entitled to receive post
employment benefits in respect of superannuation fund in which the
Company makes annual contribution at a specified percentage of the
employees'' eligible salary (currently 10% or 15 % of employees''
eligible salary). The contributions are made to the Superannuation fund
set up as irrevocable trust by the Company. Superannuation is
classified as Defined Contribution Plan as the Company has no further
obligations beyond making the contribution. The Company''s contribution
to Defined Contribution Plan is charged to Statement of Profit and Loss
as incurred.
(II) Defined Benefit Plan:
a) Gratuity
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in
employment or on termination of employment, of an amount equivalent to
15 days or 30 days salary payable for each completed year of service.
Vesting occurs upon completion of five years of service. The
Contributions are made to the Gratuity Fund set up as irrevocable trust
by the Company. The Company accounts for gratuity benefits payable in
future on the basis of an actuarial valuation by an independent actuary
at the year end, which is calculated using Project Unit Credit Method.
Actuarial gains and losses which comprise experience adjustment and the
effect of change in actuarial assumptions are recognised in the
Statement of Profit and Loss.
b) Other long-term employee benefits - compensated absences
The Company provides for encashment of leave or leave with pay subject
to certain rules. The leave accumulated to the credit of the employees
up to Dec 31, 2014 is available for carry forward and encashment on
separation. The leave earned during the period has to be utilized by
the employees within the following year. The Company makes provision
for compensated absences based on an actuarial valuation by an
independent actuary at the year end, which is calculated using Project
Unit Credit Method. Actuarial gains and losses which comprise
experience adjustment and the effect of change in actuarial assumptions
are recognised in the Statement of Profit and Loss.
c) Termination Benefits
The Company provides for compensation payable as part of termination
benefits when it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation.
Termination benefits falling due more than twelve months after the
balance sheet date are provided on the basis of an actuarial valuation
by an independent actuary as at the year-end using Project Unit Credit
Method.
(m) Employee share based payments
Equity settled stock options granted under the Company''s Employee stock
option (ESOP) scheme are accounted as per the accounting treatment
prescribed by SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting
for Employee Share based payments issued by ICAI. The Company measures
compensation cost relating to employee stock options using the
intrinsic value method and compensation expense, if any, is amortised
over the vesting period of the option on a straight line basis.
(n) Taxation
Tax expense comprises current and deferred tax. Current tax is measured
at the amount expected to be paid in accordance with the Income-tax
Act, 1961. Deferred income taxes reflects the impact of current year
timing differences between taxable income and accounting income for the
year and reversal of timing differences of earlier years. Deferred tax
is measured based on the tax rate and tax laws enacted or substantially
enacted at the balance sheet date. Deferred tax assets and MAT credit
entitlement are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets are not recognised on unabsorbed depreciation and carry forward
of losses unless there is virtual certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
(o) Provisions and Contingent Liabilities
A provision is recognised when the enterprise 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
their present values and are determined based on management estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company.
(p) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments / receipts are recognised as
an expense / income in the Statement of Profit and Loss on a
straight-line basis over the lease term.
(q) Government Grants
Grants in the nature of subsidies related to revenue are recognized in
the Statement of Profit and Loss over the period in which the
corresponding costs are incurred and are recorded on accrual basis.
(r) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits with banks
and short term highly liquid investments, which are readily convertible
into cash and have original maturities of three months or less.
(s) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to the equity shareholders by the
weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the
period is adjusted for events, such as bonus issue, bonus element in a
rights issue and shares split that have changed the number of equity
shares outstanding, without a corresponding change in resources. For
the purpose of calculating Diluted Earnings per share, the net profit
or loss for the period attributable to the equity shareholders and the
weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
(t) Segment Reporting
The Accounting Policies adopted for segment reporting are in line with
the Accounting Policies of the Company. Segment assets include all
operating assets used by the business segments and consist principally
of fixed assets, debtors and inventories. Segment liabilities include
the operating liabilities that result from the operating activities of
the business. Segment assets and liabilities that cannot be allocated
between the segments are shown as part of unallocated corporate assets
and liabilities respectively. Income / Expenses relating to the
enterprise as whole and not allocable on a reasonable basis to business
segments are reflected as unallocated corporate income / expenses.
Inter- segment transfers are accounted at prevailing market prices.
Mar 31, 2014
(a) Basis of accounting
The financial statements are prepared under the historical cost
convention, except for revaluation of certain freehold land on
conversion to stock-in-trade, on an accrual basis of accounting, in
accordance with Generally Accepted Accounting Principles in India, the
accounting standards notified under the Companies Act, 1956 ("the
Act") read with the General circular 15/2013 dated 13th September 2013
of the Ministry of Corporate Affairs in respect of section 133 of the
Companies Act, 2013 and the provisions of the Act, to the extent
applicable.
The classification of assets and liabilities of the Company into
current or non-current is based on the criterion specified in the
Revised Schedule VI to the Companies Act, 1956. The Company has
ascertained its operating cycle as 12 months for the purpose of current
 non-current classification of assets and liabilities.
(b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires the management to make
estimates and assumptions that affect the reported balances of assets,
liabilities and contingent liabilities as of the date of the financial
statements and reported amounts of income and expenses during the
period. Management believes that the estimates used in the preparation
of financial statements are prudent and reasonable. Actual results
could differ from the estimates.
(c) Revenue recognition
Revenue from sales is recognised when the significant risks and
rewards of ownership of the goods are transferred to the
customers/dealers.
(d) Revenue from real estate activity
Revenue from real estate activity is recognised on the transfer of all
significant risks and rewards of ownership to the customers and it is
not unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration.
The freehold land under Real Estate Development planned for sale, is
converted from fixed assets into stock-in-trade at market value. The
difference between the market value and cost of that part of freehold
land is credited to revaluation reserve and is released to the
Statement of Profit and Loss in the proportion of revenue recognized
under the percentage of completion method on entering into an
agreement/ contract for sale.
Revenue from real estate development activity where the Company still
has obligations to perform substantial acts even after the transfer of
all significant risks and rewards, is recognised on the ''Percentage of
Completion Method''. Revenue is recognised in relation to the sold
areas, on the basis of percentage of actual cost incurred, including
land, development and construction costs as against the total estimated
cost of project. Revenue is recognised, if the cost incurred is in
excess of 25% of the total estimated cost and the outcome of the
project can be reliably ascertained. The company continues to recognize
revenue in accordance with the Guidance Note on Recognition of Revenue
by Real Estate Developers (Issued 2006) as the Company''s ongoing
projects have commenced before 1st April 2012.
Cost of Construction/Development (including cost of land) incurred is
charged to the statement of profit and loss proportionate to area sold
and the balance cost is carried over under Inventory as part of
Development Work-in- Progress. Cost of construction/development
includes all costs directly related to the Project and other
expenditure as identified by the management which are reasonably
allocable to the project.
Unbilled revenue disclosed under other non-current and other current
assets represents revenue recognized over and above amount due as per
payment plans agreed with the customers. Progress billings which exceed
the costs and recognized profits to date on projects under
construction are disclosed as advance received from customers under
other current liabilities. Any billed amount that has not been
collected is disclosed under trade receivables.
The estimates of saleable area and cost of construction are revised
periodically by the management. The effect of such changes to estimates
is recognised in the period such changes are determined. The estimated
cost of construction as determined is based on management''s estimate of
the cost expected to be incurred till the final completion and
includes cost of materials, service and other related overheads.
Unbilled costs are carried as real estate development work in progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the
project/ activity and the foreseeable losses to completion.
(e) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever
applicable) less accumulated depreciation and impairment losses, if
any. The cost includes cost of acquisition, construction, erection,
installation etc, preoperative expenses (including trial run) and
borrowing costs incurred during construction period.
(f) Depreciation
Depreciation on fixed assets other than furniture & fixtures and
motor vehicles is provided on the straight line method at the rates
prescribed in Schedule XIV to the Companies Act, 1956 or at higher
rates in accordance with their estimated useful life. Depreciation on
furniture & fixtures and motor vehicles is provided on the written
down value method at the rates prescribed in Schedule XIV to the
Companies Act, 1956. The asset categories on which depreciation is
provided over their estimated useful life and the useful life as
estimated by the management are as under:
(i) Assets of retail shops including leasehold improvements  6 years
(ii) Movable site offices  10 years
(iii) Computer software  5 years
(iv) Technical know-how  10 years
(v) Lease hold land Âlease period namely 95 years
The Textile processing plant at Ranjangaon and the PSF manufacturing
plant at Patalganga are treated as a Continuous process plants based on
technical assessment.
(g) Impairment
The carrying amounts of the Company''s tangible and intangible assets
are reviewed at each balance sheet date to determine whether there is
any indication of impairment. If any such indication exists, the
asset''s recoverable amounts are estimated in order to determine the
extent of impairment loss, if any. An impairment loss is recognised
whenever the carrying amount of an asset exceeds its recoverable
amount. The impairment loss, if any, is recognized in the Statement of
Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of
the asset is increased to the revised estimate of its recoverable
amount, however subject to the increased carrying amount not exceeding
the carrying amount that would have been determined (net of
amortization or depreciation) had no impairment loss been recognized
for the asset in prior accounting periods.
(h) Borrowing costs
Borrowing costs include interest, amortization of ancillary costs,
amortization of discounts related to borrowings and foreign exchange
difference to the extent they are regarded as adjustment to interest
costs. Borrowing costs that are directly attributable to the
acquisition or construction of qualifying assets are capitalised as
part of the cost of such asset till such time that the asset is ready
for its intended use or sale. A qualifying asset is an asset that
necessarily takes substantial period of time to get ready for its
intended use. Other borrowing costs are recognised as an expense in the
period in which they are incurred.
(i) Investments
(i) Investments that are readily realisable and are intended to be held
for not more than one year from the date on which such investments are
made are classified as current investments. All other investments are
classified as long term investments.
(ii) Long term investments are stated at cost. Provision for diminution
is made to recognise a decline, other than temporary, in value of each
long term investment, where applicable.
(iii) Current investments are stated at lower of cost and fair value
and the resultant decline, if any, is charged to revenue.
(j) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on a weighted average method.
(b) Raw Materials
- cotton, fibre, cloth, yarn, purified terepthalic acid, mono
ethylene glycolon, dyes & chemicals and other materials on a weighted
average method.
(c) Work-in-process and fi nished goods (including stock lying at our
own retail store)
Textile division- Material costs included in the valuation are
determined on the basis of the average consumption rates closer to the
year end so as to reflect the fair approximation to the costs
incurred. Costs of conversion and other costs are determined on the
basis of standard costs, adjusted for variances between standard and
actual costs, if material. Cost of ready finished goods is determined
on weighted average method.
PSF division- Material cost included in the valuation are determined on
the basis of the weighted average rate and cost of conversion and other
costs are determined on the basis of average cost of conversion of the
last month.
(d) Real estate under development
Real estate under development comprises undivided interest in the
freehold land at market value, determined at the rate at which it was
converted from fixed assets into stock- in-trade for present and
future development, expenditure relating to construction, allocated
expenses incidental to the projects undertaken by the Company. Cost of
land and construction/ development is charged to Statement of Profit
and Loss proportionate to area sold and at the time when corresponding
revenue is recognised.
(k) Foreign currency transactions
(i) Transactions in foreign currency are recorded at standard exchange
rates determined monthly. Monetary assets and liabilities denominated
in foreign currency, remaining unsettled at the period end are
translated at closing rates. The difference in translation of all
monetary assets and liabilities and realised gains and losses on
foreign currency transactions are recognised in the Statement of Profit
& Loss.
(ii) Forward exchange contracts other than those entered into to hedge
foreign currency risk of firm commitments or highly probable forecast
transactions are translated at period end exchange rates and the
resultant gains and losses as well as the gains and losses on
cancellation of such contracts are recognised in the Statement of Profit
and Loss. Premium or discount on such forward exchange contracts is
amortised as income or expense over the life of the contract. Forward
exchange contracts entered into to hedge foreign currency risk of firm
commitments or highly probable forecast transactions are treated as
derivative financial instruments.
(iii) The company used forward foreign exchange contracts to hedge its
exposure against movements in foreign exchange rates.
(l) Derivative Financial Instruments and Hedging
The Company enters into derivative financial instruments to hedge
foreign currency risk of firm commitments and highly probable forecast
transactions. The method of recognizing the resulting gain or loss
depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The
carrying amount of a derivative designated as a hedge is presented as a
current asset or liability. The company does not enter into any
derivatives for trading purposes.
Cash Flow Hedge
Forward exchange contracts entered into to hedge foreign currency risks
of firm commitments or highly probable forecast transactions, that
qualify as cash flow hedges are recorded in accordance with the
principles of hedge accounting enunciated in Accounting Standard (AS)
30 Â Financial Instruments Recognition and Measurement. The gains or
losses on designated hedging instruments that qualify as effective
hedges is recorded in the Hedging Reserve account and is recognized in
the Statement of Profit and Loss in the same period or periods during
which the hedged transaction affects profit or loss.
Gains or losses on the ineffective hedge transactions are immediately
recognized in the Statement of Profit and Loss. When a forecasted
transaction is no longer expected to occur, the gains and losses that
were previously recognized in the Hedging Reserve are transferred to
the Statement of Profit and Loss immediately.
(m) Employees benefits
(i) Short term employee benefits:
Short term employee benefits 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.
(ii) Post-employment benefits:
(I) Defined Contribution Plan:
a) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post
employment benefits in respect of provident and family pension fund,
in which both the employees and the Company make monthly contributions
at a specified percentage of the employees'' eligible salary (currently
12% of employees'' eligible salary). The contributions are made to the
provident fund and pension fund set up as irrevocable trust by the
Company or to respective Regional Provident Fund Commissioner. The
Company has no further obligations beyond making the contribution,
except that any shortfall in the fund assets based on the Government
specified minimum rates of return in respect of provident fund set up
by the Company, and the Company recognises such contributions and
shortfall, if any, as an expense in the year incurred.
b) Superannuation
The eligible employees of the Company are entitled to receive post
employment benefits in respect of superannuation fund in which the
Company makes annual contribution at a specified percentage of the
employees'' eligible salary (currently 10% or 15% of employees'' eligible
salary). The contributions are made to the Superannuation fund set up
as irrevocable trust by the Company. Superannuation is classified as
Defined Contribution Plan as the Company has no further obligations
beyond making the contribution. The Company''s contribution to Defined
Contribution Plan is charged to Statement of Profit and Loss as
incurred.
(II) Defined Benefit Plan:
a) Gratuity
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to
15 days or 30 days salary payable for each completed year of service.
Vesting occurs upon completion of five years of service. The
Contributions are made to the Gratuity Fund set up as irrevocable trust
by the Company. The Company accounts for gratuity benefits payable in
future on the basis of an actuarial valuation by an independent actuary
at the year end, which is calculated using Project Unit Credit Method.
Actuarial gains and losses which comprise experience adjustment and the
effect of change in actuarial assumptions are recognised in the
Statement of Profit and Loss.
b) Other long-term employee benefits - compensated absences
The Company provides for encashment of leave or leave with pay subject
to certain rules. The employees are entitled to accumulate leave
subject to certain limits for future encashment/availment. The Company
makes provision for compensated absences based on an actuarial
valuation by an independent actuary at the year end, which is
calculated using Project Unit Credit Method. Actuarial gains and losses
which comprise experience adjustment and the effect of change in
actuarial assumptions are recognised in the Statement of Profit and
Loss.
c) Termination Benefits
The Company provides for compensation payable as part of termination
benefits when it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation.
Termination benefits falling due more than twelve months after the
balance sheet date are provided on the basis of an actuarial valuation
by an independent actuary as at the year-end using Project Unit Credit
Method.
(n) Employee share based payments
Equity settled stock options granted under the Company''s Employee stock
option (ESOP) scheme are accounted as per the accounting treatment
prescribed by SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting
for Employee Share based payments issued by ICAI. The Company measures
compensation cost relating to employee stock options using the
intrinsic value method and compensation expense, if any, is amortised
over the vesting period of the option on a straight line basis.
(o) Taxation
Tax expense comprises current and deferred tax. Current tax is measured
at the amount expected to be paid in accordance with the Income-tax
Act, 1961. Deferred income taxes reflects the impact of current year
timing differences between taxable income and accounting income for the
year and reversal of timing differences of earlier years. Deferred tax
is measured based on the tax rate and tax laws enacted or substantially
enacted at the balance sheet date. Deferred tax assets and MAT credit
entitlement are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets are not recognised on unabsorbed depreciation and carry forward
of losses unless there is virtual certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
(p) Provisions and Contingent Liabilities
A provision is recognised when the enterprise 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 their present values and are determined based on management estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the
current management estimates.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company.
(q) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments/ receipts are recognised as
an expense/income in the Statement of Profit and Loss on a
straight-line basis over the lease term.
(r) Government Grants
Grants in the nature of subsidies related to revenue are recognized in
the Statement of Profit and Loss over the period in which the
corresponding costs are incurred and are recorded on accrual basis.
(s) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits with banks
and short term highly liquid investments, which are readily convertible
into cash and have original maturities of three months or less.
(t) Earnings per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to the equity shareholders by the
weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the
period is adjusted for events, such as bonus issue, bonus element in a
rights issue and shares split that have changed the number of equity
shares outstanding, without a corresponding change in resources. For
the purpose of calculating Diluted Earnings per share, the net profit
or loss for the period attributable to the equity shareholders and the
weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
(u) Segment Reporting
The Accounting Policies adopted for segment reporting are in line with
the Accounting Policies of the Company. Segment assets include all
operating assets used by the business segments and consist principally
of fixed assets, debtors and inventories. Segment liabilities include
the operating liabilities that result from the operating activities of
the business. Segment assets and liabilities that cannot be allocated
between the segments are shown as part of unallocated corporate assets
and liabilities respectively. Income/Expenses relating to the
enterprise as a whole and not allocable on a reasonable basis to
business segments are reflected as unallocated corporate
income/expenses. Inter-segment transfers are accounted at prevailing
market prices.
(b) The Company had vide a postal ballot, whose results were declared
on 18th October, 2012, approved the sub-division of each equity share
of the company having face value of Rs. 10/- each fully paid into five
equity shares of the face value of Rs. 2/- each fully paid up. The
Authorised share capital of the Company, was also sub divided into
25,00,00,000 Equity shares of Rs. 2 each.
(c) Rights, preferences and restrictions attached to Equity shares
The company has one class of equity shares having a par value of Rs. 2
per share. Each shareholder is eligible for one vote per share held. T
e dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend. In the event of liquidation, the
equity shareholders are eligible to receive the remaining assets of the
Company after distribution of all preferential amounts, in proportion
to their shareholding.
(e) Shares reserved for issue under options
Pursuant to the Employee Stock Option Scheme (ESOS) approved by the
shareholders on 13th August, 2002 and as further amended by the
shareholders on 07th August, 2012, the Company has granted 14,000
options, (70,000 options post sub-division) to the Joint Managing
Director of the Company at an exercise price of Rs. 528.25 (Rs. 105.65 post
sub-division) per share. As per the terms of the ESOS, each option is
exercisable for conversion into one equity share of the Company (Refer
Note 44).
(f) Information regarding issue of shares during last five years
(i) No shares were allotted pursuant to contracts without payment being
received in cash. (ii) No bonus shares have been issued. (iii) No
shares have been bought back.
(g) Shares held in Abeyance
Under orders from the Special Court (Trial of Offences relating to
Transactions in Securities) Act, 1992, - the allotment of 4,640 shares
(2012- 13- 4,640 shares) of face value of Rs. 2/- each against warrants
carrying rights of conversion into equity shares of the Company has
been kept in abeyance in accordance with section 206A of the Companies
Act, 1956, till such time as the title of the bonafide owner is
certified by the concerned Stock Exchanges.
a) Nature of Security and terms of repayment of secured borrowing:
i) Term Loans aggregating Rs. 47.26 crores (2012-13 Rs. 66.50 crores) are
secured by first pari passu charge on the Company''s existing as well
as future fixed assets at Textile Processing Unit at Ranjangaon and
the Polyester Division at Patalganga other than fixed assets charged
exclusively to term lenders. Repayable in quarterly installments over a
period of 3 to 4 years.
ii) Term loan amounting to Rs. 3.37 crores (2012-13 Rs. 10.03 crores) is
secured by first pari-passu charge on the fixed assets of the Company
at Polyester Division at Patalganga. Repayable in half yearly
installment in the next year.
iii) Term loans aggregating Rs. 41.66 crores (2012-13 Rs. 208.30 crores)
are secured by first pari-passu charge over part of the land of the
Company at Textile Mills at Mumbai admeasuring upto 89,819.85 square
meters and plant and machinery, buildings and structures thereon.
Repayable in quarterly installments in the next year.
iv) Term loans aggregating Rs. 250.00 crores (2012-13 Rs. 200.00 crores)
are secured by fi rst pari passu charge on Company''s plant & machinery
at Textile Processing unit at Ranjangaon and the Polyester Division at
Patalganga. Repayable over 1 to 3 years.
v) Term loans aggregating Rs. 406.25 crores (2012-13 Rs. 230.00 crores)
are secured by first pari-passu charge over part of the land of the
Company at Textile Mills at Mumbai and plant and machinery, buildings
and structures thereon. Repayable in quarterly installments over a
period of 5 years.
vi) Term loan amounting to Rs. 45.00 crores (2012-13 Rs. NIL) is to be
secured by first pari-passu charge of rent receivables from premises
given on lease by the Company and second charge of portion of Spring
Mills land and buildings and structures thereon. Repayable in monthly
installments over 5 years.
a) Nature of Security for Short term borrowings
(i) Working Capital loans of Rs. 202.81 crores (2012-13 Rs. 122.37 crores)
and Buyer''s Credit amounting to Rs. 158.92 crores (2012-13 Rs. 113.21
crores) from banks under consortium arrangement is secured by
hypothecation of present and future stocks, book debts and other
current assets on pari passu basis and a second charge over part of the
land of the Company at Textile Mills at Mumbai admeasuring 89,819.85
square meters and plant and machinery and buildings thereon on pari
passu basis.
(ii) Buyer''s Credit aggregating Rs. 109.24 crores (2012-13 Rs. 91.35
crores) is secured by first pari-passu charge on land of the Company
at Spring Mills at Mumbai admeasuring 36,617.13 square meters (2012-13
36,617.13 square meters) and Rs. Nil (2012-13 Rs. 38.17 crores) is
secured by first pari-passu charge over part of the land of the Company
at Textile Mills at Mumbai admeasuring 60,767.19 square meters and plant
& machinery, buildings and erections thereon.
Mar 31, 2013
(a) Basis of accounting
The financial statements are prepared under the historical cost
convention, except for revaluation of certain freehold land on
conversion to stock-in-trade, on an accrual basis of accounting, in
accordance with Generally Accepted Accounting Principles in India, the
accounting standards notified under section 211 (3C) of the Companies
Act, 1956 and the relevant provisions thereof.
The classification of assets and liabilities of the Company into
current or non-current is based on the criterion specified in the
Revised Schedule VI to the Companies Act, 1956. The Company has
ascertained its operating cycle as 12 months for the purpose of current
and non-current classification of assets and liabilities.
(b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires the management to make
estimates and assumptions that affect the reported balances of assets,
liabilities and contingent liabilities as of the date of the financial
statements and reported amounts of income and expenses during the
period. Management believes that the estimates used in the preparation
of financial statements are prudent and reasonable. Actual results
could differ from the estimates.
(c) Revenue recognition
Revenue from sales is recognised when the significant risks and rewards
of ownership of the goods are transferred to the customers/ dealers.
(d) Revenue from real estate activity
Revenue from real estate activity is recognised on the transfer of all
significant risks and rewards of ownership to the customers and it is
not unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration.
The freehold land under Real Estate Development planned for sale, is
converted from fixed assets into stock-in-trade at market value. The
difference between the market value and cost of that part of freehold
land is credited to revaluation reserve.
Revenue from real estate development activity is recognised on the
''Percentage of Completion Method''. Revenue is recognised in relation to
the sold areas, on the basis of percentage of cost incurred, including
land, development and construction costs as against the total estimated
cost of project. Revenue is recognised if the cost incurred is in
excess of 25% of the total estimated cost and the outcome of the
project can be reliably ascertained. The estimates of saleable area and
cost of project are revised periodically by the management. The effect
of such changes to estimates is recognised in the period such changes
are determined. The estimated cost of project as determined, is based
on management''s estimate of the cost expected to be incurred till the
final completion and includes cost of materials, service and other
related overheads. Unbilled costs are carried as real estate work in
progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the project
/ activity and the foreseeable losses to completion.
(e) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever
applicable) less accumulated depreciation and impairment losses, if
any. The cost includes cost of acquisition, construction, erection,
installation etc, preoperative expenses (including trial run) and
borrowing costs incurred during construction period.
(f) Depreciation
Depreciation on fixed assets other than furniture & fixtures and motor
vehicles is provided on the straight line method at the rates
prescribed in Schedule XIV to the Companies Act, 1956 or at higher
rates in accordance with their estimated useful life. Depreciation on
furniture & fixtures and motor vehicles is provided on the written down
value method at the rates prescribed in Schedule XIV to the Companies
Act, 1956. The asset categories on which depreciation is provided over
their estimated useful life and the useful life as estimated by the
management are as under:
(i) Assets of retail shops including leasehold improvements - 6 years
(ii) Movable site offices - 10 years
(iii) Computer software - 5 years
(iv) Technical know-how - 10 years
(v) Lease hold land -lease period namely 95 years
The Textile processing plant at Ranjangaon and the PSF manufacturing
plant at Patalganga are treated as a Continuous process plants based on
technical assessment.
(g) Impairment
The carrying amounts of the Company''s tangible and intangible assets
are reviewed at each balance sheet date to determine whether there is
any indication of impairment. If any such indication exists, the
asset''s recoverable amounts are estimated in order to determine the
extent of impairment loss, if any. An impairment loss is recognised
whenever the carrying amount of an asset exceeds its recoverable
amount. The impairment loss, if any, is recognized in the Statement of
Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of
the asset is increased to the revised estimate of its recoverable
amount, however subject to the increased carrying amount not exceeding
the carrying amount that would have been determined (net of
amortization or depreciation) had no impairment loss been recognized
for the asset in prior accounting periods.
(h) Borrowing costs
Borrowing costs include interest, amortization of ancillary costs,
related to borrowings and foreign exchange to the extent they are
regarded as adjustment to interest costs. Borrowing costs that are
directly attributable to the acquisition or construction of qualifying
assets are capitalised as part of the cost of such asset till such time
that the asset is ready for its intended use or sale. A qualifying
asset is an asset that necessarily takes substantial period of time to
get ready for its intended use. Other borrowing costs are recognised as
an expense in the period in which they are incurred.
(i) Investments
(i) Investments that are readily realisable and are intended to be held
for not more than one year from the date on which such investments are
made are classified as current investments. All other investments are
classified as long term investments.
(ii) Long term investments are stated at cost. Provision for diminution
is made to recognise a decline, other than temporary, in value of each
long term investment, where applicable.
(iii) Current investments are stated at lower of cost and fair value
and the resultant decline, if any, is charged to revenue.
(j) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on a weighted average method.
(b) Raw Materials - cotton, fibre, cloth, yarn, purified terepthalic
acid, mono ethylene glycolon, dyes & chemicals and other materials on a
weighted average method.
(c) Work-in-process and finished goods (including stock lying at our
own retail store)
Textile division-
Material costs included in the valuation are determined on the basis of
the average consumption rates closer to the year end so as to reflect
the fair approximation to the costs incurred. Costs of conversion and
other costs are determined on the basis of standard costs, adjusted for
variances between standard and actual costs, if material. Cost of ready
finished goods is determined on weighted average method.
PSF division-
Material cost included in the valuation are determined on the basis of
the weighted average rate and cost of conversion and other costs are
determined on the basis of average cost of conversion of the last
month.
(d) Real estate under development
Real estate under development comprises undivided interest in the
freehold land at market value, determined at the rate at which it was
converted from fixed assets into stock-in-trade and expenditure
relating to construction. Cost of land and construction/ development is
charged to Statement of Profit and Loss proportionate to area sold and
at the time when corresponding revenue is recognised.
(k) Foreign currency transactions
(i) Transactions in foreign currency are recorded at standard exchange
rates determined monthly. Monetary assets and liabilities denominated
in foreign currency, remaining unsettled at the period end are
translated at closing rates. The difference in translation of all
monetary assets and liabilities and realised gains and losses on
foreign currency transactions are recognised in the Statement of Profit
& Loss.
(ii) Forward exchange contracts other than those entered into to hedge
foreign currency risk of firm commitments or highly probable forecast
transactions are translated at period end exchange rates and the
resultant gains and losses as well as the gains and losses on
cancellation of such contracts are recognised in the Statement of
Profit and Loss. Premium or discount on such forward exchange contracts
is amortised as income or expense over the life of the contract.
Forward exchange contracts entered into to hedge foreign currency risk
of firm commitments or highly probable forecast transactions are
treated as derivative financial instruments.
(iii) The company used forward foreign exchange contracts to hedge its
exposure against movements in foreign exchange rates.
(l) Derivative Financial Instruments and Hedging
The Company enters into derivative financial instruments to hedge
foreign currency risk of firm commitments and highly probable forecast
transactions. The method of recognizing the resulting gain or loss
depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The
carrying amount of a derivative designated as a hedge is presented as a
current asset or liability. The company does not enter into any
derivatives for trading purposes.
Cash Flow Hedge
Forward exchange contracts entered into to hedge foreign currency risks
of firm commitments or highly probable forecast transactions, that
qualify as cash flow hedges are recorded in accordance with the
principles of hedge accounting enunciated in Accounting Standard (AS)
30 - Financial Instruments Recognition and Measurement. The gains or
losses on designated hedging instruments that qualify as effective
hedges is recorded in the Hedging Reserve account and is recognized in
the Statement of Profit and Loss in the same period or periods during
which the hedged transaction affects profit or loss.
Gains or losses on the ineffective hedge transactions are immediately
recognized in the Statement of Profit and Loss. When a forecasted
transaction is no longer expected to occur, the gains and losses that
were previously recognized in the Hedging Reserve are transferred to
the Statement of Profit and Loss immediately.
(m) Employees benefits
(i) Short term employee benefits:
Short term employee benefits 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.
(ii) Post-employment benefits:
(I) Defined Contribution Plan:
a) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post
employment benefits in respect of provident and family pension fund, in
which both the employees and the Company make monthly contributions at
a specified percentage of the employees'' eligible salary (currently 12%
of employees'' eligible salary). The contributions are made to the
provident fund and pension fund set up as irrevocable trust by the
Company or to respective Regional Provident Fund Commissioner. The
Company has no further obligations beyond making the contribution,
except that any shortfall in the fund assets based on the Government
specified minimum rates of return in respect of provident fund set up
by the Company, and the Company recognises such contributions and
shortfall, if any, as an expense in the year incurred.
b) Superannuation
The eligible employees of the Company are entitled to receive post
employment benefits in respect of superannuation fund in which the
Company makes annual contribution at a specified percentage of the
employees'' eligible salary (currently 10% or 15 % of employees''
eligible salary). The contributions are made to the Superannuation fund
set up as irrevocable trust by the Company. Superannuation is
classified as Defined Contribution Plan as the Company has no further
obligations beyond making the contribution. The Company''s contribution
to Defined Contribution Plan is charged to Statement of Profit and Loss
as incurred.
(II) Defined Benefit Plan:
a) Gratuity
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to
15 days or 30 days salary payable for each completed year of service.
Vesting occurs upon completion of five years of service. The
Contributions are made to the Gratuity Fund set up as irrevocable trust
by the Company. The Company accounts for gratuity benefits payable in
future on the basis of an actuarial valuation by an independent actuary
at the year end, which is calculated using Project Unit Credit Method.
Actuarial gains and losses which comprise experience adjustment and the
effect of change in actuarial assumptions are recognised in the
Statement of Profit and Loss.
b) Other long-term employee benefits - compensated absences
The Company provides for encashment of leave or leave with pay subject
to certain rules. The employees are entitled to accumulate leave
subject to certain limits for future encashment/ availment. The Company
makes provision for compensated absences based on an actuarial
valuation by an independent actuary at the year end, which is
calculated using Project Unit Credit Method. Actuarial gains and losses
which comprise experience adjustment and the effect of change in
actuarial assumptions are recognised in the Statement of Profit and
Loss.
c) Termination Benefits
The Company provides for compensation payable as part of termination
benefits when it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation.
Termination benefits falling due more than twelve months after the
balance sheet date are provided on the basis of an actuarial valuation
by an independent actuary as at the year-end using Project Unit Credit
Method.
(n) Employee share based payments
Equity settled stock options granted under the Company''s Employee stock
option (ESOP) scheme are accounted as per the accounting treatment
prescribed by SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting
for Employee Share based payments issued by ICAI. The Company measures
compensation cost relating to employee stock options using the
intrinsic value method and compensation expense, if any, is amortised
over the vesting period of the option on a straight line basis.
(o) Taxation
Tax expense comprises current and deferred tax. Current tax is measured
at the amount expected to be paid in accordance with the Income-tax
Act, 1961. Deferred income taxes reflects the impact of current year
timing differences between taxable income and accounting income for the
year and reversal of timing differences of earlier years. Deferred tax
is measured based on the tax rate and tax laws enacted or substantially
enacted at the balance sheet date. Deferred tax assets are recognised
only to the extent that there is reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realised. Deferred tax assets are not recognised on
unabsorbed depreciation and carry forward of losses unless there is
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
(p) Provisions and Contingent Liabilities
A provision is recognised when the enterprise 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
their present values and are determined based on management estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company.
(q) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments/ receipts are recognised as
an expense/ income in the Statement of Profit and Loss on a
straight-line basis over the lease term.
(r) Government Grants
Grants in the nature of subsidies related to revenue are recognized in
the Statement of Profit and Loss over the period in which the
corresponding costs are incurred and are recorded on accrual basis.
(s) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits with banks
and short term highly liquid investments, which are readily convertible
into cash and have original maturities of three months or less.
(t) Earnings per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to the equity shareholders by the
weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the
period is adjusted for events, such as bonus issue, bonus element in a
rights issue and shares split that have changed the number of equity
shares outstanding, without a corresponding change in resources. For
the purpose of calculating Diluted Earnings per share, the net profit
or loss for the period attributable to the equity shareholders and the
weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
(u) Segment Reporting
The Accounting Policies adopted for segment reporting are in line with
the Accounting Policies of the Company. Segment assets include all
operating assets used by the business segments and consist principally
of fixed assets, debtors and inventories. Segment liabilities include
the operating liabilities that result from the operating activities of
the business. Segment assets and liabilities that cannot be allocated
between the segments are shown as part of unallocated corporate assets
and liabilities respectively. Income / Expenses relating to the
enterprise as a whole and not allocable on a reasonable basis to
business segments are reflected as unallocated corporate income /
expenses. Inter-segment transfers are accounted at prevailing market
prices.
Mar 31, 2012
(a) Basis of accounting
The financial statements are prepared under the historical cost convention, on an accrual basis, in accordance with Generally Accepted Accounting Principles in India and are in accordance with the requirements of the Companies Act, 1956 and comply with the Accounting Standards.
(b) Use of Estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported balances of assets, liabilities and contingent liabilities as of the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Actual results could differ from the estimates.
(c) Revenue recognition
Revenue from sales is recognized when the significant risks and rewards of ownership of the goods are transferred to the customers.
(d) Revenue from real estate activity
Revenue from real estate is recognized on the transfer of all significant risks and rewards of ownership to the buyers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration.
The freehold land under Real Estate Development planned for sale, is converted from fixed assets into stock-in-trade at market value. The difference between the market value and cost of that part of freehold land is credited to revaluation reserve. Revenue arising on sale of undivided interest in the underlying freehold land pertaining to flats / office premises, which are under construction, is being accounted on the percentage of completion method.
Revenue from construction activity is recognized on the 'Percentage of Completion Method' of accounting. Revenue is recognized in relation to the sold areas only, on the basis of percentage of cost incurred as against the total cost of project (including land). Revenue is recognized if the cost incurred is in excess of 25% of the total estimated cost. The estimates of saleable area and cost of construction are revised periodically by the management. The effect of such changes to estimates is recognized in the period such changes are determined. The estimated cost of construction as determined, is based on management's estimate of the cost expected to be incurred till the final completion and includes cost of materials, service and other related overheads. Unbilled costs are carried as real estate work in progress.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project / activity and the foreseeable losses to completion.
(e) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever applicable) less accumulated depreciation and impairment losses, if any. The cost includes cost of acquisition, construction, erection, installation etc, preoperative expenses (including trial run) and borrowing costs incurred during construction period.
(f) Depreciation
Depreciation on fixed assets other than furniture and motor vehicles is provided under the straight line method in a manner that amortizes the cost of the assets after commissioning, over their estimated useful lives or lives based on the rates specified in Schedule XIV to the Companies Act, 1956, whichever is higher. Depreciation on furniture and motor vehicles is provided on the written down value method at the rates specified in Schedule XIV to the Companies Act, 1956. Useful lives as estimated by the management are as under:
(i) Assets of retail shops including leasehold improvement - 6 years
(ii) Movable site offices - 10 years
(iii) Computer software - 5 years
(iv) Technical know-how - 10 years
(v) Lease hold land -lease period namely 95 years
The Textile processing plant at Ranjangaon has been treated as a Continuous process plant based on technical assessment.
(g) Impairment
The carrying amounts of the Company's tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the Statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.
(h) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalized. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognized as an expense in the period in which they are incurred.
(i) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognize a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value and the resultant decline if any is charged to revenue.
(j) Inventories
(i) Inventories are valued at lower of cost and net realizable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on a weighted average method.
(b) Raw Materials
- cotton, fibre, cloth, yarn, purified terepthalic acid, mono ethylene glycolon, dyes & chemicals and other materials on a weighted average method.
(c) Work-in-process and finished goods Textile division-
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the yearend so as to reflect the fair approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of inventory at retail outlets is determined on a 'retail method', by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready finished cloth is determined by a combination of specific identification plus weighted average method.
PSF division-
Material cost included in the valuation are determined on the basis of the weighted average rate and cost of conversion and other costs are determined on the basis of average cost of conversion of the last month.
(d) Real estate under development
Real estate under development comprises undivided interest in the freehold land at market value, determined at the rate at which it was converted from fixed assets into stock-in-trade and expenditure relating to construction. Cost of land and construction/development is charged to Statement of Profit and Loss proportionate to area sold and at the time when corresponding revenue is recognized.
(k) Foreign currency transactions
(i) Transactions in foreign currency are recorded at exchange rates on the date of transaction. Monetary assets and liabilities denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of all monetary assets and liabilities and realized gains and losses on foreign currency transactions are recognized in the Statement of Profit and Loss.
(ii) Forward exchange contracts other than those entered into to hedge foreign currency risk of firm commitments or highly probable forecast transactions are translated at period end exchange rates and the resultant gains and losses as well as the gains and losses on cancellation of such contracts are recognized in the Statement of Profit and Loss. Premium or discount on such forward exchange contracts is amortized as income or expense over the life of the contract.
(iii) The company used forward foreign exchange contract to hedge its exposure against movements in foreign exchange rates.
(l) Accounting for Derivatives
The Company enters into derivative financial instruments to hedge foreign currency risk of firm commitments and highly probable forecast transactions. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The carrying amount of a derivative designated as a hedge is presented as a current asset or liability. The company does not enter into any derivatives for trading purposes.
Cash Flow Hedge
Forward exchange contracts entered into to hedge foreign currency risks of firm commitments or highly probable forecast transactions, that qualify as cash flow hedges are recorded in accordance with the principles of hedge accounting enunciated in Accounting Standard (AS) 30 - Financial Instruments Recognition and Measurement. The gains or losses on designated hedging instruments that qualify as effective hedges is recorded in the Hedging Reserve account and is recognized in the Statement of Profit and Loss in the same period or periods during which the hedged transaction affects profit or loss.
Gains or losses on the ineffective hedge transactions are immediately recognized in the Statement of Profit and Loss. When a forecasted transaction is no longer expected to occur the gains and losses that were previously recognized in the Hedging Reserve are transferred to the Statement of Profit and Loss immediately.
(m) Employees benefits
(i) Short term employee benefits:
Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.
(ii) Post-employment benefits:
(I) Defined Contribution Plan:
a) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employees' eligible salary (currently 12% of employees' eligible salary). The contributions are made to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner. The Company has no further obligations beyond making the contribution, except that any shortfall in the fund assets based on the Government specified minimum rates of return in respect of provident fund set up by the Company, and the Company recognizes such contributions and shortfall, if any, as an expense in the year incurred.
b) Superannuation
The eligible employees of the Company are entitled to receive post employment benefits in respect of superannuation fund in which the Company makes annual contribution at a specified percentage of the employees' eligible salary (currently 10% or 15 % of employees' eligible salary). The contributions are made to the Superannuation fund set up as irrevocable trust by the Company. Superannuation is classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Company's contribution to Defined Contribution Plan is charged to Statement of Profit and Loss as incurred.
(II) Defined Benefit Plan:
a) Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days or 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Contributions are made to the Gratuity Fund set up as irrecoverable trust by the Company. The Company accounts for gratuity benefits payable in future on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognized in the Statement of Profit and Loss.
b) Other long-term employee benefits - compensated absences
The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ a ailment. The Company makes provision for compensated absences based on an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit Method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognized in the Statement of Profit and Loss.
(n) Taxation
Tax expense comprises current and deferred tax. Current tax is measured at the amount expected to be paid in accordance with the Income-tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
(o) Provisions and Contingent Liabilities
A provision is recognized when the enterprise 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 their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.
(p) Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets, are classified as operating leases. Operating lease payments/receipts are recognized as an expense/income in the Statement of Profit and Loss on a straight-line basis over the lease term.
(q) Government Grants
Grants in the nature of subsidies related to revenue are recognized in the Statement of Profit and Loss over the period in which the corresponding costs are incurred and are recorded on accrual basis.
(r) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits with banks and short term highly liquid investments, which are readily convertible into cash and have original maturities of three months or less.
Mar 31, 2011
(1) Basis of accounting
The financial statements are prepared under the historical cost convention, on an accrual basis, in accordance with Generally Accepted Accounting Principles in India and are in accordance with the requirements of the Companies Act, 1956 and comply with the Accounting Standards.
(2) Use of Estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Actual results could differ from the estimates.
(3) Revenue recognition
Revenue from sales is recognised when the signifi cant risks and rewards of ownership of the goods are transferred to the customers.
(4) Revenue from real estate activity
Revenue from real estate is recognised on the transfer of all signifi cant risks and rewards of ownership to the buyers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration.
The freehold land under Real Estate Development planned for sale, is converted from fixed assets into stock-in-trade at market value. The difference between the market value and cost of that part of freehold land is credited to revaluation reserve. Revenue arising on sale of undivided interest in the underlying freehold land pertaining to flats / office premises, which are under construction, is being accounted when agreement for sale for such flats / office premises, is entered into with a corresponding release from revaluation reserve.
Revenue from construction activity is recognised on the 'Percentage of Completion Method' of accounting. Revenue is recognised in relation to the sold areas only, on the basis of percentage of actual cost incurred as against the total estimated cost of construction. Revenue is only recognised if the actual cost incurred is in excess of 25% of the total estimated cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognised in the period such changes are determined. The estimated cost of the construction as determined, is based on management's estimate of the cost expected to be incurred till the fi nal completion and includes cost of materials, service and other related overheads. Unbilled costs are carried as real estate work in progress.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project / activity and the foreseeable losses to completion.
(5) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever applicable) less accumulated depreciation and impairment losses, if any. The cost includes cost of acquisition, construction, erection, installation etc, preoperative expenses (including trial run) and borrowing costs incurred during construction period.
(6) Depreciation
Depreciation on fixed assets other than furniture and motor vehicles is provided under the straight line method in a manner that amortises the cost of the assets after commissioning, over their estimated useful lives or lives based on the rates specifi ed in Schedule XIV to the Companies Act, 1956, whichever is higher. Depreciation on furniture and motor vehicles is provided on the written down value method at the rates specifi ed in Schedule XIV to the Companies Act, 1956. Useful lives as estimated by the management are as under:
(i) Assets of retail shops including leasehold improvement - 6 years
(ii) Computer software - 5 years
(iii) Technical know-how - 10 years
(iv) Leases hold land - lease period namely 95 years
The Textile processing plant at Ranjangaon has been treated as a Continuous process plant based on technical assessment.
(7) Impairment
The carrying amounts of the Company's tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.
(8) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(9) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognise a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value and the resultant decline, if any, is charged to revenue.
(10) Inventories
(i) Inventories are valued at lower of cost and net realisable value. (ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on a weighted average method.
(b) Raw Materials
- cotton, fi bre, cloth, yarn, purifi ed terepthalic acid,mono ethylene glycolon, dyes & chemicals and other materials on a weighted average method.
(c) Work-in-process and fi nished goods Textile division- Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to refl ect the fair approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of inventory at retail outlets is determined on a 'retail method', by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready fi nished cloth is determined by a combination of Specific identifi cation plus weighted average method.
PSF division- Material cost included in the valuation are determined on the basis of the weighted average rate and cost of conversion and other costs are determined on the basis of average cost of conversion of the last month.
(d) Real estate under development- Real estate under development comprises undivided interest in the freehold land at market value, determined at the rate at which it was converted from fixed assets into stock-in-trade and expenditure relating to construction. Cost of land and construction/ development is charged to Profit and loss account proportionate to area sold and at the time when corresponding revenue is recognised.
(11) Foreign currency transactions
(i) Transactions in foreign currency are recorded at exchange rates on the date of transaction. Monetary assets and liabilities denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of all monetary assets and liabilities and realised gains and losses on foreign currency transactions are recognised in the Profit & Loss Account.
(ii) Forward exchange contracts other than those entered into to hedge foreign currency risk of fi rm commitments or highly probable forecast transactions are translated at period end exchange rates and the resultant gains and losses as well as the gains and losses on cancellation of such contracts are recognised in the Profit and Loss Account. Premium or discount on such forward exchange contracts is amortised as income or expense over the life of the contract.
(iii) The company used forward foreign exchange contract to hedge its exposure against movements in foreign exchange rates.
(12) Accounting for Derivatives
The Company enters into derivative financial instruments to hedge foreign currency risk of fi rm commitments and highly probable forecast transactions. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The carrying amount of a derivative designated as a hedge is presented as a current asset or liability. The company does not enter into any derivatives for trading purposes.
Cash Flow Hedge
Forward exchange contracts entered into to hedge foreign currency risks of fi rm commitments or highly probable forecast transactions, that qualify as cash fl ow hedges are recorded in accordance with the principles of hedge accounting enunciated in Accounting Standard (AS) 30 - Financial Instruments Recognition and Measurement. The gains or losses on designated hedging instruments that qualify as effective hedges is recorded in the Hedging Reserve account and is recognized in the statement of Profit and Loss in the same period or periods during which the hedged transaction affects Profit or loss.
Gains or losses on the ineffective hedge transactions are immediately recognized in the Profit and Loss account. When a forecasted transaction is no longer expected to occur the gains and losses that were previously recognized in the Hedging Reserve are transferred to the statement of Profit and Loss immediately.
(13) Employees benefits
(i) Short term employee benefits:
Short term employee benefits are recognised as an expense at the undiscounted amount in the Profit and loss account of the year in which the related service is rendered.
(ii) Post-employment benefits:
(I) Defi ned Contribution Plan:
a) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both the employees and the Company make monthly contributions at a specifi ed percentage of the employees' eligible salary (currently 12% of employees' eligible salary). The contributions are made to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner. The Company has no further obligations beyond making the contribution, except that any shortfall in the fund assets based on the Government specifi ed minimum rates of return in respect of provident fund set up by the Company, and the Company recognises such contributions and shortfall, if any, as an expense in the year incurred.
b) Superannuation
The eligible employees of the Company are entitled to receive post employment benefits in respect of superannuation fund in which the Company makes annual contribution at a specifi ed percentage of the employees' eligible salary (currently 10% or 15 % of employees' eligible salary). The contributions are made to the Superannuation fund set up as irrevocable trust by the Company. Superannuation is classifi ed as Defi ned Contribution Plan as the Company has no further obligations beyond making the contribution. The Company's contribution to Defi ned Contribution Plan is charged to Profit and loss account as incurred.
(II) Defi ned Benefit Plan:
a) Gratuity
The Company has an obligation towards gratuity, a defi ned benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days or 30 days salary payable for each completed year of service. Vesting occurs upon completion of fi ve years of service. The Contributions are made to the Gratuity Fund set up as irrecoverable trust by the Company. The Company accounts for gratuity benefits payable in future on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognised in the Profit and loss account.
b) Other long-term employee benefits - compensated absences
The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ availment. The Company makes provision for compensated absences based on an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit Method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognised in the Profit and loss account.
(14) Taxation
Tax expense comprises current and deferred tax. Current tax is measured at the amount expected to be paid in accordance with the Income- tax Act, 1961. Deferred income taxes refl ects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realised.
(15) Provisions and Contingent Liabilities
A provision is recognised when the enterprise has a present obligation as a result of past event and it is probable that an outfl ow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to refl ect the current management estimates.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confi rmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.
(16) Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets, are classifi ed as operating leases. Operating lease payments/receipts are recognised as an expense/income in the Profit and Loss Account on a straight-line basis over the lease term.
(17) Government Grants
Grants in the nature of subsidies related to revenue are recognized in the Profit and loss account over the period in which the corresponding costs are incurred and are recorded on accrual basis.
Mar 31, 2010
(1) Basis of accounting
The financial statements are prepared under the historical cost convention, on an accrual basis, in accordance with Generally Accepted Accounting Principles in India and are in accordance with the requirements of the Companies Act, 1956 and comply with the Accounting Standards.
(2) Use of estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Actual results could differ from the estimates.
(3) Revenue recognition
Revenue from sales is recognised when the significant risks and rewards of ownership of the goods are transferred to the customers.
(4) Revenue from real estate activity
Revenue from real estate is recognised on the transfer of all significant risks and rewards of ownership to the buyers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration.
The freehold land under Real Estate Development planned for sale, is converted from fixed assets into stock-in-trade at market value. The difference between the market value and cost of that part of freehold land is credited to revaluation reserve. Revenue arising on sale of undivided interest in the underlying freehold land pertaining to flats / office premises, which are under construction, is being accounted when agreement for sale for such flats / office premises, is entered into with a corresponding release from revaluation reserve.
Revenue from construction activity is recognised on the Percentage of Completion Method of accounting. Revenue is recognised in relation to the sold areas only, on the basis of percentage of actual cost incurred as against the total estimated cost of construction. Revenue is only recognised if the actual cost incurred is in excess of 25% of the total estimated cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognised in the period such changes are determined. The estimated cost of the construction as determined, is based on managements estimate of the cost expected to be incurred till the final completion and includes cost of materials, service and other related overheads. Unbilled costs are carried as real estate work in progress.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project / activity and the foreseeable losses to completion.
(5) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever applicable) less accumulated depreciation and impairment losses, if any. The cost includes cost of acquisition, construction, erection, installation etc, preoperative expenses (including trial run) and borrowing costs incurred during construction period.
(6) Depreciation
Depreciation on fixed assets other than furniture and motor vehicles is provided under the straight line method in a manner that amortises
the cost of the fixed assets after commissioning, over their estimated useful lives or lives based on the rates specified in Schedule XIV to
the Companies Act, 1956, whichever is higher. Depreciation on furniture and motor vehicles is provided on the written down value method
at the rates specified in Schedule XIV to the Companies Act, 1956. Useful lives as estimated by the management are as under:
(i) Assets of retail shops including leasehold improvement - 6 years
(ii) Computer software - 5 years
(iii) Technical know-how - 10 years
(iv) Lease hold land - lease period namely 95 years
The Textile processing plant at Ranjangaon has been treated as a Continuous process plant based on technical assessment.
(7) Impairment
The carrying amounts of the Companys tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.
(8) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(9) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognise a decline, other than temporary, in value of
long term investments, where applicable. (ii) Current investments are stated at lower of cost and fair value and the resultant decline if any is charged to revenue.
(10) Inventories
(i) Inventories are valued at lower of cost and net realisable value. (ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on a weighted average method.
(b) Raw Materials
cotton, fibre, purified terepthalic acid,mono ethylene glycolon, dyes & chemicals and other materials on a weighted average method.
cloth and yarn on a first-in first-out method.
(c) Work-in-process and finished goods Textile division- Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of inventory at retail outlets is determined on a retail method, by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready finished cloth is determined by a combination of specific identification plus weighted average method.
PSF division- Material cost included in the valuation are determined on the basis of the weighted average rate and cost of conversion and other costs are determined on the basis of average cost of conversion of the last month.
(d) Real estate under development
Real estate under development comprises undivided interest in the freehold land at market value, determined at the rate at which it was converted from fixed assets into stock-in-trade and expenditure relating to construction. Cost of land and construction/ development is charged to profit and loss account proportionate to area sold and at the time when corresponding revenue is recognised.
(12) Accounting for Derivatives
The Company enters into derivative financial instruments to hedge foreign currency risk of firm commitments and highly probable forecast transactions. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The carrying amount of a derivative designated as a hedge is presented as a current asset or liability. The company does not enter into any derivatives for trading purposes.
Cash Flow Hedge
Forward exchange contracts entered into to hedge foreign currency risks of firm commitments or highly probable forecast transactions, that qualify as cash flow hedges are recorded in accordance with the principles of hedge accounting enunciated in Accounting Standard (AS) 30 - Financial Instruments Recognition and Measurement. The gains or losses on designated hedging instruments that qualify as effective hedges is recorded in the Hedging Reserve account and is recognized in the statement of Profit and Loss in the same period or periods during which the hedged transaction affects profit or loss.
Gains or losses on the ineffective hedge transactions are immediately recognized in the Profit and Loss account. When a forecasted transaction is no longer expected to occur the gains and losses that were previously recognized in the Hedging Reserve are transferred to the statement of Profit and Loss immediately.
(13) Employees benefits
(i) Short term employee benefits:
Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.
(ii) Post-employment benefits:
(I) Defined Contribution Plan:
a) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employees eligible salary (currently 12% of employees eligible salary). The contributions are made to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner. The Company has no further obligations beyond making the contribution, except that any shortfall in the fund assets based on the Government specified minimum rates of return in respect of provident fund set up by the Company, and the Company recognises such contributions and shortfall, if any, as an expense in the year incurred.
b) Superannuation
The eligible employees of the Company are entitled to receive post employment benefits in respect of superannuation fund in which the Company makes annual contribution at a specified percentage of the employees eligible salary (currently 10% or 15 % of employees eligible salary). The contributions are made to the Superannuation fund set up as irrevocable trust by the Company. Superannuation is classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Companys contribution to Defined Contribution Plan is charged to profit and loss account as incurred.
(II) Defined Benefit Plan:
a) Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days or 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Contributions are made to the Gratuity Fund set up as irrecoverable trust by the Company. The Company accounts for gratuity benefits payable in future on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognised in the profit and loss account.
b) Other long-term employee benefits - compensated absences
The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ availment. The Company makes provision for compensated absences based on an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit Method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognised in the profit and loss account.
(iii) Termination benefits
Compensation to employees who have opted for retirement under the Voluntary Retirement Scheme (VRS) of the Company is being written off equally over a period of five years from the date of incurrence or upto 31st March, 2010, whichever is shorter. The VRS incurred during 2006-07 and 2007-08 relating to Textile Mills and New Bleach Works is carried as development cost of the land, as the Company proposes to carry out real estate development at Textile Mills and New Bleach Works.
(14) Taxation
Tax expense comprises current, deferred and fringe benefit tax. Current tax and fringe benefit tax is measured at the amount expected to be paid in accordance with the Income-tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.
(15) Provisions and Contingent Liabilities
A provision is recognised when an enterprise 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 their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.
(16) Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets, are classified as operating leases. Operating lease payments/receipts are recognised as an expense/income in the Profit and Loss Account on a straight- line basis over the lease term.
(17) Government Grants
Grants in the nature of subsidies related to revenue are recognized in the profit and loss account over the period in which the corresponding costs are incurred and are recorded on accrual basis.
Mar 31, 2009
(1) Basis of accounting
The financial statements are prepared under the historical cost convention, on an accrual basis, in accordance with Generally Accepted Accounting Principles in India and are in accordance with the requirements of the Companies Act, 1956 and comply with the Accounting Standards.
(2) Use of Estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Actual results could differ from the estimates.
(3) Revenue recognition
Revenue from sales is recognised when the significant risks and rewards of ownership of the goods are transferred to the customers.
(4) Revenue from real estate activity
Revenue from real estate is recognised on the transfer of all significant risks and rewards of ownership to the buyers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration.
The freehold land under Real Estate Development planned for sale, is converted from fixed assets into stock-in-trade at market value. The difference between the market value and cost of that part of freehold land is credited to revaluation reserve. Revenue arising on sale of undivided interest in the underlying freehold land pertaining to flats / office premises, which are under construction, is being accounted when agreement for sale for such flats / office premises, is entered into with a corresponding release from revaluation reserve.
Revenue from construction activity is recognised on the Percentage of Completion Method of accounting. Revenue is recognised in relation to the sold areas only, on the basis of percentage of actual cost incurred as against the total estimated cost of construction. Revenue is only recognised if the actual cost incurred is in excess of 25% of the total estimated cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognised in the period such changes are determined. The estimated cost of the construction as determined, is based on managements estimate of the cost expected to be incurred till the final completion and includes cost of materials, service and other related overheads. Unbilled costs are carried a*s real estate work in progress.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project / activity and the foreseeable losses to completion.
(5) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever applicable) less accumulated depreciation and impairment losses, if any. The cost includes cost of acquisition, construction, erection, installation etc, preoperative expenses (including trial run) and borrowing costs incurred during construction period.
(6) Depreciation
Depreciation is provided on fixed assets in a manner that amortises the cost of the assets after commissioning, over their estimated useful lives or, where specified, lives based oh the rates specified in Schedule XIV to the Companies Act, 1956, whichever is lower, on a straight line method on machinery and buildings and on a written down value method on other assets; except in respect of following assets:
(i) Assets of retail shops including leasehold improvement are being depreciated over the period of six years.
(ii) Computer software is being amortised over a period of 5 years being the estimated useful life.
(iii) Technical know-how is being amortised over a period of 10 years
(iv) Lease hold land is being amortised over the period of the lease namely 95 years.
(7) Impairment
The carrying amounts of the Companys tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss, if any, is recognized in the statement of Profit and Loss in the period in which impairment takes place.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognized for the asset in prior accounting periods
(8) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(9) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognise a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value and the resultant decline if any is charged to revenue.
SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31 ST MARCH, 2009 AND THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON THAT DATE
SCHEDULE 18 (Contd.)
(10) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on a weighted average method.
(b) Raw Materials
cotton, fibre, purified terepthalic acid,mono ethylene glycolon, dyes & chemicals and other materials on a weighted average method.
cloth and yarn on a first-in first-out method.
(c) Work-in-process and finished goods Textile division- Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of inventory at retail outlets is determined on a retail method, by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready finished cloth is determined by a combination of specific identification plus weighted average method.
PSF division- Material cost included in the valuation are determined on the basis of the weighted average rate and cost of conversion and other costs are determined on the basis of average cost of conversion of the last month.
(d) Real estate under development
Real estate under development comprises undivided interest in the freehold land at market value, determined at the rate at which it was converted from fixed assets into stock-in-trade and expenditure relating to construction. Cost of land and construction/ development is charged to profit and loss account proportionate to area sold and at the time when corresponding revenue is recognised.
(12) Accounting for Derivatives
The Company enters into derivative financial instruments to hedge foreign currency risk of firm commitments and highly probable forecast transactions. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The carrying amount of a derivative designated as a hedge is presented as a current asset or liability. The company does not enter into any derivatives for trading purposes.
Cash Flow Hedge
Forward exchange contracts entered into to hedge foreign currency risks of firm commitments or highly probable forecast transactions, that qualify as cash flow hedges are recorded in accordance with the principles of hedge accounting enunciated in Accounting Standard (AS) 30 - Financial Instruments Recognition and Measurement. The gains or losses on designated hedging instruments that qualify as effective hedges is recorded in the Hedging Reserve account and is recognized in the statement of Profit and Loss in the same period or periods during which the hedged transaction affects profit or loss.
Gains or losses on the ineffective hedge transactions are immediately recognized in the Profit and Loss account. When a forecasted transaction is no longer expected to occur the gains and losses that were previously recognized in the Hedging Reserve are transferred to the statement of Profit and Loss immediately.
(13) Employees benefits
(i) Short term employee benefits:
Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.
SCHEDULE 18 (Contd.)
(ii) Post-employment benefits:
(a) Defined Contribution Plan:
I) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employees eligible salary (currently 12% of employees eligible salary). The contributions are made to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner. The Company has no further obligations beyond making the contribution, except that any shortfall in the fund assets based on the Government specified minimum rates of return in respect of provident fund set up by the Company, and the Company recognises such contributions and shortfall, if any, as an expense in the year incurred.
II) Superannuation
The eligible employees of the Company are entitled to receive post employment benefits in respect of superannuation fund in which the Company makes annual contribution at a specified percentage of the employees eligible salary (currently 10% or 15 % of employees eligible salary). The contributions are made to the Superannuation fund set up as irrevocable trust by the Company. Superannuation is classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Companys contribution to Defined Contribution Plan is charged to profit and loss account as incurred.
(b) Defined Benefit Plan:
I) Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days or 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Contributions are made to the Gratuity Fund set up as irrecoverable trust by the Company. The Company accounts for gratuity benefits payable in future on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognised in the profit and loss account.
II) Other long-term employee benefits - compensated absences
The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ availment. The Company makes provision for compensated absences based on an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit Method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognised in the profit and loss account. (iii) Termination benefits Compensation to employees who have opted for retirement under the Voluntary Retirement Scheme (VRS) of the Company is being written off equally over a period of five years from the date of incurrence or upto 31st Marbh, 2010, whichever is shorter. In respect of VRS incurred during 2006-07 and 2007-08 relating to Textile Mills and New Bleach Works is carried as development cost of the land, as the Company proposes to carry out real estate development at Textile Mills and New Bleach Works.
(14) Taxation
Tax expense comprises current, deferred and fringe benefit tax. Current tax and fringe benefit tax is measured at the amount expected to be paid in accordance with the Income-tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.
(15) Provisions and Contingent Liabilities
A provision is recognised when an enterprise 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 their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.
(16) Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets, are classified as operating leases. Operating lease payments/receipts are recognised as an expense/income in the Profit and Loss Account on a straight- line basis over the lease term.
(17) Government Grants
Government grants related to fixed assets are recorded as a deduction from the gross value of the assets and grants in the nature of subsidies related to revenue are recognised in the profit & loss account over the period in which the corresponding costs are incurred. The grants are recognized on accrual basis when the claims for incentives are lodged.
Mar 31, 2008
(1) Basis of accounting
The financial statements are prepared under the historical cost convention on an accrual basis and are in accordance with the requirements of the Companies Act, 1956 and comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the said Act.
(2) Revenue recognition
Revenue from sales is recognised when the significant risks and rewards of ownership of the goods are transferred to the customers.
(3) Revenue from real estate activity
The freehold land under Real Estate Development planned for sale, is converted from fixed assets into stock-in-trade at market value. The difference between the market value and cost of that part of freehold land is credited to revaluation reserve. Revenue arising on sale of undivided interest in the underlying freehold land pertaining to flats, which are yet to be constructed, is being accounted when agreement for sale for such flats is entered into with a corresponding release from revaluation reserve.
Revenue from construction activity is recognised on the Percentage of Completion Method of accounting. Revenue is recognised in relation to the sold areas only, on the basis of percentage of actual cost incurred as against the total estimated cost of construction. Revenue is only recognised if the actual cost incurred is in excess of 25% of the total estimated cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognised in the period such changes are determined. The estimated cost of the construction as determined, is based on managements estimate of the cost expected to be incurred till the final completion and includes cost of materials, service and other related overheads.
(4) Fixed assets
Fixed assets are stated at cost (net of cenvat credit wherever applicable) less accumulated depreciation and impairment losses, if any. The cost includes cost of acquisition, construction, erection, installation etc, preoperative expenses (including trial run) and borrowing costs incurred during pre-operational period. Also see Note 8 below.
(5) Depreciation
(a) Depreciation is provided on.fixed assets in a manner that amortises the cost of the assets after commissioning, over their estimated useful lives or, where specified, lives based on the rates specified in Schedule XIV to the Companies Act, 1956, whichever is lower, on a straight line method on machinery and buildings and on a written down value method on other assets except in respect of assets of the DMT Plant and assets of retail shops including leasehold improvement.
(b) Hitherto, consequent to the recognition of impairment loss in an earlier year, depreciation on assets of the DMT plant was being provided at such rates that would fully depreciate, on a straight line method, the block of assets over its revised balance useful life, estimated at 7 years and 9 months from 1st April, 2004. Consequent to sale of DMT plant, certain balance assets of DMT plant were redeployed for PSF plant and now being depreciated at the rates specified in Schedule XIV to the Companies Act, 1956 on a straight line method.
(c) Assets of retail shops including leasehold improvement are being depreciated over the period of six years.
(d) Computer software is being amortised over a period of 5 years being the estimated useful life.
(6) Expenditure during construction period
In case of new projects and substantial expansion of existing factories, expenditure incurred, including trial production expenses net of revenue earned, and attributable interest and financing costs, prior to commencement of commercial production are capitalised.
(7) Impairment
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arms length transaction between knowledgeable, willing parties, less the cost of disposal.
An assessment is also done at each balance sheet date whether there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. If any such indication exists, the assets recoverable amount is estimated. The carrying amount of the fixed assets is increased to the revised estimate of its recoverable amount, however, the same would be restricted to the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss is recognised in the profit and loss account.
After recognition of impairment loss or reversal of impairment loss, as applicable, the depreciation charge for the asset is adjusted in future periods to allocate the assets revised carrying amount less its residual value (if any), on a straight line basis over its remaining useful life.
(8) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(9) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognise a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value.
(10) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on a weighted average method.
(b) Raw Materials cotton, fibre, paraxylene and methanol on the basis of specific identification; * cloth and yarn on a first-in first-out method; and dyes & chemicals and other materials on a weighted average method.
(c) Work-in-process and finished goods
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of inventory at retail outlets is determined on a retail method, by reducing from the sales value of the inventory, an appropriate percentage of gross margin Cost of ready finished cloth is determined on a first-in first-out method.
(d) Real estate under development
Real estate under development comprises undivided interest in the freehold land at market value, determined at the rate at which it was converted from fixed assets into stock-in-trade and expenditure relating to construction. Cost of land and construction/ development is charged to profit and loss account proportionate to area sold and at the time when corresponding revenue is recognised.
(11) Foreign currency transactions
(i) Foreign currency monetary assets and liabilities are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credit in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed. The resultant exchange differences are recorded in the profit and loss account.
(ii) The Company uses forward foreign exchange contracts to hedge its exposure against movements in foreign exchange rates.
(iii) Premiums or discounts arising at the inception of forward foreign exchange contracts are amortised and recognised in the Profit and Loss Account over the period of the contract. Also, exchange difference on forward foreign exchange contracts i.e. the difference between (i) the foreign currency amount of the contract translated at the exchange rate at the reporting date or the settlement date where the transaction is settled during the reporting period, and (ii) the same foreign currency amount translated at the latter of the date of inception of the forward foreign exchange contract and last reporting date, is recognised in the profit and loss account.
(12) Accounting for Derivatives
During the year ended 31st March, 2008, The Institute of Chartered Accountants of India has issued an announcement on Accounting for Derivatives which, inter alia, requires provision to be made for losses on all derivative contracts outstanding at the balance sheet date by marking them to market keeping in view the principle of prudence, other than for forward contracts to which Accounting Standard (AS) 11 The Effect of Change in Foreign Exchange Rates is applicable (see Note 20 on Schedule 19).
(13) Employees benefits
(i) Short term employee benefits:
Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.
(ii) Post-employment benefits:
(I) Defined Contribution Plan:
a) Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employees eligible salary (currently 12% of employees eligible salary). The contributions are made to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner The Company has no further obligations beyond making the contribution, except that any shortfall in the fund assets based on the Government specified minimum rates of return in respect of provident fund set up by the Company, and the Company recognises such contributions and shortfall, if any, as an expense in the year incurred.
b) Superannuation
The eligible employees of the Company are entitled to receive post employment benefits in respect of superannuation fund in which the Company makes annual contribution at a specified percentage of the employees eligible salary (currently 10% or 15 % of employees eligible salary). The contributions are made to the Superannuation fund set up as irrevocable trust by the Company. Superannuation is classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Companys contribution to Defined Contribution Plan is charged to profit and loss account as incurred.
(13) (ii) Employees benefits (contd.)
(II) Defined Benefit Plan:
a) Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days or 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Contributions are made to the Gratuity Fund set up as irrecoverable trust by the Company. The Company accounts for gratuity benefits payable in future on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognised in the profit and loss account.
b) Other long-term employee benefits - compensated absences:
The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ availment. The Company makes provision for compensated absences based on an actuarial valuation by an independent actuary at the year end, which is calculated using Project Unit Credit Method. Actuarial gains and losses which comprise experience adjustment and the effect of change in actuarial assumptions are recognised in the profit and loss account. (iii) Termination benefits:
Compensation to employees who have opted for retirement under the Voluntary Retirement Scheme (VRS) of the Company is being written off equally over a period of five years from the date of incurrence or upto 31st March, 2010, whichever is shorter. In respect of VRS incurred during 2006-07 and 2007-08 relating to Textile Mills and New Bleach Works is carried as development cost of the land, as the Company proposes to carry out real estate development at Textile Mills and New Bleach Works (see Note 7 on Schedule 19).
(14) Employees Stock Option Scheme
The fair value of options granted under the Employees Stock Option Scheme has been deferred, to be written off over the vesting period
(15) Taxation
Tax expense comprises current, deferred and fringe benefit tax. Current tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.
(16) Provision
A provision is recognised when an enterprise 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 their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.
(17) Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets, are classified as operating leases Operating lease payments/receipts are recognised as an expense/income in the Profit and Loss Account on a straight-line basis over the lease term.
Mar 31, 2007
(1) Basis of accounting
The financial statements are prepared under the historical cost convention on an accrual basis and are in accordance with the requirements of the Companies Act, 1956 and comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the said Act.
(2) Revenue recognition
Revenue from sales is recognised when the significant risks and rewards of ownership of the goods are transferred to the customers.
(3) Revenue from real estate activity
In the previous year, a part of the freehold land under Real Estate Development had been converted from fixed assets into stock-in-trade at market value. The difference between the market value and cost of that part of freehold land was credited to revaluation reserve. Revenue arising on sale of undivided interest in the underlying freehold land pertaining to flats, which are yet to be constructed, is being accounted when agreement for sale for such flats is entered into with a corresponding release from revaluation reserve.
(4) Fixed assets
All fixed assets are stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use, net of CENVAT credit, less accumulated depreciation and impairment losses if any. Also see Note 8 below.
(5) Depreciation
(a) Depreciation is provided on fixed assets in a manner that amortises the cost of the assets after commissioning, over their estimated useful lives or, where specified, lives based on the rates specified in Schedule XIV to the Companies Act, 1956, whichever is lower, on a straight line method on machinery and buildings and on a written down value method on other assets except in respect of assets of the DMT Plant.
(b) Consequent to the recognition of impairment loss in an earlier year as stated in Note 15 on Schedule 19, depreciation on assets of the DMT Plant is being provided at such rates that would fully depreciate, on a straight line method, the block of assets over its revised balance useful life, estimated at 7 years and 9 months from 1st April, 2004.
(c) Computer software is being amortised over a period of 5 years being the estimated useful life.
(6) Expenditure during construction period
In case of new projects and substantial expansion of existing factories, expenditure incurred, including trial production expenses net of revenue earned, and attributable interest and financing costs, prior to commencement of commercial production are capitalised.
(7) Impairment
The carrying amounts of assess are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing parties, less the cost of disposal.
(8) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred
(9) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognise a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value.
(10) Inventories
(i) Inventories are valued at lower of cost and net realisable value,
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on a weighted average method.
(b) Raw Materials
- cotton, fibre, paraxylene and methanol on the basis of specific identification;
- cloth and yarn on a first-in first-out method; and
- dyes & chemicals and other materials on a weighted average method.
(c) Work-in-process and finished goods
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of inventory at retail outlets is determined on a `retail method', by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready finished cloth is determined on a first-in first-out method.
(d) Real estate under development
Real estate under development comprises undivided interest in the freehold land at market value, determined at the rate at which it was converted from fixed assets into stock-in-trade and expenditure relating to construction.
(11) Foreign currency transactions
(i) Foreign currency assets and liabilities are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credit in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed. The resultant exchange differences are recorded in the profit and loss account except in respect of fixed assets acquired from countries outside India where such differences are adjusted in the carrying amounts of the respective fixed assets.
(ii) The company uses forward foreign exchange contracts to hedge its exposure against movements in foreign exchange rates.
(iii) Premium or discount on forward foreign exchange contracts are amortised and recognised in the profit and loss account over the period of the contract except in respect of fixed assets acquired from countries outside India where such premium or discount are adjusted in the carrying amounts of the respective fixed assets.
(12) Retirement benefits
(i) Contributions for provident fund and superannuation (based on a percentage of salary) and gratuity (based on an actuarial valuation as at the year end) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability is accrued based on an actuarial valuation as at the year end.
(iii) Voluntary retirement compensation is being written off equally over a period of five years from the date of incurrence or upto 31st March, 2010, whichever is shorter period.
(13) Employees' Stock Option Scheme
The fair value of options granted under the Employees' Stock Option Scheme has been deferred, to be written off over the vesting period.
(14) Taxation
Tax expense comprises current, deferred and fringe benefit tax. Current tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.
(15) Provision
A provision is recognised when an enterprise 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 their present values and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.
(16) Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets, are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss Account on a straight-line basis over the lease term.
Mar 31, 2006
(1) Fixed assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use, net of CENVAT credit Also see Note 3 below.
(2) Depreciation
(a) Depreciation is provided on the straight line method on machinery and buildings and on the written down value method on other assets, at the rates prescribed in Schedule XIV to the Companies Act, 1956 except in respect of assets of the DMT division.
(b) Consequent to the recognition of impairment loss in the previous year as stated in Note 17 on Schedule 18, depreciation on assets of the DMT division is being provided at such rates that would fully depreciate, on the straight line method, the block of assets over its revised balance useful life, estimated at 7 years and 9 months from 1st April, 2004.
(3) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(4) Investments
(i) Long term investments are stated at cost Provision for diminition is made to recognise a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value.
(5) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows;
(a) Stores, spare parts and catalysts on the weighted average method.
(b) Raw Materials
- cotton, fibre, cloth & yarn, paraxylene and methanol on the basis of specific identification; and
- dyes & chemicals and other materials on the weighted average method.
(c) Work-in-process and finished goods
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of inventory at retail outlets is determined on the `retail method', by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready finished cloth is determined on the first-in first-out method.
(d) Real estate under development
Real estate under development comprises undivided interest in the freehold land at market value, determined at the rate at which it was converted from fixed assets into stock-in-trade and expenditure relating to construction.
(6) Revenue from real estate activity
The part of the freehold land when converted from fixed assets into stock-in-trade is stated at market value. The difference between the market value and cost of that part of freehold land is credited to revaluation reserve. Revenue arising on sale of undivided interest in the underlying freehold land pertaining to flats, which are yet to be constructed, is accounted when agreement for sale for such flats has been entered into with a corresponding release from revaluation reserve.
(7) Foreign currency transactions
(i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credit in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed. The resultant exchange deferences are recorded in the profit and loss account except in respect of fixed assets acquired from countries outside India where such deferences are adjusted in the carrying amounts of the respective fixed assets.
(i) The company uses forward foreign exchange contracts to hedge its exposure against movements in foreign exchange rates in order to reduce the risk associated with exchange fluctuations.
(ii) Premium or discount on forward foreign exchange contracts are amortised and recognised in the profit and loss account over the period of the contract except in respect of fixed assets acquired from countries outside India where such premium or discount are adjusted in the carrying amounts of the respective fixed assets.
(8) Retirement benefits
(i) Contributions for provident fund and superannuation (based on a percentage of salary) and gratuity (based on an actuarial valuation as at the year end) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability is accrued based on an actuarial valuation as at the year end.
(iii) Voluntary retirement compensation was being charged to the profit and loss account with a corresponding reversal of provision for voluntary separation payments created in an earlier year by adjustment from securities premium account. This year, the excess of the voluntary retirement compensation after reversal of the balance available provision is being written off equally over a period of 5 years [see Note 6 on Schedule 18].
(9) Employees' Stock Option Scheme
The fair value of options granted under the Employees' Stock Option Scheme has been deferred, to be written off over the vesting period.
Mar 31, 2005
(1) Fixed assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use, net of CENVAT credit. Also see Note 3 below.
(2) Depreciation
(a) Textile Division:
Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956, on the following basis:
Machinery and buildings acquired/purchased:
Pre 1974 Written down value method From 1974 onwards Straight line-method Other assets Written down value method
(b) DMT Division
(i) Consequent to the recognition of impairment loss as stated in Note 17 on Schedule 18, depreciation for the year on all the assets has been provided at the rate of 12.79% per annum, derived on the basis of the revised balance useful life of the block of assets, and on the straight line method. Until the previous year, depreciation was being provided at the rates prescribed in Schedule XIV to the Companies Act, 1956; on the straight line method for Machinery and buildings and on the written down value method for other assets.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(4) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognise a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value.
(5) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on the weighted average method.
(b) Raw Materials
- cotton, fibre, cloth & yarn, paraxylene and methanol on the basis of specific identification; and
- dyes & chemicals and other materials on the weighted average method.
(c) Work-in-process and finished goods
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of inventory at retail outlets is determined on the `retail method', by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready finished cloth is determined on the first-in first-out method.
(6) Foreign currency transactions
(i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.
(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets from a country outside India, exchange differences arising out of settlement/conversion at the exchange rates prevailing at the year end are adjusted to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of forward foreign exchange contracts are recognised as income or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(iv) Gains or losses in respect of forward foreign exchange contracts are recognised as income or expense over the life of the contract, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(7) Retirement benefits
(i) Contributions for provident fund and superannuation (based on a percentage of salary) and gratuity (based on an actuarial valuation as at the year end) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability is accrued based on an actuarial valuation as at the year end.
(8) Employee Stock Option Scheme
The fair value of option granted under Employee Stock Option Scheme has been deferred, to be written off over the vesting period.
Mar 31, 2004
(1) Fixed assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use, net of CENVAT credit. Also see Note 3 below.
(2) Depreciation
(i) Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the Companies Act,1956, as revised by Notification No. GSR 756(E) dated 16-12-1993 of the Department of Company Affairs, on the following basis:
Textile division assets D.M.T. division assets
Machinery and buildings acquired/purchased:
Pre 1974 Written down value method Not applicable 1974 to 31.3.1993 Straight line method Straight line method* From 1.4.1993 onwards Straight line method Straight line method Other assets Written down value method Written down value method
* At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(4) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognise a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value.
(5) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on the weighted average method.
(b) Raw Materials
- cotton, fibre, cloth & yarn, paraxylene and methanol on the basis of specific identification; and
- dyes & chemicals and other materials on the weighted average method.
(c) Work-in-process and finished goods
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of inventory at retail outlets is determined on the `retail method', by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready finished cloth is determined on the first-in first-out method.
(6) Foreign currency transactions
(i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.
(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, exchange differences arising out of settlement/conversion at the exchange rates prevailing at the year end are adjusted to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of forward foreign exchange contracts are recognised as income or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(iv) Gains or losses in respect of forward foreign exchange contracts are recognised as income or expense over the life of the contract, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(7) Retirement benefits
(i) Contributions for provident fund and superannuation (based on a percentage of salary) and gratuity (based on an actuarial valuation as at the year end) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability is accrued based on an actuarial valuation as at the year end.
(8) Employees' Stock Option Scheme
The fair value of options granted under Employees' Stock Option Scheme has been deferred, to be written off over the vesting period.
Mar 31, 2003
(1) Fixed assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for Its Intended use, net of CENVAT credit. Also see Note 9 below.
(2) Depreciation
(i) Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956, as revised by Notification No. GSR 756(E), dated 16-12-1993 of the Department of Company Affairs, on the following basis:
Textile division assets D.M.T. division assets
Machinery and buildings acquired/purchased:
Pre 1974 Written down value method Not applicable
1974 to 31.3.1993 Straight line method Straight line method *
From 1.4.1993 onwards Straight line method Straight line method
Other assets Written down value method Written down value method
* At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Assets given on lease (comprise only of assets given prior to 1st April, 2001)
Lease income is accounted for after adjusting the difference between capital recovery included in lease rentals and depreciation provided in the books. This difference referred to in the 1st footnote on Schedule 5 and item 2(g) of Schedule 14 as lease equalisation is netted off against the written down value of the assets given on lease.
(4) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognise a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value.
(5) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on the weighted average method.
(b) Raw Materials
* cotton, fibre, cloth & yam, paraxylene and methanol on the basis of specific identification, and;
* dyes & chemicals and other materials on the weighted average method.
(c) Work-in-process and finished goods
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of readymade garments is determined on the `retail method, by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready finished cloth is determined on the first-in first-out method.
(iii) Also see Note 13(b) on Schedule 17.
(6) Deferred revenue expenditure
During the previous year, the balance of Rs. 51.96 crores in deferred revenue expenditure as at 31st December, 2001, after writing off the relevant amounts for the period 1st April, 2001 to 31st December, 2001, was adjusted from securities premium account. This year, no such expenditure has been deferred.
(7) Foreign currency transactions
(i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.
(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, exchange differences arising out of settlement/conversion at the exchange rates prevailing at the year end are adjusted to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of forward foreign exchange contracts are recognised as income or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(iv) Gains or losses in respect of forward foreign exchange contracts are recognised as income or expense over the Me of the con in respect of fixed assets where such gains or losses are adjusted In the carrying amount of the respective fixed assets.
(8) Retirement benefits
(i) Contributions for provident fund and superannuation (based on a percentage of salary) and gratuity (based on an actuarial valuation as at the year end) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability Is accrued based on an actuarial valuation as at the year end.
(9) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(10) Employee Stock Option Scheme
The fair value of options granted under the Employee Stock Option Scheme has been deferred, to be written off over the vesting period.
Mar 31, 2002
(1) Fixed assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use, net of CENVAT credit. Also see Note 9 below.
(2) Depreciation
(i) Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956, as revised by Notification No. GSR 756(E), dated 16-12-1993 of the Department of Company Affairs, on the following basis:
Textile division assets D. M. T. division assets
Machinery and buildings
acquired/purchased:
Pre 1974 Written down value method Not applicable
1974 to 31.3.1993 Straight line method Straight line method*
From 1.4.1993 onwards Straight line method Straight line method
Other assets Written down value method Written down value method
* At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period Which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years,
(3) Assets given on lease (comprise only of assets given prior to 1st April, 2001)
Lease income is accounted for after adjusting the difference between capital recovery included in lease rentals and depreciation provided in the books. This difference referred to in the 1st footnote on Schedule 5 and item 2(h) of Schedule 14 as lease equalisation is netted off against the written down value of the assets given on lease.
(4) Investments
(i) Long term investments are stated at cost. Provision for diminution is made to recognise a decline, other than temporary, in value of long term investments, where applicable.
(ii) Current investments are stated at lower of cost and fair value.
(5) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on the weighted average method.
(b) Raw Materials
- cotton, fibre, cloth & yarn, paraxylene and methanol on the basis of specific identification, and;
- dyes & chemicals and other materials on the weighted average method.
(c) Work-in-process and finished goods
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of ready made garments is determined on the `retail method, by reducing from the sales value of the inventory, an appropriate percentage of gross margin. Cost of ready finished cloth is determined on the first-in first-out method.
(6) Deferred revenue expenditure
Until the previous year and upto 31st December, 2001, deferred revenue expenditure comprised
(i) Voluntary retirement compensation
Compensation under the Companys voluntary retirement schemes paid/provided upto the year 1997-1998 was being written off equally over a period of 5 years. Compensation similarly paid/provided from the year 1998-1999 onwards was being written off equally over a period of 8 years.
(ii) Catalysts
Expenditure incurred on activated carbon and sieves molecular carbon was being written off equally over a period of 3 and 5 years respectively.
(iii) Nav Nirman project
Expenditure on this Business Process Re-engineering programme was being written off equally over a period of 8 years.
(iv) Advertisement and other related expenditure incurred on promotion of new brands/products.
Advertisement and other related expenditure incurred on promotion of new brands/products was being written off equally over a period of 3 years.
This year, the balance of Rs. 51.96 crores in deferred revenue expenditure as at 31st December, 2001, after writing off the relevant amounts for the period 1st April, 2001 to 31st December, 2001, has been adjusted from securities premium account (see Note 9 on Schedule 17).
(7) Foreign currency transactions
(i) Current assets and current liabilities i. e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.
(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, exchange differences arising out of settlement/conversion at the exchange rates prevailing at the year end are adjusted to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of foreign exchange contracts are recognised as income or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(iv) Gains or losses in respect of foreign exchange contracts are recognised as income or expense over the life of the contract, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(8) Retirement benefits
(i) Contributions for. provident fund and superannuation (based on a percentage of salary) and gratuity (based on an actuarial valuation as at the year end) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability is accrued based on an actuarial valuation as at the year end.
(9) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
Mar 31, 2001
(1) Fixed assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use, net of CENVAT credit. Also see Note 9 below.
(2) Depreciation
(i) Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956, as revised by Notification No. G.S.R. 756(E) dated 16th December, 1993 of the Department of Company Affairs, on the following basis:
Textile division D.M.T. division assets assets Machinery and buildings acquired/purchased :
Pre 1974.............. Written down value Not applicable method 1974 to 31.3.1993..... Straight line method Straight line method *
From 1.4.1993 onwards ... Straight line method Straight line method
Other assets......... Written down value Written down value method method
In respect of assets transferred from Seal Investments Limited, consequent to its amalgamation with the Company (see Note 10 on Schedule 16), depreciation has been provided on the straight line method for plant and machinery and on the written down value method for other assets.
* At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Assets given on lease
Lease income is accounted for after adjusting the difference between capital recovery included in lease rentals and depreciation provided in the books. This difference referred to in the 3rd footnote on Schedule 5 and item 2(h) of Schedule 13 as lease equalisation is netted off against the written down value of the assets given on lease.
(4) Investments
Long term investments are stated at cost less provision for diminution in value where applicable.
(5) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows:
(a) Stores, spare parts and catalysts on the basis of weighted average method.
(b) Raw Materials
- cotton, fibre, cloth & yarn, paraxylene and methanol on the basis of specific identification, and;
- dyes & chemicals and other materials on the basis of weighted average method.
(c) Work-in-process and finished goods
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material. Cost of readymade garments is determined on the 'retail method', by reducing from the sales value of the inventory, an appropriate percentage of gross margin.
(6) Deferred revenue expenditure
Deferred revenue expenditure comprises
(i) Voluntary retirement compensation
Compensation under the Company's voluntary retirement schemes paid/provided upto the year 1997-98 is being written off equally over a period of 5 years. Compensation similarly paid/provided from the year 1998-99 onwards is being written off equally over a period of 8 years.
(ii) Catalysts
Expenditure incurred on activated carbon and sieves molecular carbon is being written off equally over a period of 3 and 5 years respectively.
(iii) Nav Nirman project
Expenditure on this Business Process Re-engineering programme is being written off equally over a period of 8 years.
(iv) Advertisement expenditure incurred on promotion of new brands/products
Advertisement expenditure incurred on promotion of new brands/products is being written off equally over a period of 3 years.
(7) Foreign currency transactions
(i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.
(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, exchange differences arising out of settlement/ conversion at the exchange rates prevailing at the year end are adjusted to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of foreign exchange contracts are recognised as income or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(iv) Gains or losses in respect of foreign exchange contracts are recognised as income or expense over the life of the contract, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(8) Retirement benefits
(i) Contributions for provident fund and superannuation (based on a percentage of salary) and gratuity (based on an actuarial valuation as at the year end) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability is accrued based on an actuarial valuation as at the year end.
(9) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
Mar 31, 2000
(1) Fixed assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the working condition for its intended use, net of modvat credit,
(2) Depreciation
(i) Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956, as revised by Notification No. G.S.R. 756(E) dated 16th December, 1993 of the Department of Company Affairs, on the following basis :
Textile division assets D.M.T. division assets
Machinery and buildings acquired/purchased
Pre 1974 Written down value Not applicable method
1974 to 31.3.1993 Straight line method Straight line method
From 1.4.1993 onwards Straight line method Straight line method
Other assets Written down value Written down value method method
* At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Assets given on lease
Lease income is accounted for after adjusting the difference between capital recovery included in lease rentals and depreciation provided in the books. This difference referred to in the 4th footnote on Schedule 5 and item 3 (h) of Schedule 13 as lease equalisation is netted off against the written down value of the assets given on lease.
(4) Investments
Long term investments are stated at cost less provision for diminution in value where applicable. Current investments are stated at lower of cost and fair value.
(5) Inventories
(i) Inventories are valued at lower of cost and net realisable value.
(ii) Cost is determined as follows :
(a) Stores, spare parts and catalysts on the basis of weighted average method.
(b) Raw Materials
- cotton, fibre, cloth & yarn, paraxylene and methanol on the basis of specific identification, and;
- dyes & chemicals and other materials on the basis of weighted average method.
(c) Work-in-process and finished goods
Material costs included in the valuation are determined on the basis of the average consumption rates closer to the year end so as to reflect the fairest possible approximation to the costs incurred. Costs of conversion and other costs are determined on the basis of standard costs, adjusted for variances between standard and actual costs, if material.
(6) Deferred revenue expenditure
Deferred revenue expenditure comprises
(i) Voluntary retirement compensation
Compensation under the Company's voluntary retirement schemes paid/provided upto the year 1997-98 is being written off equally over a period of 5 years. Compensation similarly paid/provided from the year 1998-99 onwards is being written off equally over a period of 8 years.
(ii) Catalysts
Expenditure incurred on activated carbon and sieves molecular carbon is being written off equally over a period of 3 and 5 years respectively.
(iii) Nav Nirman project
Expenditure on this business process re-engineering programme is being written off equally over a period of 8 years.
(iv) Advertisement expenditure incurred on promotion of new brands/products
Advertisement expenditure incurred on promotion of new brands/products is being written off equally over a period of 3 years.
(7) Foreign currency transactions
(i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCS) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.
(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, exchange differences arising out of settlement/conversion at the exchange rates prevailing at the year end are adjusted to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of foreign exchange contracts are recognised as income or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(iv) Gains or losses in respect of foreign exchange contracts are recognised as income or expense over the life of the contract, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(8) Retirement benefits
(i) Contributions for provident fund and superannuation (based on a percentage of salary) and gratuity (based on an actuarial valuation as at the year end) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability is accrued based on an actuarial valuation as at the year end.
Mar 31, 1999
(1) Fixed Assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use.
(2) Depreciation
(i) Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956, as revised by Notification No. G.S.R. 756(E) dated 16th December, 1993 of the Department of Company Affairs, on the following basis :
Textile division assets D.M.T. division assets Machinery and buildings acquired/purchased :
Pre 1974 Written down value method Not applicable 1974 to 31.3.1993 Straight line method Straight line method From 1.4.1993 onwards Straight line method Straight line method Other Assets Written down value method Written down value method
* At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Assets given on lease
Lease income is accounted for after adjusting the difference between capital recovery included in lease rentals and depreciation provided in the books. This difference referred to in the 4th footnote on Schedule 5 and item 3(h) of Schedule 13 as lease equalisation is netted off against the written down value of the assets given on lease.
(4) Investments
Long term investments are stated at cost less provision for diminution in value where applicable. Current investments are stated at lower of cost and fair value.
(5) Inventories
Stores, spare parts and catalysts are valued at cost. Stock-in-trade is valued at lower of cost and market value (being replacement value for raw materials and work-in-process, and realisable value for finished goods).
(6) Deferred revenue expenditure
Deferred revenue expenditure comprises
(i) Voluntary retirement compensation
Compensation under the Company's Voluntary Retirement Schemes paid/ provided in earlier years is being written off equally over a period of 5 years. In respect of payments/provisions, under the schemes, made during the current year, the compensation is being written off over a period of 8 years.
Also see Note 12(a) on Schedule 16.
(ii) Catalysts
Expenditure incurred on activated carbon and sieves molecular carbon is being written off equally over a period of 3 and 5 years respectively.
(iii) Nav Nirman project
Expenditure on this project is being deferred until completion and would be written off over the expected period of future benefit commencing from the year in which the project is completed.
(iv) Advertisement expenditure incurred on promotion of new brands/ products Advertisement expenditure incurred on promotion of new brands/products is being written off equally over a period of 3 years. Until the preceeding year these expenses were fully charged to the profit and loss account when incurred. Also see Note 12(b) On Schedule 16.
(7) Foreign currency transactions
(i) Current assets and current liabilities i.e. items to be received Or paid in foreign currencies (other than those related to fixed assets are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the Amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.
(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, exchange differences arising out of settlement/conversion at the exchange rates prevailing at the year end are adjusted to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of foreign exchange contracts are recognised as income Or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(iv) Gains or losses in respect of foreign exchange contracts are recognised as income or expense over the life of the contract, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(8) Retirement benefits
(i) Contributions for provident fund and superannuation (based on a percentage of salary and gratuity (based on an actuarial valuation as at the year end) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability is accrued based on an actuarial valuation as at the year end.
Mar 31, 1998
(1) Fixed Assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use.
(2) Depreciation
(i) Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the companies Act, 1956, as revised by Notification No. G.S.R. 756(E) dated 16th December, 1993 of the Department of company Affairs, on the following basis: Textile division assets D.M.T. division assets
Machinery and buildings acquired/purchased Pre 1974 written down value method Not Applicable 1974 to 31.3.1993 Straight line method Straight line method From 1.4.1993 onwards Straight line method Straight line method Other Assets written down value method Written down value method
* At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the Original cost, the revised rates prescribed in Schedule XIV to the companies Act, 1956.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Assets given on lease
Lease income is accounted for after adjusting the difference between capital recovery included in lease rentals and depreciation provided in the books. This difference referred to in the 4th footnote on Schedule Sand item 3(i) of Schedule 13 as lease equalisation is netted off against the written down value of the assets given on lease.
(4) Investments
Long term investments are stated at cost less provision for diminution in value where applicable, current investments are stated at lower of cost and market value (being repurchase price for units of Unit Trust of India).
(5) Inventories
Stores, spare parts and catalysts are valued at cost. Stock-in-trade is valued at lower of cost and market value (being replacement value for raw materials and work-in-process, and realisable value for finished goods). Also see Note 12(a) on Schedule 16.
(6) Modvat credit
There has been a change in the method of accounting for Modvat credit in respect of the Textile division. Whereas until the previous year Modvat credit was being accounted on utilisation thereof, on payment of excise duty on final products; this year the Modvat credit is being accounted on payment of the specified duty on inputs. The relevant guidance note issued by the Institute of Chartered Accountants of India recognises this changed method as one of the alternative accounting treatments. Also see Note 12(a) on Schedule 16.
(7) Deferred revenue expenditure
Deferred revenue expenditure comprises
(i) Voluntary retirement compensation
compensation under the company's Voluntary Retirement Scheme is being written off equally over a period of 5 years.
(ii) Catalysts
Expenditure incurred on activated carbon and sieves molecular carbon is being written off equally over a period of 3 and 5 years respectively. Until the preceding year these expenses were fully charged to the profit and loss account when incurred. Also see Note 12(b) on Schedule 16.
(iii) Nav Nirman Project
Expenditure on this project is being deferred until completion and would be written off over the expected period of future benefit commencing from the year in which the project is completed.
(8) Foreign Currency Transactions
(i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated a against future export proceeds, at the rate of exchange at which the loans were disbursed.
(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liability arising out of the exchange rates on repayment or at the year end is adjusted to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of foreign exchange contracts are recognised as income or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(iv) Gains or losses in respect of foreign exchange contracts are recognised as income or expense over the life of the contract, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(9) Retirement benefits
(i) Contributions for provident fund and superannuation (based on a percentage of salary) and gratuity (based on an actuarial valuation) are made to the respective funds, which are administered by trustees.
(ii) Leave encashment liability is accrued on an actuarial basis.
Mar 31, 1997
(1) Fixed Assets
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use.
(2) Depreciation
(i) Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the companies Act, 1956, as revised by Notification No. G.S.R. 756(E) dated 16th December, 1993 of the Department of company Affairs, on the following basis:
Textile Division D.M.T. Division Assets Assets
Machinery and Buildings Acquired/Purchased Pre 1974 Written down Not Applicable value method 1974 to 31.3.1993 Straight line Straight line method method* From 1.4.1993 onwards Straight line Straight line method method Other Assets Written down Written down value method value method
* At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the Original cost, the revised rates prescribed in Schedule XIV to the companies Act. 1956.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Assets given on lease
Lease income is accounted for after adjusting the difference between capital recovery included in lease rentals and depreciation provided in the books. This difference referred to in the 3rd footnote on Schedule 5 and item 3(h) of Schedule 13 as lease equalisation is netted off against the written down value of the asset given on lease.
(4) Investments
Long Term investments are stated at cost less provision for diminution in value where applicable. Current investments are stated at lower of cost and market value (being repurchase price for units of Unit Trust of India).
(5) Inventories
Stores, spare parts and catalysts are valued at cost. Stock-in-trade is valued at lower of cost and market value (being replacement value for raw materials and work-in-process and realisable value for finished goods).
(6) Retirement Benefits
(i) Contributions for Provident Fund and Superannuation (based on a percentage of salary) and Gratuity (based on actuarial valuation are made to the respective funds, which are administered by Trustees.
(ii) Leave encashment liability is accrued on an actuarial basis.
(7) Voluntary Retirement Compensation
Compensation under the Company's Voluntary Retirement Scheme (VRS) is being written off equally over a period of 5 years. Until the preceding year this was fully charged to the Profit and Loss Account in the year of payment/provision Also see Note 10 on Schedule 16.
(8) Foreign Currency Transactions
(i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, Since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.
(ii) in the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liability arising out of the exchange rates on repayment or at the year end is adjusted' to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of foreign exchange contracts are recognised as income Or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
(iv) Gains or losses in respect of foreign exchange contracts are recognised as income or expense Over the life of the contract, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets.
Mar 31, 1996
(1) Fixed Assets:
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use.
(2) Depreciation: (i) Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956, as revised by Notification No. G.S.R. 756(E) dated 16th December, 1993 of the Department of Company Affairs, on the following basis:
Textile Division D.M.T. Division Assets Assets
Machinery and Buildings Acquired/Purchased : Pre 1974 Written down Not Applicable value method
1974 to 31.3.1993 Straight line Straight line method method*
From 1.4.1993 Straight line Straight line onwards method method
Other Assets Written down Written down value method value method
* At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.
Also see Note 3 on Schedule 16.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Assets given on lease Lease income is accounted for after adjusting the difference between capital recovery included in lease rentals and depreciation provided in the books. This difference referred to in the footnote on Schedule 5 and Schedule 13 as lease equalisation is netted off against the written down value of the asset given on lease.
(4) Investments: Investments, all of which are long term, are stated at cost less provision for diminution in value where application.
(5) Inventories: Stores, spare parts and catalysts are valued at cost. Stock-in-trade is valued at lower of cost and market value (being replacement value for raw materials and work-in-process and realisable value for finished goods).
(6) Retirement Benefits: (i) Contributions for Provident Fund and Superannuation (based on a percentage of salary) and Gratuity (based on actuarial valuation) are made to the respective funds, which are administered by Trustees.
(ii) The Company has, this year, accrued the leave encashment liability on an actuarial basis. Also see Note 7 on Schedule 16.
(7) Foreign Currency Transactions: (i) Current assets and current liabilities i.e. items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed. In the past, except for PCFCs where there is no change in the method of accounting, these assets and liabilities were stated at the amounts subsequently realised/paid where such receipts/payments were materialised.
(ii) In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liability arising out of the exchange rates on repayment or at the year end is adjusted to the cost of acquisition of the fixed assets.
(iii) Gains or losses on cancellation of foreign exchange contracts are recognised as income or expense, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets. In the past even in respect of fixed assets such gains were credited to income.
(iv) Gains or losses on renewal of foreign exchange contracts are recognised as income or expense over the balance period of the contract, except in respect of fixed assets where such gains or losses are adjusted in the carrying amount of the respective fixed assets. In the past renewal charges on contracts other than in respect of fixed assets were recognised as income or expenditure at the point of renewal/roll over.
Mar 31, 1995
(1) Fixed Assets
The gross block of fixed assets is stated of Cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use.
(2) Depreciation
(i) Depreciation for the year has been provided at the rates prescribed in Schedule xiv to the Companies Act, 1956, as revised by Notification No. G.S.R. 756(E) dated 16th December, 1993 of the Department of Company Affairs, on the following basis:
Textile Division D.M.T. Division Assets Assets
Machinery and Buildings Acquired/Purchased
Pre 1974 written down Not Applicable value method
1974 to 31.3.1993 Straight line Straight line method method
From 1.4.1993 onwards Straight line Straight line method method
Other Assets Written down Written down value method value method
At derived rates, computed by allocating the unamortised value as at 31st March, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.
Also see Note 3 on Schedule 16.
(ii) No write off has been made in respect of the leases relating to leasehold land where unexpired period is over 50 years.
(3) Investments
Investments are valued at Cost less provision for diminution in value where applicable.
(3) The depreciation rates adopted in respect of Textile Division machinery acquired/purchased during 1982-83 to 1985-87, for the purpose of determining the specified life under Section 205(2))b) of the Companies Act. 1956 were Consistent with the Company's actual claim for depreciation upto 1985-87 under the Income-tax Act. 1961 which was on single shift basis. The unprovided depreciation in respect of the aforesaid years as at 31st March, 1995 amounts to Rs. 1.33 Crores. In respect of such machinery depreciation has been provided in the subsequent years inclusive of extra shifts.
The adequacy of depreciation Charged by the Company in relation to the normal useful life of its Textile Division machinery has been confirmed by competent independent technical evaluation.
The Company is also advised by Counsel that the depreciation provision by the Company in the relevant years is in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956 and the dividend declared, it any, out of the profits for the year under report would be Consistent with the provisions of Section 205 of the Companies Act, 1956.
(4) As in previous years, customs and excise duty are taken into account when items are taken out of bond, This amounted to Rs. 2.58 crores (1993-94 Rs. 0.19 Crore) which has been excluded both from inventory valuation and current liabilities. Had these been included there would have been no impact on profits. Disputed excise duty is accounted for on a cash basis, however, in the current year and in the previous year there is no impact on profits. Technical know- how fees for an overseas project have not been accrued in view of uncertainty of ultimate collection.
Mar 31, 1994
Fixed Assets:
The gross block of fixed assets is stated at cost of acquisition or construction including any attributable cost of bringing the asset to its working condition for its intended use.
Depreciation: Depreciation for the year has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956, as revised by Notification No.G.S.R. 756(E) dated 16th December, 1993 of the Department of Company Affairs.
Foreign Currency Transactions Current assets and current liabilities i.e.items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the amounts subsequently realised/paid. Where receipts/payments have not materialised, these assets and liabilities are accounted for at the exchange rates prevailing at the year end, except for Pre-Shipment Credits in Foreign Currencies (PCFCs) which have been stated at the amounts received on the date of disbursement, since the PCFCs are liquidated against future export proceeds, at the rate of exchange at which the loans were disbursed.
In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liability arising out of the exchange rates on repayment or at the year end is adjusted to the cost of acquisition of the fixed assets.
Balance in Exchange Earner's Foreign Currency Accounts have been stated at the exchange rates prevailing at the year end.
Roll over charges on forward foreign exchange contracts in respect of fixed assets are capitalised while gains on cancellation of such contracts have been credited to income.
Inventories Stores, Spares parts and catalysts are valued at cost. Stock in trade is valued at lower of cost and market value (being replacement value for raw materials and work-in-process and realisable value for finished goods).
Investments: Investments are valued at cost less provision for diminution in value where applicable.
Retirement Benefits: Contributions for Provident Fund and Superannuation (based on a percentage of salary) and Gratuity (based on actuarial valuation) are made to the respective funds, which are administered by Trustees.
Mar 31, 1993
Depreciation has been provided for the year on the following
basis:
Method of
Providing Rate of
Depreciation Depreciation
Textile Division Assets
Machinery & building -
Acquired/Purchased:
Pre 1974....................... Written down Schedule XIV of
value method the Companies
Act, 1956
During 1974 to 31.3.87.......... Straight line *
method
From 1987-88.................... Straight line Schedule XIV of
method the Companies
Act, 1956
Other Assets.................... Written down Schedule XIV of
value method the Companies
Act, 1956
D.M.T. Division Assets Machinery & buildings - Acquiried/Purchased: Upto 31.3.1987.................. Straight line * method From 1987-88.................... Straight line Schedule XIV of method the Companies Act, 1956 Other Assets.................... Written down Schedule XIV of value method the Companies Act, 1956
At rates corresponding to the rates applicable under the Income-tax Rules as in force at the time of acquisition/purchase of assets to Circular No. 1/1/86-CL. V No. 15(50)84-CL. VI dated 21st May, 1986 issued by the Department of Company Affairs in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956.
Foreign Currency Transactions Current assets and current liabilities i.e.items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the amounts subsequently realised/paid. Where receipts/payments have not materialised, these assets and liabilities are accounted for at the exchange rates prevailing at the year end.
In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liability arising out of the exchange rates on repayment or at the year end is adjusted to the cost of acquisition of the fixed assets.
Balance in Exchange Earner's Foreign Currency Accounts have been stated at the exchange rates prevailing at the year end.
Roll over charges on forward foreign exchange contracts in respect of fixed assets are capitalised consistent with the previous year while gains on cancellation of such contracts realised for the first time during this year have been credited to income - Rs. 12.85 crores.
Inventories Stores, Spares parts and catalysts are valued at cost. Stock in trade is valued at lower of cost and market value (being replacement value for
Mar 31, 1992
Depreciation has been provided for the year on the following
basis:
Method of
Providing Rate of
Depreciation Depreciation
Textile Division Assets
Machinery & building -
Acquired/Purchased:
Pre 1974....................... Written down Schedule XIV of
value method the Companies
Act, 1956
During 1974 to 31.3.87.......... Straight line *
method
From 1987-88.................... Straight line Schedule XIV of
method the Companies
Act, 1956
Other Assets.................... Written down Schedule XIV of
value method the Companies
Act, 1956
D.M.T. Division Assets Machinery & buildings - Acquiried/Purchased: Upto 31.3.1987.................. Straight line * method From 1987-88.................... Straight line Schedule XIV of method the Companies Act, 1956 Other Assets.................... Written down Schedule XIV of value method the Companies Act, 1956
At rates corresponding to the rates applicable under the Income-tax Rules as in force at the time of acquisition/purchase of assets to Circular No. 1/1/86-CL. V No. 15(50)84-CL. VI dated 21st May, 1986 issued by the Department of Company Affairs in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956.
Foreign Currency Transactions Current assets and current liabilities i.e.items to be received or paid in foreign currencies (other than those related to fixed assets) are stated at the amounts subsequently realised/paid. Where receipts/payments have not materialised, these assets and liabilities are accounted for at the exchange rates prevailing at the year end.
In the case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liability arising out of the exchange rates on repayment or at the year end is adjusted to the cost of acquisition of the fixed assets.
Balance in Exchange Earner's Foreign Currency Accounts have been stated at the exchange rates prevailing at the year end.
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