Accounting Policies of Jupiter Wagons Ltd. Company
Mar 31, 2023
1. CORPORATE INFORMATION
Jupiter Wagons Limited (Formerly Commercial Engineers and Body Builders Co Limited) (the "Companyâ), having its registered office situated at 48, Vandana Vihar, Narmada Road, Madhya Pradesh, Jabalpur - 482001 (CIN L28100MP1979PLC049375), India, incorporated on 28 September 1979, under the Companies Act, 1956. The Company''s shares are listed on two stock exchanges in India (Bombay Stock Exchange and National Stock Exchange). The Company is engaged in the business ofmanufacturing railway wagons, wagon components, castings, metal fabrication comprising load bodies for commercial vehicles, rail freight wagons and components with manufacturing facilities at Hooghly (WB), Jabalpur (MP), Indore (MP) and Jamshedpur (Jharkhand).
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
a. Statement of compliance
These financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as prescribed under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules as amended from time to time and notified under Companies Act 2013, and other relevant provisions of the Act and the guidelines issued by Securities and Exchange Board of India, to the extent applicable.
The financial statements have been prepared on an accrual basis using the historical cost convention, except for the following assets and liabilities:
i) Financial assets and liabilities are measured at fair value
ii) Defined benefit plans-plan assets measured at fair value
iii) Derivative financial instruments are measured at fair value
iv) Lease liability and Right-of-use assets are measured at fair value
The financial statements were authorised for issue by the Company''s Board of Directors on 25 May 2023.
b. Basis of preparation
The financial statements have been prepared on accrual and going concern basis under historical cost convention except for certain financial instruments and plan assets, which are measured at fair values. The accounting policies have been applied consistently to all the periods presented in the financial statements.
Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and as per terms of agreements wherever applicable which is period of twelve months. Deferred tax assets and liabilities are classified as non-current assets and noncurrent liabilities.
c. Functional and presentation currency
The Management has determined the currency of the primary economic environment in which the Company operates i.e., functional currency, to be Indian Rupees (''). The financial statements are presented in '' lakhs, which is Company''s functional and presentational currency.
d. Revenue recognition Sale of goods
Revenue arises mainly from the sale of goods. Revenue is recognised at a point in time, when the Company satisfies performance obligations by transferring the promised goods to its customers. To determine whether to recognise revenue, the Company follows a 5-step process:
(i) Identifying the contract with a customer
(ii) Identifying the performance obligations
(iii) Determining the transaction price
(iv) Allocating the transaction price to the performance obligations
(v) Recognising revenue when/as performance obligation(s) are satisfied.
The Company considers the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which the Company
expects to be entitled in exchange for transferring promised goods to a customer, excluding amounts collected on behalf of third parties (for example, indirect taxes). The consideration promised in a contract with a customer may include fixed consideration, variable consideration (if reversal is less likely in future) both. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold is net of variable consideration on account of price changes of raw materials used in final product.
Contract assets (Unbilled revenue)
C ontract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. Contract liabilities (Unearned or deferred revenue is recognised when there is billings in excess of revenues). Contracts are subject to modification to account for changes in contract specification and requirements. The Company reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for.
Revenue from sale of services is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.
Revenue from sale of scrap is accounted for as and when sold.
Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable. For all financial assets measured at amortised cost, interest income is recorded using the effective interest rate (EIR) i.e. the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial assets. The future cash flows include all other transaction costs paid or received, premiums or discounts if any, etc.
Inventories are valued at the lower of cost and net realisable value. However, materials and other items held for use in production of inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost. Costs incurred in bringing each product to its present location and condition are accounted for as follows:
⢠Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
⢠Finished goods and work-in-progress: cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity. Cost of finished goods is determined on manufacturing cost basis.
⢠Stores and spares and other consumables are valued at net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Due allowance is estimated and made for defective and obsolete items, wherever necessary.
Tax expense recognised in the statement of profit and loss comprises the sum of deferred tax and current tax not recognised in Other Comprehensive Income (OCI)/directly in equity.
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Current tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (i.e. in OCI or any other equity depending upon the treatment of underlying item).
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside statement of profit and loss (in OCI or equity depending upon the treatment of underlying item).
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
h. Foreign currency transactions
Monetary and non-monetary transactions in foreign currencies are initially recorded in the functional currency of the Company at the exchange rates at the dates of the transactions or at an average rate if the average rate approximates the actual rate at the date of the transaction. Monetary foreign currency assets and liabilities remaining unsettled on reporting date are translated at the rates of exchange prevailing on reporting date. Gains/ (losses) arising on account of realisation/ settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognised in the statement of profit and loss. Non-monetary items are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. The Company uses derivative financial
instruments such as forward exchange contracts to hedge its risk associated foreign currency fluctuations. Such derivatives are stated at fair value. Any gains or losses arising from changes in fair value are taken directly to statement of profit or loss.
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below:
Non-derivative financial assets Subsequent measurementi. Financial assets carried at amortised cost -
a financial asset is measured at the amortised cost, if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. I nvestments in equity instruments - The
Company subsequently measures all equity investments (other than subsidiaries, joint ventures and associates) at fair value (either through profit or loss or through other comprehensive income). Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment
loss for financial assets. 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.
Trade receivables: Trade receivable is recognized initially at fair value, plus transaction costs that are attributable to the acquisition of the financial asset. However, trade receivables that do not contain a significant financing component are measured at transaction price.
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, including the use of historical trends and macroeconomic information.
Other financial assets: In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares
the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since 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.
De-recognition of financial assets
A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities Subsequent measurement at amortised cost
Subsequent to initial recognition, all nonderivative financial liabilities are measured at amortised cost using the effective interest method.
Subsequent measurement at fair value
The Company has classified contingent consideration under business combination as financial liability. Such financial liability is subsequently measured at fair value with changes in fair value recognised in profit and loss.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
j. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realised. For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments.
The Company has an established control framework with respect to the measurement of fair values. This includes the management that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the board of directors.
The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Management assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
k. Property, plant and equipment (''PPE'') Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition less accumulated depreciation less accumulated impairment, if any. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. 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 definition of asset is met. All other repair and maintenance costs are recognised in the statement of profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis, interest expenses included in deferred payment is recognised as interest expense and not included in cost of asset.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives;
(i) The depreciation charged on all property, plant and equipment is on the basis of useful life specified in Part âCâ of Schedule II to the Companies Act, 2013 which represents useful lives of the assets.
(ii) On assets sold, discarded, etc., during the year, depreciation is provided up to the date of sale/ discard.
(iii) Depreciation has been calculated on a pro-rata basis from the date of additions in respect of acquisition/installation during the year.
(iv) Leasehold land is amortised over the primary lease period or the useful life, whichever is shorter.
Depreciation methods, useful lives and residual values are reviewed at each financial year, and changes, if any, are accounted for prospectively.
An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is de-recognised.
Recognition, initial measurement and subsequent measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
C omputer software is amortised over their respective individual estimated useful life on straight line method for 3 to 5 years and customer relationships are amortised over their useful life of 10 years; commencing from the date, the asset is available to the Company for its use.
Cash generating units to which goodwill is allocated are tested for impairment annually at each balance sheet date, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to that unit and then to the other assets of the unit pro rata on the basis of carrying amount of each asset in the unit.
An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use and disposal. Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss.
Cost of material consumed and erection charges thereon along with other direct cost incurred by the Company for the projects are shown as capital work-in-progress until capitalisation.
n. Impairment of non-financial assets
The carrying amounts of the Company''s nonfinancial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ''Impairment of Assets''. If any such indication exists, then the asset''s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ). An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the
statement of profit and loss. Impairment losses recognised in respect of CGUs are reduced from the carrying amounts of the assets of the CGU.
o. Right of use assets and lease liabilities
The Company considers whether a contract is, or contains a lease. A lease is defined as ''a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for considerationâ.
The Company as a lessee Classification of leases
The Company enters into leasing arrangements for various assets. The assessment of the lease is based on several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to extend/purchase etc.
Recognition and initial measurement
At lease commencement date, the Company recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company, an estimate of any costs to dismantle and remove the asset at the end of the lease (if any), and any lease payments made in advance of the lease commencement date (net of any incentives received).
The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.
At lease commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Companyâs incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed payments) and variable payments based on an index or rate. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there are
changes in in-substance fixed payments. When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use asset.
The Company has elected to account for shortterm leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in statement of profit and loss on a straight-line basis over the lease term.
Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalisation of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption.
q. Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises when there is a presence of a legal or constructive commitment that has resulted from past events, for example, legal disputes or onerous contracts. Provisions are not recognised for future operating losses.
P rovisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted to their present values, where the time value of money is material.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
In those cases where the outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised. Contingent liability is disclosed for:
⢠Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
⢠Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognised
Expenses and liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard 19- Employee Benefits.
Defined benefit plans Long-term employee benefits
Gratuity: The Company has computed its liability towards future payments of gratuity to employees, on actuarial valuation basis which is determined based on project unit credit method and the charge for current year is debited to the Statement of Profit and Loss. Actuarial gains and losses arising on the measurement of defined benefit obligation is charged/ credited to other comprehensive income.
Compensated absences: Liability for compensated absences that are not short term, are determined on actuarial valuation basis which is determined based on project unit credit method and the charge for current year is debited to the Statement of Profit and Loss. Actuarial gains and losses arising on the measurement of defined benefit obligation is charged/ credited to profit or loss.
Expense in respect of other short-term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.
s. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) 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 including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
t. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. In accordance with Ind AS 108 - Operating Segments, the operating segments used to present segment information are identified on the basis of internal reports used by the Company''s Management to allocate resources to the segments and assess their performance.
2.1 RECENT ACCOUNTING PRONOUNCEMENT
The Ministry of Corporate Affairs (MCA) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31 March 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023. The Company has evaluated the amendment and the impact of the amendment is expected to be immaterial upon the financial statements.
2.2 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
When preparing the financial statements, the Management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results are likely to differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results. Information about significant judgments, estimates and assumptions that have the most significant effect on recognition and measurement
of assets, liabilities, income and expenses are discussed below:
(i) Evaluation of indicators for impairment of non-financial assets
The evaluation of indicators for impairment of non-financial assets requires assessment of several external and internal factors which could result in impact the recoverable amount of the assets.
(ii) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilised. The recognition of deferred tax assets and reversal thereof is also dependent upon management decision relating to timing of availment of tax holiday benefits available under the Income Tax Act, 1961 which in turn is based on estimates of future taxable profits.
The Company has certain legal proceedings which are pending in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the final outcome of such matters. The cases and claims against the Company often raise difficult and complex factual and legal issues, which are subject to many uncertainties, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law. In the
normal course of business, management consults with legal counsel and certain other experts on matters related to litigation and taxes. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated.
J udgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as inflation related adjustments etc. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period.
A t each balance sheet date, basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions. However, the actual future outcome may be different from management''s estimates.
(vi) Recoverability of financial assets
At each balance sheet date, based on historical default rates and other factors, the Management assesses the expected credit loss on outstanding financial assets.
Mar 31, 2018
1. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements and in preparing the opening Ind AS Balance Sheet as at 1 April 2016 for the purposes of the transition to Ind AS.
a) Current and non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
- it is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle;
- it is held primarily for the purpose of being traded;
- it is expected to be realised within 12 months after the reporting date; or
- it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date."
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
- it is expected to be settled in the Company''s normal operating cycle;
- it is held primarily for the purpose of being traded;
- it is due to be settled within 12 months after the reporting date; or
- the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include the current portion of financial liabilities some part of which may be non-current. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating cycle
Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the
Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
b) Property, plant and equipment
Recognition and measurement
All items of property, plant and equipment are measured at cost less accumulated depreciation/ amortization and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price including import duties and non-refundable purchase taxes after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
When parts of an item of property, plant and equipment having significant cost have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Gains or losses on disposal of an item of property plant and equipment are recognised in the statement of profit and loss.
All spare parts which are expected to be used for more than one accounting period are capitalised as property, plant and equipment.
Capital work-in-progress is stated at cost, net of impairment loss, if any.
Transition to Ind AS
The Company has elected to avail the option under Ind AS 101 by not applying the provisions of Ind AS 16 retrospectively and continue to use the Previous GAAP carrying amount as the deemed cost under Ind AS on the date of transition to Ind AS. Therefore, the Previous GAAP carrying amounts of items of property, plant and equipment as at April 1, 2016 (the Company''s date of transition to Ind AS) have been considered as the carrying amounts under Ind AS on April 1, 2016. (Also refer note 46).
Subsequent expenditure
Subsequent expenditure is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in the Statement of profit and loss as incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation is provided on cost of items of property, plant and equipment less their estimated residual values over their estimated useful lives.
Depreciation is provided using written down value method for the assets acquired prior to 1 January 2011 and using straight line method for the assets acquired after 1 January 2011.
(i) The depreciation charged on all property, plant and equipment is on the basis of useful life specified in Part "C" of Schedule II to the Companies Act, 2013 which represents useful lives of the assets.
(ii) On assets sold, discarded, etc., during the year, depreciation is provided up to the date of sale/discard.
(iii) Depreciation has been calculated on a pro-rata basis in respect of acquisition/installation during the year.
(iv) Leasehold land is amortised over the primary lease period or the useful life, whichever is shorter.
(v) Freehold land is not depreciated
Depreciation methods, useful lives and residual values are reviewed at each financial year, and changes, if any, are accounted for prospectively.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (upto) the date on which asset is ready for use (disposed of).
c) Intangible assets
Recognition and initial measurement
Intangible assets comprise computer software. Intangible assets that are acquired by the Company are measured at cost less accumulated amortization and accumulated impairment losses. Cost includes any directly attributable incidental expenses necessary to make the assets ready for its intended use.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in the statement of profit and loss when the asset is derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognised as at 1 April 2016 measured as per the Previous GAAP and use that carrying value as the deemed cost of intangible assets.
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in statement of profit and loss as incurred.
Amortisation
Intangible assets, being computer software is amortised in the statement of profit and loss over the estimated useful life of 3 years using the straight line method.
An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use and disposal. Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss.
The amortisation method and the useful lives of intangible assets are reviewed annually and adjusted as necessary.
d) Inventories
Inventories are measured at lower of cost and net realizable value. The methods of determining costs of various categories of inventories are as follows:
Costs includes expenditure incurred in acquiring the inventories, production or conversion costs incurred in bringing them to their present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses.
e) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. This inter alia involves discounting of the consideration due to the present value if payment extends beyond normal credit terms. Revenue is recognized when the products are dispatched and significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing effective control over, or managerial involvement with, the goods, and the amount of revenue can be measured reliably.
Revenue is recognised inclusive of excise duty and net of value added tax/sales tax/goods and service tax (GST).
Revenue from sale of services is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.
Revenue from sale of scrap is accounted for as and when sold.
Other Income
For instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss.
f) Income tax
Income tax expense comprises current and deferred tax. Current tax expense is recognized in statement of profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in other comprehensive income or equity.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
Deferred tax
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority.
Deferred tax is recognized in the statement of profit or loss except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised in other comprehensive income or equity.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. The Company recognizes a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is other convincing evidence that sufficient taxable profit will be available against which such deferred tax asset can be realized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
g) Employee benefits
i) Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid e.g., under short- term cash bonus, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
Leave encashment is provided for on the basis of actual costs the Company expects to pay for the compensated absences.
ii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into separate entity and will have no legal or constructive obligation to pay further amounts.
Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in statement of profit and loss in the periods during which the related services are rendered by the employees.
The Company makes specific contributions to provident fund.
iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company has following defined benefit plans:
Gratuity
The Company provides for gratuity, a defined benefit plan (the Gratuity Plan) covering all directly recruited eligible employees. In accordance with the payment of Gratuity Act, 1972, the Gratuity plan provides a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment. These are funded by the Company and are managed by the Life Insurance Corporation of India (LIC).
The calculation of defined benefit obligation is performed by a qualified actuary separately for each plan using the projected unit credit method, which recognises each year of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to the statement of profit or loss in subsequent periods.
The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the statement of profit and loss.
h) Foreign currency transactions and translation
Monetary and non-monetary transactions in foreign currencies are initially recorded in the functional currency of the Company at the exchange rates at the dates of the transactions or at an average rate if the average rate approximates the actual rate at the date of the transaction.
Monetary foreign currency assets and liabilities remaining unsettled on reporting date are translated at the rates of exchange prevailing on reporting date. Gains/ (losses) arising on account of realisation/ settlement of foreign exchange transactions and on translation of monetary foreign currency assets and liabilities are recognised in the statement of profit and loss.
Non-monetary items are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
The Company uses derivative financial instruments such as forward exchange contracts to hedge its risk associated foreign currency fluctuations. Such derivatives are stated at fair value. Any gains or losses arising from changes in fair value are taken directly to statement of profit or loss.
i) Finance expense
Finance expenses comprises of interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest cost) incurred in connection with the borrowings of funds. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in the statement of profit and loss using the effective interest method.
j) Impairment of non-financial assets
The carrying amounts of the Company''s non-financial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ''Impairment of Assets''. If any such indication exists, then the asset''s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit", or "CGU").
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in the statement of profit and loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of the assets of the CGU.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
k) Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period., If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the entity. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.
l) Borrowings and borrowing cost
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets are capitalised as part of cost of such asset until such time that the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale.
When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalized. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for the acquisition of the qualifying asset.
Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
All other borrowing costs are recognised as an expense in the year in which they are incurred.
m) Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of an arrangement at inception date: whether fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.
Where the Company is the lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to similar owned assets.
n) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
In accordance with Ind AS 108 - Operating Segments, the operating segments used to present segment information are identified on the basis of internal reports used by the Company''s Management to allocate resources to the segments and assess their performance.
The Board of Directors is collectively the Company''s ''Chief Operating Decision Maker'' or ''CODM'' within the meaning of Ind AS 108. Refer Note 36 for segment information.
o) Government grant
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as other operating revenue on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.
p) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
i) Financial assets
Recognition and initial measurement
Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (''FVTPL''), transaction costs that are directly attributable to its acquisition or issue.
Classification and subsequent measurement
On initial recognition, a financial asset is classified as measured at:
- Amortized cost;
- Fair Value through Other Comprehensive Income (''FVOCI'') - debt instrument;
- FVOCI - equity investment; or
- FVTPL
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables. Company has recognized financial assets viz. security deposit, trade receivables, employee advances at amortized cost.
A debt instrument is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On de-recognition of the asset, cumulative gain or loss previously recognized in OCI is re-classified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
- the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management''s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;
- how the performance of the portfolio is evaluated and reported to the Company''s management;
- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets : Assessment whether contractual cash flows are solely payments of principal and interest
For the purpose of this assessment ''Principal'' is defined as the fair value of the financial asset on initial recognition. ''Interest'' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making the assessment, the Company considers:
- contingents events that would change the amounts or timings of cash flows;
- terms that may adjust the contractual coupon rate, including variable interest rate features;
- prepayment and extension features; and
- terms that limit the Company''s claim to cash flows from specified assets (e.g. non - recourse features)
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, as feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Any gain or loss on derecognition is recognised in the statement of profit and loss.
Impairment
The Company recognizes loss allowances using the Expected Credit Loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition, in which case those financial assets are measured at lifetime ECL. The changes (incremental or reversal) in loss allowance computed using ECL model, is recognised as an impairment gain or loss in the statement of profit and loss.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the counterparty does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.
ii) Financial liabilities
Recognition and initial measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are initially measured at fair value minus, in the case of financial liabilities not recorded at fair value through profit or loss, transaction costs that are attributable to the liability.
Classification and subsequent measurement
Financial liabilities are classified as measured at amortised cost or FVTPL.
Financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense are recognised in the statement of profit and loss. Any gain or loss on derecognition is also recognised in the statement of profit and loss. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings.
Derecognition
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in the statement of profit and loss.
iii) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
q) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
r) Earnings per share
Basic earnings per equity share is computed by dividing the Net Profit / Loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year. Diluted earnings per equity share is computed by dividing the net profit/loss attributable to equity shareholders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
s) Ind AS 115 ''Revenue from Contracts with Customers''
On 28 March 2018, Ministry of Corporate Affairs (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 entity''s 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
- Cumulative catch - up approach - Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application
The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1 April 2018.The Company will adopt the standard on 1 April 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended 31 March 2018 will not be retrospectively adjusted. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
On 28 March 2018, Ministry of Corporate Affairs (MCA) 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 1 April 2018. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Mar 31, 2016
Note 1:Background of the Company
The Company was incorporated in the year 1979, under the name Commercial Engineers & Body Builders Co Private Limited. The name was changed to ''Commercial Engineers & Body Builders Co Limited'' in the year 2010. The Company''s Equity Shares were listed in the same year. The Company caters to Commercial Vehicles, Railways and Power sectors through manufacturing of tippers, load bodies, wagons and components.
Note 2:Significant accounting policies
(a) Basis of accounting and preparation of financial statements:
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. The accounting policy adopted in the preparation of financial statements are constant with those followed in previous year.
(b) Use of Estimates :
The preparation of financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reported period. Differences between the actual results and estimates are recognized in the year in which the results are known/materialize.
(c) Fixed Assets: Tangible assets :
Fixed assets are stated at cost net of Cenvat. Costs includes all cost incurred to bring the assets to their working condition and location.
Intangible assets :
The Company capitalizes software and related implementation costs, where it is reasonably estimated that the software has an enduring useful life.
(d) Depreciation and Amortization :
i) Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets is provided over their useful life and in the manner prescribed in Schedule II to the Companies Act, 2013.
Leasehold land is amortized over the period of lease on pro rata basis.
Computer Software is amortized over the period of three years.
ii) Depreciation on assets acquired/purchased during the year is provided on prorata basis from the date of each addition.
iii) Assets having value of '' 5000/- or less are charged off fully in the year of purchase.
(e) Impairment of Assets :
At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard 28 on ''Impairment of Assets''. Where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference.
(f) Revenue recognition :
Sales are stated net of returns and sales tax/value added tax. Excise duty related to sales turnover is presented as a reduction from gross sales. Revenue from sale of built bodies and other components are recognized when products are dispatched and all significant risks and rewards of ownership of the products are transferred to the customers.
Revenue from service contract is recognized when the services are completed. Dividend from investments is recognized as and when a right to receive payment is established.
Revenue is recognized when no significant uncertainty as to its determination or realization exists.
(g) Inventories :
Inventories are valued at lower of cost and net realizable value. The cost of inventories is arrived at on the following basis:
Raw materials : On FIFO basis (net of Cenvat)
Work-in-progress : On weighted average basis including Appropriate proportion of direct factory overheads.
Finished goods : On weighted average basis including appropriate proportion of direct factory overheads and Excise duty
Stores and spares : On FIFO basis.
(h) Foreign currency transactions:
a. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transactions.
b. Monetary items denominated in foreign currencies at the year-end are restated at the year-end rates. In case of monetary items, which are covered by forward exchange contracts, the difference between the year-end rate and rate on the date of the contracts is recognized as exchange difference and premium/discount on forward exchange contract is recognized over the life of the contract.
c. Non-monetary foreign currency items are carried at cost. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the profit and loss account.
(i) Derivative Contracts :
Pursuant to the announcement on accounting for derivatives issued by the Institute of Chartered Accountants of India (ICAI), the Company in accordance with the principle of prudence as enunciated in Accounting Standard 1 on ''Disclosure of Accounting Policies'' provides for losses in respect of all outstanding derivative contracts at the Balance Sheet date by marking them to market. Any gains arising on such mark to market are not recognized as income.
(j) Employee Benefits :
(a) Post-Employment Benefits and Other Long Term Benefit:
i) Defined contribution Plan :
Contributions under Defined Contribution Plans in the form of Provident Fund are recognized in the Statement of Profit and Loss Account in the period in which the employee has rendered the service.
ii) Defined Benefit Plan :
The Company''s Liability towards Defined Benefit Plan in the form of Gratuity is funded through schemes administered by the Life Insurance Corporation of India (LIC). The liability determined on the basis of actuarial valuation being carried out at each Balance Sheet date using the Projected Unit Credit Method. The retirement benefit obligation recognized in the Balance Sheet represents the total of present value of the defined benefit obligation as reduced by unrecognized past service cost and the fair value of plan assets as at the balance sheet date. Any asset resulting from this calculation is restricted the present value of available refunds from the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss Account in the period of occurrence of such gains and losses. Past service cost is recognized as an expense on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits are already vested immediately following the introduction of, or changes to, a defined benefit plan, past service cost is recognized immediately.
(b) Short Term Employee Benefits :
Short-term employee benefits are recognized as expenses at the undiscounted amount in the Statement of Profit and Loss Account of the period in which the related services are rendered.
Leave encashment is provided for on the basis of actual costs the Company expects to pay for the compensated absences.
(k) Borrowing costs :
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.
(l) Income tax :
a. Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to/ recovered from the tax authorities, using the applicable tax rates.
b. Deferred income tax reflect the current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future income will be available except that deferred tax assets, in case there are unabsorbed depreciation and losses, are recognized if there is virtual certainty that sufficient future taxable income will be available to realize the same.
c. Tax on distributed profits payable in accordance with the provisions of Section 115-O of the Income-tax Act,1961, is disclosed in accordance with the Guidance Note on Accounting for Corporate Dividend Tax issued by the Institute of Chartered Accountants of India (ICAI).
d. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
(m) Investments :
Investments classified as long-term (non-current) investments are stated at costs. Provision is made to recognize a diminution, other than temporary, in the value of such investments. Investments classified as current investments are stated at lower of cost and fair value.
(n) Operating Leases
Assets taken on Lease under which all significant risks and rewards of ownership are effectively retained by the lesser are classified as Operating Leases. Lease payments under Operating Leases are recognized as expenses as incurred in accordance with the respective Lease Agreements.
(o) Provisions and contingencies :
Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation.
Mar 31, 2015
(a) Basis of accounting and preparation of financial statements:
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the
1956Act"), as applicable.
(b) Use of Estimates :
The preparation of financial statements, in conformity with the
generally accepted accounting principles, requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of financial statements and the reported
amounts of revenues and expenses during the reported period.
Differences between the actual results and estimates are recognized in
the year in which the results are known/materialize.
(c) Fixed Assets:
Tangible assets :
Fixed assets are stated at cost net of Cenvat. Costs includes all cost
incurred to bring the assets to their working condition and location.
Intangible assets :
The Company capitalizes software and related implementation costs,
where it is reasonably estimated that the software has an enduring
useful life.
(d) Depreciation and Amortization :
i) Depreciable amount for assets is the cost of an asset, or other
amount substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets is provided over their useful
life and in the manner prescribed in Schedule II to the Companies Act,
2013.
Leasehold land is amortized over the period of lease on pro rata basis.
Computer Software is amortized over the period of three years.
ii) Depreciation on assets acquired/purchased during the year is
provided on pro-rata basis from the date of each addition.
iii) Assets having value of Rs. 5000/- or less are charged off fully in
the year of purchase.
(e) Impairment of Assets :
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard 28 on 'Impairment of Assets'. Where the
recoverable amount of any fixed asset is lower than its carrying
amount, a provision for impairment loss on fixed assets is made for the
difference.
(f) Revenue recognition :
Sales are stated net of returns and sales tax/value added tax. Excise
duty related to sales turnover is presented as a reduction from gross
sales. Revenue from sale of built bodies and other components are
recognised when products are despatched and all significant risks and
rewards of ownership of the products are transferred to the customers.
Revenue from service contract is recognized when the services are
completed. Dividend from investments is recognized as and when a right
to receive payment is established.
Revenue is recognised when no significant uncertainty as to its
determination or realisation exists.
(g) Inventories :
Inventories are valued at lower of cost and net realisable value. The
cost of inventories is arrived at on the following basis:
Raw materials : On FIFO basis (net of Cenvat)
Work-in-progress : On weighted average basis including Appropriate
proportion of direct factory overheads.
Finished goods : On weighted average basis including appropriate
proportion of direct factory overheads and Excise
duty
Stores and spares : On FIFO basis.
(h) Foreign currency transactions:
a. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the time of the transactions.
b. Monetary items denominated in foreign currencies at the year-end
are restated at the year-end rates. In case of monetary items, which
are covered by forward exchange contracts, the difference between the
year-end rate and rate on the date of the contracts is recognised as
exchange difference and premium/discount on forward exchange contract
is recognised over the life of the contract.
c. Non-monetary foreign currency items are carried at cost. Any income
or expense on account of exchange difference either on settlement or on
translation is recognised in the profit and loss account.
(i) Derivative Contracts :
Pursuant to the announcement on accounting for derivatives issued by
the Institute of Chartered Accountants of India (ICAI), the Company in
accordance with the principle of prudence as enunciated in Accounting
Standard 1 on 'Disclosure of Accounting Policies' provides for losses
in respect of all outstanding derivative contracts at the Balance Sheet
date by marking them to market. Any gains arising on such mark to
market are not recognized as income.
(j) Employee Benefits :
(a) Post-Employment Benefits and Other Long Term Benefit:
i) Defined contribution Plan :
Contributions under Defined Contribution Plans in the form of Provident
Fund are recognized in the Statement of Profit and Loss Account in the
period in which the employee has rendered the service.
ii) Defined Benefit Plan :
The Company's Liability towards Defined Benefit Plan in the form of
Gratuity is funded through schemes administered by the Life Insurance
Corporation of India (LIC). The liability determined on the basis of
actuarial valuation being carried out at each Balance Sheet date using
the Projected Unit Credit Method. The retirement benefit obligation
recognized in the Balance Sheet represents the total of present value of
the defined benefit obligation as reduced by unrecognized past service
cost and the fair value of plan assets as at the balance sheet date. Any
asset resulting from this calculation is restricted the present value of
available refunds from the plan or reductions in future contributions to
the plan.
Actuarial gains and losses are recognized immediately in the Statement
of Profit and Loss Account in the period of occurrence of such gains
and losses. Past service cost is recognized as an expense on a
straight-line basis over the average period until the benefits become
vested. To the extent that the benefits are already vested immediately
following the introduction of, or changes to, a defined benefit plan,
past service cost is recognized immediately.
(b) Short Term Employee Benefits :
Short-term employee benefits are recognized as expenses at the
undiscounted amount in the Statement of Profit and Loss Account of the
period in which the related services are rendered.
Leave encashment is provided for on the basis of actual costs the
Company expects to pay for the compensated absences.
(k) Borrowing costs :
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(l) Income tax :
a. Tax expense comprises of current tax and deferred tax. Current tax
is measured at the amount expected to be paid to/ recovered from the
tax authorities, using the applicable tax rates.
b. Deferred income tax reflect the current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax assets are
recognized only to the extent that there is reasonable certainty that
sufficient future income will be available except that deferred tax
assets, in case there are unabsorbed depreciation and losses, are
recognized if there is virtual certainty that sufficient future taxable
income will be available to realise the same.
c. Tax on distributed profits payable in accordance with the
provisions of Section 115- O of the Income-tax Act,1961, is disclosed
in accordance with the Guidance Note on Accounting for Corporate
Dividend Tax issued by the Institute of Chartered Accountants of India
(ICAI).
d. Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
which gives future economic benefits in the form of adjustment to
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Accordingly, MAT is recognised as an asset in the Balance Sheet when it
is probable that future economic benefit associated with it will flow
to the Company.
(m) Investments :
Investments classified as long-term (non-current) investments are
stated at costs. Provision is made to recognize a diminution, other
than temporary, in the value of such investments. Investments
classified as current investments are stated at lower of cost and fair
value.
(n) Operating Leases
Assets taken on Lease under which all significant risks and rewards of
ownership are effectively retained by the lesser are classified as
Operating Leases. Lease payments under Operating Leases are recognized
as expenses as incurred in accordance with the respective Lease
Agreements.
(o) Provisions and contingencies :
Provisions are recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and there is a reliable estimate of the amount of the obligation.
Mar 31, 2014
(a) Basis of accounting and preparation of financial statements:
The financial statements have been prepared to comply with accounting
principles generally accepted in India, the Accounting Standards (AS)
notified under the Companies (Accounting Standards) Rules, 2006 and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared in the format prescribed by the Revised
Schedule VI to the Companies Act, 1956.
(b) Use of Estimates:
The preparation of financial statements, in conformity with the
generally accepted accounting principles, requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of financial statements and the reported
amounts of revenues and expenses during the reported period.
Differences between the actual results and estimates are recognized in
the year in which the results are known/materialize.
(c) Fixed Assets:
Tangible assets:
Fixed assets are stated at cost net of Cenvat. Costs includes all cost
incurred to bring the assets to their working condition and location.
Intangible assets:
The Company capitalizes software and related implementation costs,
where it is reasonably estimated that the software has an enduring
useful life.
(d) Depreciation and Amortization:
i) Depreciation is provided using the written-down method based on the
management''s estimate of useful life of the assets acquired prior to
1st January, 2011. The depreciation rates for such assets are as under:
Assets Depreciation rate
Factory Building 10%
Non-Factory Building 10%
Residential Flat 5%
Plant and Machinery 15% - 100%
Office Equipment 15%
Computers 60%
Vehicles 25.89%
Electrical Installations 20%
Furniture and Fixtures 18.10%
Depreciation on assets acquired/purchased after 1st January, 2011 is
provided using the straight line method based on the management''s
estimate of useful life of the assets, which is as under:
Assets Estimated useful life
Factory Building 25 Years
Non-Factory Building 40 Years
Residential Flat 40 Years
Plant and Machinery 10 Years
Office Equipment 4 Years
Computers 3 years
Vehicles 5 Years
Electrical Installations 5 Years
Furniture and Fixtures 5 Years
ii) Leasehold land is amortized over the period of lease on pro rata
basis.
iii) Depreciation on assets acquired/purchased during the year is
provided on pro-rata basis from the date of each addition.
iv) Assets having value of Rs. 5000/- or less are charged off fully in
the year of purchase.
v) Computer Software is amortized over the period of three years.
(e) Impairment of Assets:
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard 28 on ''Impairment of Assets''. Where the
recoverable amount of any fixed asset is lower than its carrying
amount, a provision for impairment loss on fixed assets is made for the
difference.
(f) Revenue recognition:
Sales are stated net of returns and sales tax/value added tax. Excise
duty related to sales turnover is presented as a reduction from gross
sales. Revenue from sale of built bodies and other components are
recognised when products are despatched and all significant risks and
rewards of ownership of the products are transferred to the customers.
Revenue from service contract is recognized when the services are
completed.
Dividend from investments is recognized as and when a right to receive
payment is established.
Revenue is recognized when no significant uncertainty as to its
determination or realization exists.
(g) Inventories:
Inventories are valued at lower of cost and net realisable value. The
cost of inventories is arrived at on the following basis:
Raw materials : On FIFO basis (net of Cenvat)
Work-in-progress : On weighted average basis including
Appropriate proportion of direct factory
overheads
Finished goods : On weighted average basis including appropriate
proportion of direct factory overheads and
Excise duty
Stores and spares : On FIFO basis
(h) Foreign currency transactions:
a. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the time of the transactions.
b. Monetary items denominated in foreign currencies at the year-end are
restated at the year-end rates. In case of monetary items, which are
covered by forward exchange contracts, the difference between the
year-end rate and rate on the date of the contracts is recognized as
exchange difference and premium/discount on forward exchange contract
is recognized over the life of the contract
c. Non-monetary foreign currency items are carried at cost. Any income
or expense on account of exchange difference either on settlement or on
translation is recognized in the profit and loss account.
(i) Derivative Contracts:
Pursuant to the announcement on accounting for derivatives issued by
the Institute of Chartered Accountants of India (ICAI), the Company in
accordance with the principle of prudence as enunciated in Accounting
Standard 1 on ''Disclosure of Accounting Policies'' provides for losses
in respect of all outstanding derivative contracts at the Balance Sheet
date by marking them to market. Any gains arising on such mark to
market are not recognized as income.
(j) Employee Benefits:
(a) Post-Employment Benefits and Other Long Term Benefit:
i) Defined contribution Plan:
Contributions under Defined Contribution Plans in the form of Provident
Fund are recognized in the Statement of Profit and Loss Account in the
period in which the employee has rendered the service.
ii) Defined Benefit Plan :
The Company''s Liability towards Defined Benefit Plan in the form of
Gratuity is funded through schemes administered by the Life Insurance
Corporation of India (LIC). The liability determined on the basis of
actuarial valuation being carried out at each Balance Sheet date using
the Projected Unit Credit Method. The retirement benefit obligation
recognized in the Balance Sheet represents the total of present value
of the defined benefit obligation as reduced by unrecognized past
service cost and the fair value of plan assets as at the balance sheet
date. Any asset resulting from this calculation is restricted the
present value of available refunds from the plan or reductions in
future contributions to the plan.
Actuarial gains and losses are recognized immediately in the Statement
of Profit and Loss Account in the period of occurrence of such gains
and losses. Past service cost is recognized as an expense on a
straight-line basis over the average period until the benefits become
vested. To the extent that the benefits are already vested immediately
following the introduction of, or changes to, a defined benefit plan,
past service cost is recognized immediately.
(b) Short Term Employee Benefits:
Short-term employee benefits are recognized as expenses at the
undiscounted amount in the Statement of Profit and Loss Account of the
period in which the related services are rendered.
Leave encashment is provided for on the basis of actual costs the
Company expects to pay for the compensated absences.
(k) Borrowing costs:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(l) Income tax:
a. Tax expense comprises of current tax and deferred tax. Current tax
is measured at the amount expected to be paid to/ recovered from the
tax authorities, using the applicable tax rates.
b. Deferred income tax reflect the current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax assets are
recognized only to the extent that there is reasonable certainty that
sufficient future income will be available except that deferred tax
assets, in case there are unabsorbed depreciation and losses, are
recognized if there is virtual certainty that sufficient future taxable
income will be available to realize the same
c. Tax on distributed profits payable in accordance with the provisions
of Section 115-O of the Income-tax Act,1961, is disclosed in accordance
with the Guidance Note on Accounting for Corporate Dividend Tax issued
by the Institute of Chartered Accountants of India (ICAI).
d. Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
which gives future economic benefits in the form of adjustment to
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Accordingly, MAT is recognized as an asset in the Balance Sheet when it
is probable that future economic benefit associated with it will flow
to the Company.
(m) Investments:
Investments classified as long-term (non-current) investments are
stated at costs. Provision is made to recognize a diminution, other
than temporary, in the value of such investments. Investments
classified as current investments are stated at lower of cost and fair
value.
(n) Operating Leases
Assets taken on Lease under which all significant risks and rewards of
ownership are effectively retained by the lesser are classified as
Operating Leases. Lease payments under Operating Leases are recognized
as expenses as incurred in accordance with the respective Lease
Agreements.
(o) Provisions and contingencies:
Provision is recognized in the accounts when there is a present
obligation as a result of past event/s and it is probable that an
outflow of resources will be required to settle the obligation.
Contingent liabilities, if any, are disclosed in the notes to the
financial statements.
Mar 31, 2013
Notes forming part of the financial statements
(j) Employee Benefits :
(a) Post-Employment Benefits and Other Long Term Benefit:
(i) Defined contribution Plan:
Contributions under Defined Contribution Plans in the form of Provident
Fund are recognized in the Statement of Profit and Loss Account in the
period in which the employee has rendered the service.
(ii) Defined Benefit Plan :
The Company''s Liability towards Defined Benefit Plan in the form of
Gratuity is funded through schemes administered by the Life Insurance
Corporation of India (LIC). The liability determined on the basis of
actuarial valuation being carried out at each Balance Sheet date using
the Projected Unit Credit Method. The retirement benefit obligation
recognised in the Balance Sheet represents the total of present value
of the defined benefit obligation as reduced by unrecognised past
service cost and the fair value of plan assets as at the balance sheet
date. Any asset resulting from this calculation is restricted the
present value of available refunds from the plan or reductions in
future contributions to the plan Actuarial gains and losses are
recognised immediately in the Statement of Profit and Loss Account in
the period of occurrence of such gains and losses. Past service cost is
recognized as an expense on a straight-line basis over the average
period until the benefits become vested. To the extent that the
benefits are already vested immediately following the introduction of,
or changes to, a defined benefit plan, past service cost is recognised
immediately
(b) Short Term Employee Benefits:
Short-term employee benefits are recognized as expenses at the
undiscounted amount in the Statement of Profit and Loss Account of the
period in which the related services are rendered.
Leave encashment is provided for on the basis of actual costs the
Company expects to pay for the compensated absences.
(k) Borrowing costs:
Borrowing costs that are attributable to the acquisition or
construction of qualifying capitalized as part of the cost of such
assets. A qualifying asset is one that necessarily takes a substantial
period of time to get ready for its intended use or sale. All other
borrowing costs are charged to revenue.
(I) Income tax:
a .Tax expense comprises of current tax and deferred tax. Current tax
is measured at the amount expected to be paid to/ recovered from the
tax authorities, using the applicable tax rates.
b. Deferred income tax reflect the current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax assets are
recognized only to the extent that there is reasonable certaintythat
sufficient future income will be available except that deferred tax
assets, in case there are unabsorbed depreciation and losses, are
recognized if there is virtual certainty that sufficient future taxable
income will be available to realise the same.
Commercial Engineers & Body Builders Co Limited
Notes forming part of the financial statements
c. Tax on distributed profits payable in accordance with the
provisions of Section 115-O of the Income-tax Act,1961, is disclosed in
accordance with the Guidance Note on Accounting for Corporate Dividend
Tax issued by the Institute of Chartered Accountants of India (ICAI).
(m) Investments:
Investments classified as long term (non-current) investments are
stated at costs. Provision is made to recognize a diminution, other
than temporary, in the value of such investments. Investments
classified as current investments are stated at lower of cost and fair
value.
(n) Operating Leases
Assets taken on Lease under which all significant risks and rewards of
ownership are effectively retained by the lesser are classified as
Operating Leases. Lease payments under Operating Leases are recognized
as expenses as incurred in accordance with the respective Lease
Agreements.
(o) Provisions and contingencies:
Provision is recognized in the accounts when there is a present
obligation as a result of past event/s and it is probable that an
outflow of resources will be required to settle the obligation.
Contingent liabilities, if any, are disclosed in the notes to the
financial statements.
Mar 31, 2012
(a) Basis of accounting and preparation of financial statements:
The financial statements have been prepared under the historical cost
convention in accordance with generally accepted accounting principles
in India and the Accounting Standards notified under the Companies
(Accounting Standards) Rules, 2006. The financial statements have been
prepared in the format prescribed by the Revised Schedule VI to the
Companies Act, 1956.
(b) use of Estimates:
The preparation of financial statements, in conformity with the
generally accepted accounting principles, requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of financial statements and the reported amounts
of revenues and expenses during the reported period. Differences
between the actual results and estimates are recognized in the year in
which the results are known/materialized.
(c) Fixed Assets:
Tangible assets:
Fixed assets are stated at cost net of Cenvat. Costs includes all cost
incurred to bring the assets to their working condition and location.
Intangible assets:
The Company capitalizes software and related implementation costs,
where it is reasonably estimated that the software has an enduring
useful life.
Depreciation on assets acquired/purchased after 1st January, 2011 is
provided using the straight line method based on the management's
estimate of useful life of the assets, which is as under:
Depreciation on assets acquired/purchased during the year is provided
on pro-rata basis from the date of each addition.
iv) Assets having value of Rs. 5000/- or less are charged off fully in
the year of purchase.
v) Computer Software is amortized over the period of three years.
(e) Impairment of Assets:
At the end of each year, the company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard 28 on ''Impairment of Assets''. Where the
recoverable amount of any fixed asset is lower than its carrying amount,
a provision for impairment loss on fixed assets is made for the
difference.
(f) Revenue recognition:
Revenue from sale of built bodies is recognised when products are
despatched and all significant risks and rewards of ownership of the
products are transferred to the customers.
Revenue from service contract is recognized when the services are
completed.
Dividend from investments is recognized as and when a right to receive
payment is established.
(g) Inventories:
Inventories are valued at lower of cost and net realisable value. The
cost of inventories is arrived at on the following basis:
Raw materials : On FIFO basis (net of Cenvat)
Work-in-progress : On weighted average basis including direct factory
overheads
Finished goods : On weighted average basis, attributable overheads and
Excise duty
Stores and spares : On FIFO basis
(h) Foreign currency transactions:
a. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the time of the transactions.
b. Monetary items denominated in foreign currencies at the year-end
are restated at the year-end rates. In case of monetary items, which
are covered by forward exchange contracts, the difference between the
yearend rate and rate on the date of the contracts is recognised as
exchange difference and premium/discount on forward exchange contract
is recognised over the life of the contract
c. Non-monetary foreign currency items are carried at cost. Any income
or expense on account of exchange difference either on settlement or on
translation is recognised in the Profit and loss account.
(i) Derivative Contracts:
Pursuant to the announcement on accounting for derivatives issued by
the Institute of Chartered Accountants of India (ICAI), the Company in
accordance with the principle of prudence as enunciated in Accounting
Standard 1 on 'Disclosure of Accounting Policies' provides for losses
in respect of all outstanding derivative contracts at the Balance Sheet
date by marking them to market. Any gains arising on such mark to
market are not recognized as income.
(j) Employee Benefits:
(a) Post-Employment Benefits and Other Long Term Benefit:
i) defined contribution Plan:
Contributions under Defined Contribution Plans in the form of Provident
Fund are recognized in the
Statement of Profit and Loss Account in the period in which the employee
has rendered the service.
ii) Defined Benefit Plan :
The Company's Liability towards Defined Benefit Plan in the form of
Gratuity is funded through schemes administered by the Life Insurance
Corporation of India (LIC). The liability determined on the basis of
actuarial valuation being carried out at each Balance Sheet date using
the Projected unit Credit Method. The retirement benefit obligation
recognised in the Balance Sheet represents the total of present value
of the Defined benefit obligation as reduced by unrecognised past service
cost and the fair value of plan assets as at the balance sheet date.
Any asset resulting from this calculation is restricted the present
value of available refunds from the plan or reductions in future
contributions to the plan.
Actuarial gains and losses are recognised immediately in the Statement
of Profit and Loss Account in the period of occurrence of such gains and
losses. Past service cost is recognized as an expense on a straight-
line basis over the average period until the benefits become vested. To
the extent that the benefits are already vested immediately following
the introduction of, or changes to, a Defined benefit plan, past service
cost is recognised immediately
(b) Short Term Employee Benefits:
Short-term employee benefits are recognized as expenses at the
undiscounted amount in the Statement of Profit and Loss Account of the
period in which the related services are rendered.
Leave encashment is provided for on the basis of actual costs the
Company expects to pay for the compensated absences.
(k) Borrowing costs:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(l) Income tax:
a. Tax expense comprises of current tax and deferred tax. Current tax
is measured at the amount expected to be paid to/ recovered from the
tax authorities, using the applicable tax rates.
b. Deferred income tax reflect the current period timing differences
between taxable income and accounting income for the period and
reversal of timing differences of earlier years/ period. Deferred tax
assets are recognized only to the extent that there is reasonable
certainty that sufficient future income will be available except that
deferred tax assets, in case there are unabsorbed depreciation and
losses, are recognized if there is virtual certainty that sufficient
future taxable income will be available to realise the same
(m) Investments:
Investments classified as long term (non-current) investments are stated
at costs. Provision is made to recognize a diminution, other than
temporary, in the value of such investments. Investments classified as
current investments are stated at lower of cost and fair value.
(n) Operating Leases
Assets taken on Lease under which all significant risks and rewards of
ownership are effectively retained by the lesser are classified as
Operating Leases. Lease payments under Operating Leases are recognized
as expenses as incurred in accordance with the respective Lease
Agreements.
(o) Contingent Liabilities:
These, if any, are disclosed in the notes. Provision is made in the
accounts if it becomes probable that any outflow of resources embodying
economic benefits will be required to settle the obligation.
Nature of Security
a) Term Loan is secured by: -
Primary Security- Equitable Mortgage of land admeasuring 8062 sq. ft.
bearing plot no 2(new), 14(old) part of banglow No 37D block No: 36
situated at Civil Line Ward, Civil Station, Pachpedi, jabalpur.
Collateral Security - Personal Guarantee of two directors of the
company and their relatives.
b) Vehicle Loans are secured by: - Hypothecation of vehicles.
c) ECB Loan is secured by: -
Primary Security: - First charge on the entire fixed assets of the
company, except on the Factory Land and Building situated at Richhai,
jabalpur.
Collateral Security: - Pari Passu second charge on the entire current
assets of the company.
Terms of Repayment
a) Term Loan: -
Term Loan is repayable in 84 monthly equal installments commencing
30/04/2006.
b) Vehicle Loans: -
Vehicle Loan from State Bank of India is repayable in 36 monthly equal
installments from the date of disbursement i.e. 29/07/2010.
Vehicle Loan from Tata Capital Limited is repayable in 36 monthly equal
installments from the date of disbursement i.e. 25/03/2010.
c) ECB Loan: -
Repayable in quarterly 20 equal installments starting from 21st month
from the date of 1st disbursement i.e 17/02/2012.
Nature of Security
Cash Credit Facilities, Working Capital Loans and Short Term Loans are
secured by either one or more of the following as per terms of
Arrangement with respective banks:
Primary Security:
First charge on Pari -passu basis on entire current assets of the
company.
Collateral Security:
a. First Pari-Passu charge by way of extension of Equitable Mortgage
of factory land and building and hypothecation of plant and machineries
situated at Plot Nos. 21, 22, 33 and 34 at Industrial Estate, Richhai,
jabalpur
b. First Pasi-Passu charge on movable fixed assets of the Company
c. Equitable Mortgage of fat no. 14,5,2,3,6,7,9,10,8 Mouza Hathital,
Gorakhpur, jabalpur.
d. Equitable Mortgage of Property situated at Block No.36, Plot
No.2/29, Pachpedi, South Civil Lines, jabalpur standing in the name of
Shri Arun Gupta
e. First and exclusive charge on the following Fixed assets of the
Company situated at lease hold / free hold land by way of Hypothecation
of :-
- Plot Nos. (Nos. to be allotted) at Industrial Estate, Richhai,
area- 105000 sq.feet, jabalpur (lease hold)
- Plot No.133/2 (New no.169) at udaipura, area- 15.92 acres, Dist: -
Mandla.(free hold)
- Sector -3, Plot no. 690-693, 751-756 at MPAKVN Growth Centre,
Phase-III, area 8.67 acres, Pithampur, Distt-Dhar. (lease hold)
f. First and exclusive charge on Fixed Assets of the propsed Railway
Project of the Company at Imlai, jabalpur.
g. Personal guarantees of two directors and their relatives.
h. Corporate Guarantee of group concerns
Mar 31, 2011
(a) Basis for preparation of accounts:
The accompanying financial statements have been prepared under the
historical cost convention in accordance with generally accepted
accounting principles in India and the Accounting Standards notified
underthe Companies (Accounting Standards) Rules, 2006.
(b) Use of Estimates:
The preparation of financial statements, in conformity with the
generally accepted accounting principles, requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of financial statements and the reported
amounts of revenues and expenses during the reported period.
Differences between the actual results and estimates are recognised in
the year in which the results are known/materialised.
(c) Fixed Assets:
Fixed assets are stated at cost net of Cenvat. Costs includes all cost
incurred to bring the assets to their working condition and location.
The company capitalises software and related implementation costs,
where it is reasonably estimated that the software has an enduring
useful life.
(d) Depreciation and amortisation: (Refer Note No. 5 below)
i) Depreciation is provided using the written-down method based on the
management's estimate of useful life of the assets acquired prior to
1st January, 2011. The depreciation rates for such assets are as under:
Assets Depreciation rate
Factory Building 10%
Non-Factory Building 10%
Residential Flat 5%
Plant and Machinery 15% -100%
Office Equipments 15%
Computers 60%
Vehicles 25.89%
Electrical Installations 20%
Furniture and Fixtures 18.10%
Depreciation on assets acquired/purchased after 1 st January, 2011 is
provided using the straight line method based on the management's
estimate of useful life of the assets, which is as under:
Assets Estimated useful life
Factory Building 25 Years
Non-Factory Building 40 Years
Residential Flat 40 Years
Plant and Machinery 10 Years
Office Equipments 4 Years
Computers 3 years
Vehicles 5 Years
Electrical Installations 5 Years
Furniture and Fixtures 5Years
ii) Leasehold land is amortised over the period of lease on pro rata
basis.
iii) Depreciation on assets acquired/purchased during the year is
provided on pro-rata basis from the date of each addition.
iv) Assets having value ofRs. 5,000/-or less are charged off fully in
the year of purchase.
v) Computer Software is amortised over the period of three years.
(e) Impairment of Assets:
At the end of each year, the company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard 28 on "Impairment of Assets". Where the
recoverable amount of any fixed asset is lower than its carrying
amount, a provision for impairment loss on fixed assets is made for the
difference.
(f) Revenue recognition:
Revenue from sale of built bodies is recognised when products are
despatched and all significant risks and rewards of ownership of the
products are transferred to the customers.
Revenue from service contract is recognised when the services are
completed.
Dividend from investments is recognised as and when a right to receive
payment is established.
(g) Inventories:
Inventories are valued at lower of cost and net realisable value. The
cost of inventories is arrived at on the following basis:
Raw materials : On FIFO basis (net of Cenvat)
Work-in-progress : On weighted average basis including direct factory
overheads
Finished goods : On weighted average basis, attributable overheads and
Excise duty
Stores and spares : On FIFO basis
(h) Foreign currency transactions:
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of transaction. Monetary items are translated at
the year-end rates. The exchange difference between the rate prevailing
on the date of transaction and on the date of settlement as also on
translation of monetary items at the end of the year is recognised as
income or expense, as the case may be.
(i) Employee Benefits:
(a) Post-Employment Benefits and Other Long Term Benefit:
i) Defined contribution Plan:
Contributions under Defined Contribution Plans in the form of Provident
Fund are recognised in the Profit and Loss Account in the period in
which the employee has rendered the service.
ii) Defined Benefit Plan :
The Company's Liability towards Defined Benefit Plan in the form of
Gratuity is funded through schemes administered by the Life Insurance
Corporation of India (LIC). The liability determined on the basis of
actuarial valuation being carried out at each Balance Sheet date using
the Projected Unit Credit Method. The retirement benefit obligation
recognised in the Balance Sheet represents the total of present value
of the defined benefit obligation as reduced by unrecognised past
service cost and the fair value of plan assets as at the balance sheet
date. Any asset resulting from this calculation is restricted to the
present value of available refunds from the plan or reductions in
future contributions to the plan.
Actuarial gains and losses are recognised immediately in the Profit and
Loss Account in the period of occurrence of such gains and losses. Past
service cost is recognised as an expense on a straight-line basis over
the average period until the benefits become vested. To the extent
that the benefits are already vested immediately following the
introduction of, or changes to, a defined benefit plan, past service
cost is recognised immediately
(b) Short Term Employee Benefits:
Short-term employee benefits are recognised as expenses at the
undiscounted amount in the Profit and Loss Account of the period in
which the related services are rendered.
Leave encashment is provided for on the basis of actual costs the
Company expects to pay for the compensated absences.
(j) Borrowing costs:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(k) Income tax:
a. Tax expense comprises of current tax and deferred tax. Current tax
is measured at the amount expected to be paid to/ recovered from the
tax authorities, using the applicable tax rates.
b. Deferred income tax reflect the current period timing differences
between taxable income and accounting income for the period and
reversal of timing differences of earlier years/ period. Deferred tax
assets are recognised only to the extent that there is reasonable
certainty that sufficient future income will be available except that
deferred tax assets, in case there are unabsorbed depreciation and
losses, are recognised if there is virtual certainty that sufficient
future taxable income will be available to realise the same
(I) Investments:
Investments classified as long-term investments are stated at costs.
Provision is made to recognise a diminution, other than temporary, in
the value of such investments. Investments classified as current
investments are stated at lower of cost and fair value.
(m) Operating Leases
Assets taken on Lease under which all significant risks and rewards of
ownership are effectively retained by the lesser are classified as
Operating Leases. Lease payments under Operating Leases are recognised
as expenses as incurred in accordance with the respective Lease
Agreements.
(n) Contingent Liabilities:
These, if any, are disclosed in the notes and accounts. Provision is
made in the accounts if it becomes probable that any outflow of
resources embodying economic benefits will be required to settle the
obligation.
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