Accounting Policies of Deccan Cements Ltd. Company
Mar 31, 2023
1 Company Information:
Deccan Cements Limited (''the Company'') is a public limited company incorporated in India having its registered office at Hyderabad, Telangana. The Company is engaged in the manufacturing and selling of Cement and generation and selling of power from hydel and wind sources.
2 Significant Accounting Policies:
This note provides a list of the significant accounting policies adopted in the preparation of the financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
The financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time, notified under section 133 of the Companies Act, 2013, (âActâ) and other relevant provisions of the Act.
The financial statements have been prepared under the historical cost convention with the exception of certain assets and liabilities that are required to be carried at fair values as per Ind AS. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
iii) Use of estimates and critical accounting judgements:
In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and the associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of property, plant and equipment and intangible assets, impairment of property, plant and equipment, intangible assets and investments, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies.
iv) Revenue Recognition:i) Sale of Products
Revenue is recognised when the performance obligations have been satisfied, which is once control of the goods is transferred from the Company to the customer.
Cement: Revenue related to the sale of goods is recognised when the product is delivered to the destination specified by the customer, and the customer has gained control through their ability to direct the use of and obtain substantially all the benefits from the asset.
Revenue is measured based on consideration specified in the contract with a customer which is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates and excludes amounts collected on behalf of third parties.
Power: Revenue from sale of power is recognized net of wheeling and banking charges, line losses and the selling costs.
Dividend income is recognised when the shareholder''s right to receive the income is established.
Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.
Rental income from investment properties is recognised on a straight line basis over the term of the relevant leases.
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalization.
Other borrowing costs are expensed in the period in which they are incurred.
vi) Employee Benefits:(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
The liabilities for earned leave is not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligations. Remeasurements as a result of the experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
The liabilities or assets recognized in the balance sheet in respect of gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss.
(iv) Defined contribution plans
The Company pays provident fund contributions to publicly administered funds as per local regulations and super annuation fund to LIC of India. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due.
The Company recognizes a liability and an expense for bonuses. The Company recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
Tax expense for the year comprises current and deferred tax.
Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary differences arise from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Tax relating to items recognized directly in equity or other comprehensive income is recognised in equity or other comprehensive income and not in the Statement of Profit and Loss.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they are related to income taxes levied by the same tax authority, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
viii) Property, plant and equipment (PPE):
Property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. The cost of property, plant and equipment comprises of purchase price, applicable duties and taxes, any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets, upto the date the asset is ready for its intended use.
All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, Plant and equipment retired from active use and held for sale are stated at the lower of their net book value and net realizable value and are disclosed separately.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Intangible assets acquired separately are measured on initial recognition cost
x) Depreciation and amortisation expenses:
Depreciation is the systematic allocation of the depreciable amount of PPE over its useful life and is provided on the straight line method over the useful lives as prescribed in Schedule II to the Act.
Intangible assets are amortized on straight line method based on the estimated useful lives.
The amortized period and amortization method are reviewed at each financial year end.
Cost of compensatory land (intangibles) paid / transferred to Government in lieu of forest land diverted for mining and free hold land for mining is amortized over the tenure of the mining lease. Cost of ERP Software is amortized over a period of four years.
xi) Expenditure during construction period:
Expenditure during construction period (including finance cost related to borrowed funds for construction or acquisition of qualifying PPE) is included under Capital Work-in-Progress and the same is allocated to the respective PPE on the completion of their construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under âOther non-current Assetsâ.
Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
Investment property are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost model which is in accordance with Ind AS 40.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no further economic benefits are expected from disposal. Any gain or loss arising on derecognition of the property is included in profit or loss in the period in which the property is derecognised.
xiv) Inventories:Raw Materials, Fuel, Stores & Spares and Packing Materials:
These inventories are valued at lower of cost and net realizable value (NRV). However, these items are considered to be realizable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost, Cost is determined on weighted Average basis.
Valuation of Inventories of Materials in Transit is done at Cost
Work-in-Progress (WIP) and Finished Goods:
These inventories are valued at lower of cost and NRV. Cost of Finished Goods and WIP includes cost of raw materials, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is computed on weighted average basis.
xv) Provisions, Contingent Liabilities and Contingent Assets :
The Company recognises provisions when there is present obligation as a result of past event and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent Liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Contingent assets are not recognized in financial statements since this may result in the recognition of income that may never be realised.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Financial assets:(i) Financial assets carried at amortised cost:
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(ii) Financial assets at fair value through other comprehensive income:
A financial asset is subsequently measured at fair value through other comprehensive income if it 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 on the principal amount outstanding. Further, in case where the company has made an irrevocable selection based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
(iii) Financial assets at fair value through profit or loss:
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.
(iv) 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 are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in statement of profit or loss.
Financial liabilities and equity instruments:Classification as debt or equity:
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and unsecured loans are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
Derecognition of financial instruments:
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
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 or may not be realized.
Offsetting financial instruments:
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
The basic earnings per share is computed by dividing the profit/(loss) for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, profit/(loss) for the year attributable to the equity shareholders and the weighted average number of the equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
xviii) Cash and cash equivalents:
Cash and cash equivalents include cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
xix) Transactions in Foreign Currencies:
The financial statements of the Company are presented in Indian rupees (Rs.), which is the functional currency of the Company and the presentation currency for the financial statements.
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction.
Foreign currency monetary assets and liabilities such as cash, receivables, payables, etc., are translated at year end exchange rates.
Exchange differences arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.
xx) Segment Reporting - Identification of Segments:
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the company''s chief operating decision maker to make decisions for which discrete financial information is available. Based on the management approach as defined in Ind AS 108, the chief operating decision maker evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments.
Grants from the government are recognised at fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs they are intended to compensate and presented within other income.
Government grants relating to the purchase of property, plant and equipment are included in noncurrent liabilities as deferred income and are credited to profit and loss on a straight line basis over the expected lives of the related assets and presented within other income.
The benefit of a government loan at below current market rate of interest is treated as a government grant.
As a lessee:
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether:
(1) The Contract involves the use of an identified asset;
(2) The Company has substantially all the economic benefits from use of the asset through the period of the lease and
(3) The Company has the right to direct the use of the asset.
The Company recognizes a right-of-use asset (âROUâ) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the balance lease term of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of the leases. Lease liabilities are re-measured with a corresponding adjustment to the related right of use asset if the company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset shall be separately presented in the Balance Sheet and lease payments shall be classified as financing cash flows.
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
Operating lease - Rentals payable under operating leases are charged to the statement of profit and loss on a straight line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are utilised.
Dividends paid (including income tax thereon) is recognised in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakh as per the requirement of Schedule III, unless otherwise stated.
xxv) Standards issued but not yet effective:
Ministry of Corporate Affairs (âMCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
Ind AS 1 - Presentation of Financial Statements -This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors -This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its financial statements.
Ind AS 12 - Income Taxes-This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its financial statements.
Mar 31, 2018
Notes forming part of the financial statements for the year ended March 31, 2018
1 Company Information:
Deccan Cements Limited (''the Company'') is a public limited company incorporated in India having its registered office at Hyderabad, Telangana. The Company is engaged in the manufacturing and selling of Cement, producing and selling power from hydel and wind sources.
2 Significant Accounting Policies:
This note provides a list of the significant accounting policies adopted in the preparation of the financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
a) Statement of Compliance:
The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Amendment Rules, 2016 and Companies (Indian Accounting Standards) Amendment Rules, 2017, the relevant provisions of the Companies Act, 2013 (''the Act'') and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
The financial statements for the year ended March 31, 2018 are the Company''s first Ind AS financial statements. The date of transition to Ind AS is April 1, 2016. Accordingly, the Company has prepared an Opening Ind AS Balance Sheet as at April 1, 2016 and comparative figures for the year ended March 31, 2017 also in compliance with Ind AS. An explanation of how the transition to Ind AS has effected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 35.
The transition to Ind AS has resulted in changes in the presentation of the financial statements, disclosures in the notes thereto and accounting policies and principles, which are duly approved and authorised for issue by the Board of Directors of the Company .
b) Basis of preparation:
The financial statements have been prepared under the historical cost convention with the exception of certain assets and liabilities that are required to be carried at fair values as per Ind AS. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
c) Use of estimates and critical accounting judgements:
In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and the associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of property, plant and equipment and intangible assets, impairment of property, plant and equipment, intangible assets and investments, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies.
d) Revenue Recognition:
i) Sale of Products
Cement: Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and when the significant risks and rewards of ownership of the goods have been transferred to the buyer, usually on delivery / dispatch of the goods. It is measured at the value of the consideration received or receivable, net of returns, discounts, volume rebates. Till 30th June 2017, Revenue is inclusive of excise duty and excluding taxes collected from parties such as outgoing sales taxes or value added taxes. With effect from 1st July, 2017 revenue is excluding goods and service tax.
Power: Revenue from sale of power is recognized net of wheeling and banking charges, line losses and the selling costs.
ii) Other income
Dividend income is recognised when the shareholder''s right to receive the income is established.
Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.
Rental income from investment properties and subletting of properties is recognised on a straight line basis over the term of the relevant leases.
e) Borrowing Costs:
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalization. Other borrowings costs are expensed in the period in which they are incurred.
f) Employee Benefits:
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
The liabilities for earned leave is not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligations. Remeasurements as a result of the experience adjustments and changes in actuarial assumptions are recognized in profit or loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(iii) Gratuity obligations
The liability or assets recognized in the balance sheet in respect of gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss.
(iv) Defined contribution plans
The Company pays provident fund contributions to publicly administered funds as per local regulations and superannuation fund to LIC of India. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due.
(v) Bonus plans
The Company recognizes a liability and an expense for bonuses. The Company recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
g) Income Taxes:
Tax expense for the year comprises current and deferred tax.
Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary differences arise from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Tax relating to items recognized directly in equity or other comprehensive income is recognised in equity or other comprehensive income and not in the Statement of Profit and Loss.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they are related to income taxes levied by the same tax authority, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
h) Property, plant and equipment (PPE):
Property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. The cost of property, plant and equipment comprises of purchase price, applicable duties and taxes, any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets, upto the date the asset is ready for its intended use.
All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, Plant and equipment retired from active use and held for sale are stated at the lower of their net book value and net realizable value and are disclosed separately.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
i) Expenditure during construction period:
Expenditure during construction period (including finance cost related to borrowed funds for construction or acquisition of qualifying PPE) is included under Capital Work-in-Progress and the same is allocated to the respective PPE on the completion of their construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under "Other non-current Assets"
j) Depreciation:
Depreciation is the systematic allocation of the depreciable amount of PPE over its useful life and is provided on the straight line method over the useful lives as prescribed in Schedule II to the Act.
k) Intangible assets and amortization:
Intangible assets acquired separately are measured on initial recognition cost and are amortized on straight line method based on the estimated useful lives.
The amortized period and amortization method are reviewed at each financial year end.
Cost of compensatory land (intangibles) paid / transferred to Government in lieu of forest land diverted for mining and free hold land for mining is amortized over the tenure of the mining lease. Cost of ERP Software is amortized over a period of four years.
l) Investment Properties:
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost model which is in accordance with Ind AS 40.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no further economic benefits are expected from disposal. Any gain or loss arising on derecognition of the property is included in profit or loss in the period in which the property is derecognised.
m) Impairment of assets:
Intangible assets and property, plant and equipment: Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash
flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
n) Inventories:
Raw Materials, Fuel, Stores & Spares and Packing Materials
Valued at lower of cost and net realizable value (NRV). However, these items are considered to be realizable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost, Cost is determined on weighted Average basis.
Materials in Transit:
Valuation of Inventories of Materials in Transit is done at Cost Work-in-Progress (WIP) and Finished Goods
Valued at lower of cost and NRV. Cost of Finished Goods and WIP includes cost of raw materials, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is computed on weighted average basis.
o) Provisions, Contingent Liabilities and Contingent Assets :
The Company recognises provisions when there is present obligation as a result of past event and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent Liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Contingent assets are not recognized in financial statements since this may result in the recognition of income that may never be realised.
p) Financial instruments:
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Financial assets
(i) Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it 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 on the principal amount outstanding. Further, in case where the company has made an irrevocable selection based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.
(iv) 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 are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in statement of profit or loss.
Financial liabilities and equity instruments Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and unsecured loans are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
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 or may not be realized.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
q) Earnings Per Share :
The basic earnings per share is computed by dividing the profit/(loss) for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, profit/(loss) for the year attributable to the equity shareholders and the weighted average number of the equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
r) Cash and cash equivalents:
Cash and cash equivalents include cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
s) Transactions in Foreign Currencies:
The financial statements of the Company are presented in Indian rupees (Rs), which is the functional currency of the Company and the presentation currency for the financial statements.
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction.
Foreign currency monetary assets and liabilities such as cash, receivables, payables, etc., are translated at year end exchange rates.
Exchange differences arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.
t) Segment Reporting - Identification of Segments:
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the company''s chief operating decision maker to make decisions for which discrete financial information is available. Based on the management approach as defined in Ind AS 108, the chief operating decision maker evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments.
u) Government Grants:
Grants from the government are recognised at fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs they are intended to compensate and presented within other income.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit and loss on a straight line basis over the expected lives of the related assets and presented within other income. The benefit of a government loan at below current market rate of interest is treated as a government grant.
v) Leases
The Company determines whether an arrangement contains a lease by assessing whether the fulfillment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to use that asset to the Company in return for payment. Where this occurs, the arrangement is deemed to include a lease and is accounted for either as finance or operating lease.
The Company as lessee
Operating lease - Rentals payable under operating leases are charged to the statement of profit and loss on a straight line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are utilised.
The Company as lessor
Operating lease - Rental income from operating leases is recognised in the statement of profit and loss on a straight line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognised on a straight line basis over the lease term.
w) Dividend Distribution
Dividends paid (including income tax thereon) is recognised in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
x) Rounding off amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
y) Standards issued but not yet effective
The standards issued, but not yet effective up to the date of issuance of the Company''s financial statements are disclosed below.
Ind AS 115, Revenue from Contract with Customers:
On March 28,2018, Ministry of Corporate Affairs has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that revenue should be recognised when a customer obtains control of a promised good or service and thus has the ability to direct the use and obtain the benefits from the good or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and 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 Company will adopt the standard on April 1, 2018 and the effect on adoption of Ind AS 115 is expected to be insignificant.
Ind AS 21, Foreign currency transactions and advance consideration:
On March 28, 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing 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. This amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
Mar 31, 2017
1. Significant Accounting Policies
a) Basis of Preparation
The financial statements are prepared under the historical cost convention on accrual basis in accordance with the Generally Accepted Accounting Principles (GAAP) that are followed in India. GAAP comprises the mandatory accounting standards as prescribed by Companies (Accounting Standards) Rules 2006 [which continue to apply under Companies Act, 2013 (âthe Actâ)] and other applicable provisions of the Act. All incomes and expenditures, having a material bearing on the financial statements, are recognized on an accrual basis.
b) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities at the end of the reporting period. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from these estimates.
c) Fixed Assets Tangible Fixed Assets
Tangible Fixed Assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises of purchase price, borrowing costs if capitalisation criteria are met and directly attributable cost of bringing the asset to working condition for its intended use.
Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets including day to day repairs and maintenance expenditure and cost of replacing parts are charged to the Statement of Profit and Loss for the period during which such expenses are incurred.
Capital Work-in-progress: Tangible fixed assets which are not yet ready for their intended use are stated at amount expended up to the date of the Balance Sheet date.
Depreciation on Tangible Fixed Assets
Depreciation on Tangible Fixed Assets is provided on Straight Line Method as per the useful life prescribed in Schedule II to the Act.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition cost and are amortized on Straight Line Method based on the estimated useful economic life.
The amortized period and amortization method are reviewed at each financial year end.
Cost of compensatory land (intangibles) paid / transferred to Government in lieu of forest land diverted for mining and free hold land for mining is amortized over the tenure of the mining lease.
Impairment of Assets
All the fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment loss, being the excess carrying value over the recoverable value of the assets, is charged to the Statement of Profit & Loss in the respective financial year. The impairment loss recognized in the prior years is reversed in cases where the recoverable value exceeds the carrying value, upon the reassessment in the subsequent years.
d) Revenue Recognition
i) Cement: Sales are recognized at the point of dispatch i.e., when significant risk is transferred to customers.
ii) Power: Revenue from sale of power is recognized net of Wheeling and banking charges, line losses and the selling costs.
e) Inventory Valuation
i) Raw Materials, Coal, Stores & Spares, and Packing Materials: At Weighted Average Cost
ii) Materials in Transit: At Cost
iii) Work in process: At Weighted Average Cost or Net Realizable Value, whichever is lower.
iv) Finished goods: At Cost or Net Realizable Value, whichever is lower.
Cost comprises of cost of purchase, cost of conversion, & other costs incurred in bringing the inventories to its present location & condition.
f) Investments
Investments are classified as non-current and current investments. Long Term Investments are carried at cost of acquisition less provision for diminution, other than temporary, in value of such investments. Current investments are carried at lower of cost and fair value.
g) Internal Consumption
Internal consumption of the Companyâs products, which are otherwise marketable, is accounted for at transfer price and is included under sales.
h) Transfer price for Inter divisional transfer / consumption
i) Cement: Internal consumption is taken at cost plus statutory levies as applicable.
ii) Power (Hydel / Wind): At cost of purchase by the division consuming such power from external vendors.
i) Employee Benefits
Employee benefits include provident fund, superannuation fund, employee state insurance scheme, gratuity fund and compensated absences.
Defined Contribution Plan
The Companyâs contribution to provident fund, superannuation fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees.
Defined Benefit Plan Gratuity
In accordance with the Payment of Gratuity Act, 1972 the Company provides for gratuity covering eligible employees.
Liability on account of gratuity is determined using the projected unit cost method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss, in the period in which they occur.
The gratuity liability is covered through a recognized Gratuity Fund managed by Life Insurance Corporation of India and the contributions made under the scheme are charged to Statement of Profit and Loss.
Compensated Absences
The employees are entitled to accumulated leaves subject to certain limits, for future use / encashment, as per the policy of the Company.
The liability towards such unutilized leave as at the end of each balance sheet date is determined based on independent actuarial valuation and recognized in the Statement of Profit and Loss.
j) Borrowing Costs
âBorrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalization of such asset are included in the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
k) Taxation
Provision for income tax is made for both current and deferred taxes. Provision for current income tax is made at current tax rates based on assessable income. Deferred income taxes are recognized for the future tax consequences attributable to timing differences between the carrying amounts of existing assets and liabilities and their respective tax bases. The effect on deferred tax assets and liabilities of a change in tax rates as stated in the financial statements is recognized using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets resulting from unabsorbed business loss / depreciation allowance are recognized and carried forward only when there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. All other deferred tax assets are recognized and carried forward only when there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized
l) Contingencies
The Company recognizes provisions when there is present obligation as a result of past event and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of obligation. A disclosure for contingent liabilities is made in the notes to accounts when there is a possible obligation or a present obligation that may, but probably will not; require an out flow of resources. Contingent assets are neither recognized nor disclosed in the financial statements.
m) Earnings Per Share
Basic earnings per equity share is computed by dividing the net profit for the year attributable to the Equity Shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit for the year, adjusted for the effects of dilutive potential equity shares, attributable to the Equity Shareholders by the weighted average number of the equity shares and dilutive potential equity shares outstanding during the year except where the results are anti-dilutive.
Mar 31, 2016
1. Corporate Information
Deccan Cements Limited (âThe Companyâ) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the manufacturing and selling of cement.
2. Significant Accounting Policies
a) Basis of Preparation
The financial statements are prepared under the historical cost convention on accrual basis in accordance with the Generally Accepted Accounting Principles (GAAP) that are followed in India. GAAP comprises the mandatory accounting standards as prescribed by Companies (Accounting Standards) Rules 2006 [which continue to apply under Companies Act, 2013 (âthe Actâ)] and other applicable provisions of the Act. All incomes and expenditures, having a material bearing on the financial statements, are recognized on an accrual basis.
b) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities at the end of the reporting period. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from these estimates.
c) Fixed Assets Tangible Fixed Assets
Tangible Fixed Assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises of purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to working condition for its intended use.
Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets including day to day repairs and maintenance expenditure and cost of replacing parts are charged to the Statement of Profit and Loss for the period during which such expenses are incurred.
Capital Work-in-progress: Tangible fixed assets which are not yet ready for their intended use are stated at amount expended up to the date of the Balance Sheet date.
Depreciation on Tangible Fixed Assets
Depreciation on Tangible Fixed Assets is provided on Straight Line Method as per the useful life prescribed in Schedule II to the Act.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition cost and are amortized on Straight Line Method based on the estimated useful economic life.
The amortized period and amortization method are reviewed at each financial year end.
Cost of compensatory land (intangibles) paid / transferred to Government in lieu of forest land diverted for mining and free hold land for mining is amortized over the tenure of the mining lease.
Impairment of Assets
All the fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment loss, being the excess carrying value over the recoverable value of the assets, is charged to the Statement of Profit & Loss in the respective financial year. The impairment loss recognized in the prior years is reversed in cases where the recoverable value exceeds the carrying value, upon the reassessment in the subsequent years.
d) Revenue Recognition
i) Cement: Sales are recognized at the point of dispatch i.e., when significant risk is transferred to customers.
ii) Power: Revenue from sale of power is recognized net of Wheeling and banking charges, line losses and the selling costs.
e) Inventory Valuation
i) Raw Materials, Coal, Stores & Spares, and Packing Materials: At Weighted Average Cost
ii) Materials in Transit: At Cost
iii) Work in process: At Weighted Average Cost or Net Realizable Value, whichever is lower.
iv) Finished goods: At Cost or Net Realizable Value, whichever is lower.
Cost comprises of cost of purchase, cost of conversion, & other costs incurred in bringing the inventories to its present location & condition.
f) Investments
Investments are classified as non-current and current investments. Long Term Investments are carried at cost of acquisition less provision for diminution, other than temporary, in value of such investments. Current investments are carried at lower of cost and fair value.
g) Internal Consumption
Internal consumption of the Companyâs products, which are otherwise marketable, is accounted for at transfer price and is included under sales.
h) Transfer price for Inter divisional transfer / consumption
i) Cement: Internal consumption is taken at cost plus statutory levies as applicable.
ii) Power (Hydel / Wind): At cost of purchase by the division consuming such power from external vendors.
i ) Employee Benefits
Employee benefits include provident fund, superannuation fund, employee state insurance scheme, gratuity fund and compensated absences.
Defined Contribution Plan
The Companyâs contribution to provident fund, superannuation fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees.
Defined Benefit Plan Gratuity
In accordance with the Payment of Gratuity Act, 1972 the Company provides for gratuity covering eligible employees.
Liability on account of gratuity is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss, in the period in which they occur.
The gratuity liability is covered through a recognized Gratuity Fund managed by Life Insurance Corporation of India and the contributions made under the scheme are charged to Statement of Profit and Loss.
Compensated Absences
The employees are entitled to accumulated leaves subject to certain limits, for future use / encashment, as per the policy of the Company.
The liability towards such unutilized leave as at the end of each balance sheet date is determined based on independent actuarial valuation and recognized in the Statement of Profit and Loss.
j) Borrowing Costs
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalization of such asset are included in the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
k) Taxation
Provision for income tax is made for both current and deferred taxes. Provision for current income tax is made at current tax rates based on assessable income. Deferred income taxes are recognized for the future tax consequences attributable to timing differences between the carrying amounts of existing assets and liabilities and their respective tax bases. The effect on deferred tax assets and liabilities of a change in tax rates as stated in the financial statements is recognized using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets resulting from unabsorbed business loss / depreciation allowance are recognized and carried forward only when there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. All other deferred tax assets are recognized and carried forward only when there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized
l) Contingencies
The Company recognizes provisions when there is present obligation as a result of past event and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of obligation. A disclosure for contingent liabilities is made in the notes to accounts when there is a possible obligation or a present obligation that may, but probably will not; require an out flow of resources. Contingent assets are neither recognized nor disclosed in the financial statements.
m) Earnings Per Share
Basic earnings per equity share is computed by dividing the net profit for the year attributable to the Equity Shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit for the year, adjusted for the effects of dilutive potential equity shares, attributable to the Equity Shareholders by the weighted average number of the equity shares and dilutive potential equity shares outstanding during the year except where the results are anti-dilutive
Mar 31, 2015
A) Basis of Preparation
The financial statements are prepared under the historical cost
convention on accrual basis in accordance with the Generally Accepted
Accounting Principles (GAAP) that are followed in India. GAAP
comprises the mandatory accounting standards as prescribed by Companies
(Accounting Standards) Rules 2006 [which continue to apply under
Companies Act, 2013("the Act")] and other applicable provisions of
the Act. All incomes and expenditures, having a material bearing on the
financial statements, are recognized on an accrual basis.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities and disclosure of contingent
liabilities at the end of the reporting period. Although these
estimates are based upon management's best knowledge of current
events and actions, actual results could differ from these estimates.
c) Fixed Assets Tangible Fixed Assets
Tangible Fixed Assets are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises of purchase price, borrowing costs if capitalisation criteria
are met and directly attributable cost of bringing the asset to working
condition for its intended use.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets including day to day
repairs and maintenance expenditure and cost of replacing parts are
charged to the Statement of Profit and Loss for the period during which
such expenses are incurred.
Capital Work-in-progress: Tangible fixed assets which are not yet ready
for their intended use are stated at amount expended up to the date of
the Balance Sheet date.
Depreciation on Tangible Fixed Assets
Depreciation on Tangible Fixed Assets is provided on straight line
method as per the useful life prescribed in Schedule II to the
Companies Act, 2013.
Intangible Assets
Intangible assets acquired separately are measured on initial
recognition cost and are amortized on straight line method based on the
estimated useful economic life.
The amortized period and amortization method are reviewed at each
financial year end.
Cost of compensatory land (intangibles) transferred to Government in
lieu of forest land diverted for mining and free hold land for mining
is amortized over the tenure of the Mining lease.
Impairment of Assets
All the fixed assets are assessed for any indication of impairment at
the end of each financial year. On such indication, the impairment
loss, being the excess carrying value over the recoverable value of the
assets, is charged to the Statement of Profit & Loss in the respective
financial year. The impairment loss recognized in the prior years is
reversed in cases where the recoverable value exceeds the carrying
value, upon the reassessment in the subsequent years.
d) Revenue Recognition
i) Cement: Sales are recognized at the point of dispatch i.e., when
significant risk is transferred to customers.
ii) Power: Revenue from sale of power is recognized net of Wheeling and
banking charges, line losses and the selling costs.
e) Inventory Valuation
i) Raw Materials, Coal, Stores & Spares, and Packing Materials: At
Weighted Average Cost
ii) Materials in Transit: At Cost
iii) Work in process: At Weighted Average Cost or Net Realizable Value,
whichever is lower.
iv) Finished goods: At Cost or Net Realizable Value, whichever is
lower.
Cost comprises of cost of purchase, cost of conversion, & other costs
incurred in bringing the inventories to its present location &
condition.
f) Investments
Investments are classified as non-current and current investments. Long
Term Investments are carried at cost of acquisition less provision for
diminution, other than temporary, in value of such investments.
Current investments are carried at lower of cost and fair value.
g) Internal Consumption
Internal consumption of the Company's products, which are otherwise
marketable, is accounted for at transfer price and is included under
sales.
h) Transfer price for Inter divisional transfer / consumption
i) Cement: Internal consumption is taken at cost plus statutory levies
as applicable.
ii) Power (Hydel / Wind): At cost of purchase by the division consuming
such power from external vendors.
i) Employee Benefits
Employee benefits include provident fund, superannuation fund, employee
state insurance scheme, gratuity fund and compensated absences.
Defined Contribution Plan
The Company's contribution to provident fund, superannuation fund and
employee state insurance scheme are considered as defined contribution
plans and are charged as an expense based on the amount of contribution
required to be made and when services are rendered by the employees.
Defined Benefit Plan
Gratuity
In accordance with the Payment of Gratuity Act, 1972 the Company
provides for gratuity covering eligible employees.
Liability on account of gratuity is determined using the projected unit
credit method, with actuarial valuations being carried out at each
balance sheet date. Actuarial gains and losses are recognized in the
Statement of Profit and Loss, in the period in which they occur.
The gratuity liability is covered through a recognized Gratuity Fund
managed by Life Insurance Corporation of India and the contributions
made under the scheme are charged to Statement of Profit and Loss.
Compensated Absences
The employees are entitled to accumulate leave subject to certain
limits, for future use / encashment, as per the policy of the Company.
The liability towards such unutilized leave as at the end of each
balance sheet date is determined based on independent actuarial
valuation and recognized in the Statement of Profit and Loss.
j) Borrowing Costs
'Borrowing costs include interest, amortization of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilized for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalization of such asset are included in the cost of the assets.
Capitalization of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
k) Taxation
Provision for income tax is made for both current and deferred taxes.
Provision for current income tax is made at current tax rates based on
assessable income. Deferred income taxes are recognized for the future
tax consequences attributable to timing differences between the
carrying amounts of existing assets and liabilities and their
respective tax bases. The effect on deferred tax assets and liabilities
of a change in tax rates as stated in the financial statements is
recognized using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Deferred tax assets
resulting from unabsorbed business loss / depreciation allowance are
recognized and carried forward only when there is virtual certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realized. All other deferred tax assets
are recognized and carried forward only when there is a reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized
l) Contingencies
The Company recognizes provisions when there is present obligation as a
result of past event and it is probable that there will be an outflow
of resources and reliable estimate can be made of the amount of
obligation. A disclosure for contingent liabilities is made in the
notes to accounts when there is a possible obligation or a present
obligation that may, but probably will not; require an out flow of
resources. Contingent assets are neither recognized nor disclosed in
the financial statements.
m) Earnings Per Share
Basic earnings per equity share is computed by dividing the net profit
for the year attributable to the Equity Shareholders by the weighted
average number of equity shares outstanding during the year. Diluted
earnings per share is computed by dividing the net profit for the year,
adjusted for the effects of dilutive potential equity shares,
attributable to the Equity Shareholders by the weighted average number
of the equity shares and dilutive potential equity shares outstanding
during the year except where the results are anti-dilutive.
Mar 31, 2013
A) Basis of Preparation
(i) Financial Statements are prepared in accordance with Generally
Accepted Accounting Principles in India (GAAP) under the historical
cost convention.
(ii) The Company follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis.
b) Use of Estimates
The preparation of financial statements is in conformity with generally
accepted accounting principles which requires management to make
estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities and disclosure of contingent
liabilities at the end of the reporting periods. Although these
estimates are based upon management''s best knowledge of current events
and actions, actual results could differ from these estimates.
c) Fixed Assets Tangible Fixed Assets
Tangible Fixed Assets are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalisation criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets including day to day
repairs and maintenance expenditure and cost of replacing parts are
charged to the statement of Profit and Loss for the period during which
such expenses are incurred.
Depreciation on Tangible Fixed assets
Depreciation on Fixed Assets is provided in accordance with Schedule
XIV of the Companies Act, 1956, on Straight Line Method in respect of
Buildings, Plant and Machinery, and on Written Down Value Method in
respect of other Fixed Assets.
Intangible Assets
Intangible assets acquired separately are measured on initial
recognition cost and are amortised on a straight line basis over
estimated useful economic life.
The amortised period and amortisation method are reviewed at each
financial year end.
Cost of compensatory land (intangibles) transferred to Government of
Andhra Pradesh in lieu of forest land diverted for mining and free hold
land for mining is amortized over the tenure of the Mining lease.
Capital Work-in-progress is stated at amount expended up to the date of
the Balance Sheet.
All the fixed assets are assessed for any indication of impairment at
the end of each financial year. On such indication the impairment loss,
being the excess carrying value over the recoverable value of the
assets, is charged to the statement of Profit & Loss in the respective
financial year. The impairment loss recognized in the prior years is
reversed in cases where the recoverable value exceeds the carrying
value, upon the reassessment in the subsequent years.
d) Revenue Recognition
(i) Cement: Sales are recognized at the point of dispatch i.e., when
significant risk is transferred to customers.
(ii) Power: Revenue from sale of power is recognized net of Wheeling
charges.
e) Inventory Valuation
(i) Raw Materials, Coal, Stores & Spares and Packing Materials: at
Weighted Average Cost
(ii) Materials in Transit: at Cost
(iii) Work in process: at Weighted Average Cost or Net Realisable
Value, whichever is lower.
(iv) Finished goods: at Cost or Net Realisable Value, whichever is
lower.
Cost comprises of cost of purchase, cost of conversion & other costs
incurred in bringing the inventories to its present location &
condition.
f) Investments
Investments are stated at cost of acquisition. Diminution in the value
of investments, other than temporary, meant to be held for a long
period of time is recognized.
g) Internal Consumption
Internal consumption of the Company''s products, which are otherwise
marketable, is accounted for at transfer price and is included under
sales.
h) Transfer price for Inter divisional transfer / consumption
(i) Cement: Internal consumption is taken at cost plus statutory levies
as applicable.
(ii) Power (Hydel / Wind): At cost of purchase from APCPDCL by the
division consuming such power.
i) Retirement Benefits
Provident Fund is administered through Regional Provident Fund
Commissioner. Superannuation and Gratuity are administered through the
scheme of Life Insurance Corporation of India. The liability towards
Leave Encashment and Gratuity is recognized on the basis of actuarial
valuation.
j) Borrowing Costs
Borrowing costs are recognized as an expense in the period in which
they are incurred. Borrowing costs incurred for acquiring and
construction of assets are capitalised as part of the cost of such
assets.
k) Taxation
Provision for income tax is made for both current and deferred taxes.
Provision for current income tax is made at current tax rates based on
assessable income. Deferred income taxes are recognized for the future
tax consequences attributable to timing differences between the
carrying amounts of existing assets and liabilities and their
respective tax bases. The effect on deferred tax assets and liabilities
of a change in tax rates as stated in the financial statements is
recognized using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Deferred tax assets
are recognized and carried forward only when there is virtual certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realized.
l) Contingencies
The Company recognizes provisions when there is present obligation as a
result of past event and it is probable that there will be an outflow
of resources and reliable estimate can be made of the amount of
obligation. A disclosure for contingent liabilities is made in the
notes to accounts when there is a possible obligation or a present
obligation that may, but probably will not, require an out flow of
resources. Contingent assets are neither recognized nor disclosed in
the financial statements.
m) Earnings Per Share
Earnings per share is calculated by dividing the net profit or loss for
the year attributable to equity share holders by the weighted average
number of equity shares outstanding during the year.
Mar 31, 2012
A) Basis of Preparation
(i) Financial Statements are prepared in accordance with Generally
Accepted Accounting Principles in India (GAAP) under the historical
cost convention.
(ii) The Company follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis.
b) Use of Estimates
The preparation of financial statements is in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities and disclosure of contingent liabilities at the
end of the reporting periods. Although these estimates are based upon
management's best knowledge of current events and actions, actual
results could differ from these estimates.
c) Fixed Assets:
Tangible Fixed Assets:
Tangible Fixed Assets are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalisation criteria
are met and directly attributable cost of bringing of the asset to its
working condition for the intended use.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets including day to day
repairs and maintenance expenditure and cost of replacing parts are
charged to the statement of Profit and Loss for the period during which
such expenses are incurred.
Depreciation on Tangible Fixed assets:
Depreciation on Fixed Assets is provided in accordance with Schedule
XIV of the Companies Act, 1956, on Straight Line Method in respect of
Buildings, Plant and Machinery, and on Written Down Value Method in
respect of other Fixed Assets.
Intangible Assets:
Intangible assets acquired separately are measured on initial
recognition cost and are amortized on a straight line basis over
estimated useful economic life.
The amortized period and amortization method are reviewed at each
financial year end.
Cost of compensatory land (intangibles) transferred to Government of
Andhra Pradesh in lieu of forest land diverted for mining and free hold
land for mining is amortized over the tenure of the Mining lease.
Capital Work-in-progress is stated at amount expended up to the date of
the Balance Sheet.
All the fixed assets are assessed for any indication of impairment at
the end of each financial year. On such indication the impairment loss,
being the excess carrying value over the recoverable value of the
assets, is charged to the statement of Profit & Loss in the respective
financial years. The impairment loss recognized in the prior years is
reversed in cases where the recoverable value exceeds the carrying
value, upon the reassessment in the subsequent years.
d) Revenue Recognition :
i) Cement: Sales are recognized at the point of dispatch i.e., when
significant risk is transferred to customers
ii) Power: Revenue from sale of power is recognized net of Wheeling
charges.
e) Inventory Valuation:
i) Raw Materials, Coal, Stores & Spares, and Packing Materials: At
Weighted Average Cost
ii) Materials in Transit: At Cost
iii) Work in process: At Weighted Average cost or Net Realizable Value,
whichever is lower.
iv) Finished goods: At cost or Net Realizable Value, whichever is
lower.
Cost comprises of cost of purchase, cost of conversion, & other costs
incurred in bringing the inventories to the present location &
condition.
f) Investments:
Investments are stated at cost of acquisition. Diminution in the value
of investments other than temporary meant to be held for a long period
of time is recognized.
g) Internal Consumption:
Internal consumption of the Company's products, which are other wise
marketable, is accounted for at transfer price and is included under
sales.
h) Transfer price for Inter divisional transfer / consumption:
i) Cement: Internal consumption is taken at cost plus statutory levies
as applicable.
ii) Power (Hydel / Wind): At cost of purchase from APCPDCL/ TNEB by the
division consuming such power.
i) Retirement Benefits:
Provident Fund is administered through Regional Provident Fund
Commissioner. Superannuation and Gratuity are administered through the
scheme of Life Insurance Corporation of India. The liability towards
Leave Encashment and Gratuity is recognized on the basis of actuarial
valuation. j) Borrowing Costs:
Borrowing costs are recognized as an expense in the period in which
they are incurred. Borrowing costs incurred for acquiring and
construction of assets are capitalized as part of the cost of such
assets. k) Taxation:
Provision for income tax is made for both current and deferred taxes.
Provision for current Income tax is made at current tax rates based on
assessable income. Deferred income taxes are recognized for the future
tax consequences attributable to timing differences between the
carrying amounts of existing assets and liabilities and their
respective tax bases. The effect on deferred tax assets and liabilities
of a change in tax rates as stated in the financial statements is
recognized using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Deferred tax assets
are recognized and carried forward only when there is virtual certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realized.
l) Contingencies :
The Company recognizes provisions when there is present obligation as a
result of past event and it is probable that there will be an outflow
of resources and reliable estimate can be made of the amount of
obligation. A disclosure for contingent liabilities is made in the
notes to accounts when there is a possible obligation or a present
obligation that may, but probably will not, require an out flow of
resources. Contingent assets are neither recognized nor disclosed in
the financial statements.
m) Earnings Per Share:
Earnings per share is calculated by dividing the net profit or loss for
the year attributable to equity share holders by the weighted average
no of equity shares outstanding during the year.
Mar 31, 2011
A) System of Accounting :
i) Financial Statements are prepared in accordance with Generally
Accepted accounting principles in India (GAAP) under the historical
cost convention.
ii) The Company follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis.
iii) Investment subsidy not specifically related to any fixed asset is
credited to a specific reserve upon receipt and retained till the
requisite conditions are fulfilled. On fulfillment of such conditions,
the same is transferred to Capital Reserve.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
c) Fixed Assets :
i) All Fixed Assets are stated at their original cost of
acquisition/installation less depreciation.
ii) Capital Work-in-progress is stated at amount expended (including
advances) up to the date of the Balance Sheet.
iii) All the fixed assets are assessed for any indication of impairment
at the end of each financial year. On such indication the impairment
loss, being the excess carrying value over the recoverable value of the
assets, are charged to the profit & loss account in the respective
financial years. The impairment loss recognized in the prior years is
reversed in cases where the recoverable value exceeds the carrying
value, upon the reassessment in the subsequent years.
d) Expenditure during construction period :
Expenditure during construction period is grouped under "Capital work
in progress". Upon commencement of commercial production, the
expenditure is allocated to buildings and plant and machinery in the
ratio of their direct cost.
e) Depreciation :
Depreciation on Fixed Assets is provided in accordance with Schedule
XIV of the Companies Act, 1956, on Straight Line Method in respect of
Buildings, Plant and Machinery, and on Written Down Value Method in
respect of other Fixed Assets.
f) Amortization :
Cost of compensatory land (intangibles) transferred to Government of
Andhra Pradesh in lieu of forest land diverted for mining and free hold
land for mining is amortized over the tenure of the Mining lease.
g) Revenue Recognition :
i) Cement :
Sales are recognized at the point of dispatch i.e when significant risk
is transferred to customers.
ii) Power :
Revenue from sale of power is recognized net of Wheeling charges.
h) Inventory Valuation
i) Raw Materials, Coal Stores & Spares, and Packing Materials: At
Weighted average Cost
ii) Materials in Transit: At Cost
iii) Work in process: At Weighted Average cost or Net Realisable Value,
which ever is lower.
iv) Finished goods: At cost or Net Realisable Value, which ever is
lower. Cost comprises of cost of purchase, cost of conversion, & other
costs incurred in bringing the inventories to the present location &
condition.
i) Power Subsidy :
The Power subsidy granted by the Andhra Pradesh State Electricity Board
pursuant to GO issued by the Department of Industries and Commerce is
treated as a Capital Receipt.
j) Investments :
Investments are stated at cost of acquisition. Diminution in the value
of investments other than temporary meant to be held for a long period
of time is recognized.
k) Internal Consumption :
Internal consumption of the Companys products, which are other wise
marketable, is accounted for at transfer price and is included under
sales.
I) Transfer price for Inter divisional transfer/consumption :
i) Cement: Internal consumption is taken at cost plus statutory levies
as applicable.
ii) Power
Hydel/Wind: At cost of purchase from APCPDCL/ TNEB by the division
consuming such Power
m) Retirement Benefits:
Provident Fund is administered through Regional Provident Fund
Commissioner. The Superannuation and Gratuity are administered through
the scheme of Life Insurance Corporation of India. The liability
towards Leave Encashment and Gratuity is recognized on the basis of
actuarial valuation.
n) Borrowing Costs :
Borrowing costs are recognized as an expense in the period in which
they are incurred. Borrowing costs incurred for acquiring and
construction of assets are capitalised as part of the cost of such
assets.
o) Taxation : Provision for income tax is made for both current and
deferred taxes. Provision for current Income tax is made at current tax
rates based on assessable income. Deferred income taxes are recognized
for the future tax consequences attributable to timing differences
between the carrying amounts of existing assets and liabilities and
their respective tax bases. The effect on deferred tax assets and
liabilities of a change in tax rates as stated in the financial
statements is recognized using the tax rates and tax laws that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax assets are recognized and carried forward only when there
is virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
p) Contingencies : The Company recognizes provisions when there is
present obligation as a result of past event and it is probable that
there will be an outflow of resources and reliable estimate can be made
of the amount of obligation. A disclosure for contingent Liabilities is
made in the notes to accounts when there is a possible obligation or a
present obligation that may, but probably will not, require an out flow
of resources. Contingent assets are neither recognized nor disclosed in
the financial statements.
q) Earning Per Share: Earning per share is calculated by dividing the
net profit or loss for the year attributable to equity share holders by
the weighted average no of equity shares outstanding during the year.
Mar 31, 2010
A) System of Accounting :
i) Financial Statements are based on historical cost.
ii) The Company follows the mercantile system of accounting and
recognizes income and expenditure
on accrual basis. iii) Investment subsidy not specifically related to
any fixed asset is credited to a specific reserve upon
receipt and retained till the requisite conditions are fulfilled. On
fulfillment of such conditions, the
same is transferred to Capital Reserve.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
c) Fixed Assets :
i) All Fixed Assets are stated at their original cost of acquisition /
installation less depreciation.
ii) Capital Work-in-progress is stated at amount expended (including
advance) up to the date of the Balance Sheet.
iii) All the fixed assets are assessed for any indication of impairment
at the end of each financial year. On such indication the impairment
loss, being the excess carrying value over the recoverable value of the
assets, are charged to the profit & loss account in the respective
financial years. The impairment loss recognized in the prior years is
reversed in, cases where the recoverable value exceeds the carrying
value, upon the reassessment in the subsequent years.
d) Expenditure during construction period :
Expenditure during construction period is grouped under "Capital work
in progress". Upon commencement of commercial production, the
expenditure is allocated to buildings and plant and machinery in the
ratio of their direct cost.
e) Depreciation :
Depreciation on Fixed Assets is provided in accordance with Schedule
XIV of the Companies Act, 1956, on Straight Line Method in respect of
Buildings, Plant and Machinery and on Written Down Value Method in
respect of other Fixed Assets.
f) Amortization :
Cost of compensatory land (intangibles) transferred to Government of
Andhra Pradesh in lieu of forest land diverted for mining and free hold
land for mining is amortized over the tenure of the Mining lease.
g) Revenue Recognition : i) Cement :
Revenue Sale of goods is recognized at the point of dispatch i.e when
significant risk are transferred to customers. ii) Power :
Revenue from sale of power is recognized net of Wheeling charges on
power is supplied to Customers.
h) Inventory Valuation
i) Raw Materials, Coal, Stores & Spares, and Packing Materials: At
Weighted average Cost
ii) Materials in Transit : At Cost
iii) Work in process : At Weighted Average cost or Net Realisable
Value, which ever is lower.
iv) Finished goods : At Weighted Average cost or Net Realisable Value,
whichever is lower. Cost comprises of cost of purchase, cost of
conversion & other costs incurred in bringing the inventories to the
present location & condition.
i) Power Subsidy :
The Power Subsidy granted by the Andhra Pradesh State Electricity Board
pursuant to GO issued by the Department of Industries and Commerce is
treated as a Capital Receipt.
j) Investments :
Investments are stated at cost of acquisition. Diminution in the value
of investments other than temporary meant to be held for a long period
of time is recognized.
k) Internal Consumption :
Internal consumption of the Companys products, which are otherwise
marketable, is accounted for at transfer price and is included under
sales.
1) Transfer price for Inter divisional transfer / consumption :
i) Cement : Internal consumption is taken at cost plus statutory levies
as applicable. ii) Power
Hydel / Wind : At cost of purchase from APCPDCL / TNEB by the division
consuming such power
m) Retirement Benefits:
Provident Fund is administered through Regional Provident Fund
Commissioner. The Superannuation and Gratuity Funds are administered
through the scheme of Life Insurance Corporation of India. The
contributions to the above said funds are charged against revenue.
Provision for leave encashment is made on the basis of actuarial
valuation.
n) Borrowing Costs :
Borrowing costs are recognized as an expense in the period in which
they are incurred. Borrowing costs incurred for acquiring and
construction of assets are capitalised as part of the cost of such
assets.
o) Taxation : Provision for income tax is made for both current and
deferred taxes. Provision for current Income tax is made at current tax
rates based on assessable income. Deferred income taxes are recognized
for the future tax consequences attributable to timing differences
between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized using
the tax rates and tax laws that have been enacted or substantively
enacted by the balance sheet date. Deferred tax assets are recognized
and carried forward only to the extent that there is a reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
p) Contingencies : The Company recognises provisions when where is
present obligation as a result of past event and it is probable that
there will be an outflow of resources and reliable estimate can be made
of the amount of obligation. A disclosure for contingent liabilities is
made in the notes to accounts when there is a possible obligation or a
present obligation that may, but probably will not, require an out flow
of resources. Contingent assets are neither recognised nor disclosed in
the financial statements.
q) Earning Per Share: Earning share is calculated by dividing the net
profit or loss for the year attributable to equity share holders by the
weighted average number of equity shares outstanding during the year.
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