Mar 31, 2023
Significant accounting policies
a. Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of company at the exchange
rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of
the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange
rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are
translated into the functional currency at the exchange rate when the fair value was determined.
Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at
the exchange rate at the date of the transaction. Exchange differences are recognised in profit or loss.
b. Cash and cash equivalents
Cash and cash equivalents include cash on hand, call deposits and other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
c. Financial instruments
I. Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets
and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the
instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and
loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
ii. Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at
- Amortised cost;
- FVOCI (fair value through other comprehensive income) - Debt investment;
- FVOCI (fair value through other comprehensive income) - Equity investment; or
- FVTPL (fair value through profit and loss)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company
changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at
FVTPL:
â The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
â 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.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
âthe asset is held within a business model whose objective is achieved by both collecting contractual cash flows and
selling financial assets; and
â the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present
subsequent changes in the investmentâs fair value in OCI (designated as FVOCI - equity investment). This election is
made on an investment by investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL.
This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial
asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so
eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at a
portfolio level because this best reflects the way the business is managed and information is provided to management.
The information considered includes:
âthe stated policies and objectives for the portfolio and the operation of those policies in practice.
These include whether managementâs strategy focuses on earning contractual interest income, maintaining a particular
interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash
outflows or realising cash flows through the sale of the assets;
-how the performance of the portfolio is evaluated and reported to the Companyâs management;
-the risks that affect the performance of the business model (and the financial assets held within that business model)
and how those risks are managed;
-How managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets
managed or the contractual cash flows collected; and
-the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations
about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales
for this purpose, consistent with the Companyâs continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are
measured at FVTPL.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and Interest
For the purposes of this assessment, âprincipalâ is defined as the fair value of the financial asset on initial recognition.
âInterestâ is defined as consideration for the time value of money and for the credit risk associated with the principal
amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and
administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers
the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term
that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making
this assessment, the Company considers:
âcontingent events that would change the amount or timing of cash flows;
âterms that may adjust the contractual coupon rate, including variable interest rate features;
âprepayment and extension features; and
âterms that limit the Companyâs claim to cash flows from specified assets (e.g. non recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount
substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include
reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a
significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount
that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also
include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair
value of the prepayment feature is insignificant at initial recognition.
FINANCIAL LIABILITIES: CLASSIFICATION, SUBSEQUENT MEASUREMENT AND GAINS AND LOSSES
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL
if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities
at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or
loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest
expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is
also recognised in profit or loss.
iii. Derecognition
Financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks
and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains
substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either
all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified
terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair
value. The difference between the carrying amount of the financial liability extinguished and the new financial liability
with modified terms is recognised in profit or loss.
iv. Impairment of financial instruments
In accordance with Ind-AS 109, the company applies Expected Credit Loss (ECL) model for measurement and recognition
of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits,
and bank balance
b) Lease receivables
c) Trade receivables
The company follows âsimplified approachâ for recognition of impairment loss allowance on:
⢠Trade receivables which do not contain a significant financing component.
⢠All lease receivables resulting from transactions.
The application of simplified approach does not require the company to track changes in credit risk. Rather, it recognizes
impairment loss allowance based on lifetime ECLâs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the company determines that whether
there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly,
12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL
is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant
increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on
12-month ECL.
v. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only
when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them
on a net basis or to realise the asset and settle the liability simultaneously.
d. Property, plant and equipment
I. Recognition and measurement
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated
depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable
purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its
working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site
on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labor,
any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of
dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as
separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure
will flow to the Company.
iii. Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values over
their estimated useful lives using the straight-line method, and is generally recognised in the statement of profit and loss.
The useful life of the asset is determined as prescribed in schedule II to the Companies Act, 2013.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as
given above best represent the period over which management expects to use these assets.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (upto) the date on which asset is ready for
use (disposed of).
iv. Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, the property is reclassified as investment
property at its carrying amount on the date of reclassification.
e. Other intangible assets
Service concession arrangements
i) Windmill
The Company recognises an intangible asset arising from a service concession arrangement to the extent it has a right
to charge the regulator for sale of electricity at agreed prices. Subsequent to initial recognition the intangible asset is
measured at cost, less any accumulated amortisation and accumulated impairment losses.
ii) Others
Other intangible assets include software and technical know-how which are measured at cost. Such intangible assets
are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses.
iii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset
to which it relates. All other expenditure is recognised in profit or loss as incurred.
iv) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their estimated
useful lives using the straight-line method, and is included in depreciation and amortisation in Statement of Profit and
Loss. The useful life of the asset is determined as prescribed in schedule II to the Companies Act, 2013.
f. Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale
in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.
Upon initial recognition, an investment property is measured at cost. Subsequent to initial recognition, investment property
is measured at cost less accumulated depreciation and accumulated impairment losses, if any.
Depreciation is calculated on cost of items of investment property less their estimated residual values over their estimated
useful lives using the straight-line method, and is generally recognised in the statement of profit and loss. The useful life
of the asset is determined as prescribed in schedule II to the Companies Act, 2013.
Any gain or loss on disposal of an investment property is recognised in profit or loss.
The fair values of investment property is disclosed in the notes. Fair values is determined by an independent valuer who
holds a recognised and relevant professional qualification and has recent experience in the location and category of the
investment property being valued.
Investment property under construction
Property that is being constructed for future use as investment property is accounted for as investment property under
construction until construction or development is complete. All costs which are directly attributable to construction of the
investment property are capitalized.
g. Inventories
Inventories are stated at the lower of cost and net realizable value. In determining the cost of loose tools, stores and
spares, raw materials and components, the weighted average method is used. Cost of manufactured components,
work in progress and manufactured finished goods include cost of conversion and other costs incurred in bringing the
inventories to their present location and condition which is determined on absorption cost basis.
Inventories - Project in progress
Project in progress is valued at lower of cost or net realisable value. Cost includes cost of land, materials, construction,
services, borrowing costs and other overheads relating to the particular projects.
h. Impairment of non-financial assets
The Companyâs non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication exists, then the assetâs recoverable
amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into Cash-Generating
Units (CGUâs). Each CGU represents the smallest Company of assets that generates cash inflows that are largely
independent of the cash inflows of other assets or CGUâs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to
sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in the statement of profit and loss. Impairment loss recognised in respect of a CGU
is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying
amounts of the other assets of the CGU (or group of CGUâs) on a pro rata basis.
In respect of assets for which impairment loss has been recognised in prior periods, the company reviews at each reporting
date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if
there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to
the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
i. Employee benefits
I) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the
Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the
employee, and the amount of obligation can be estimated reliably.
II) Gratuity :
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The
Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in the current and prior periods, discounting that amount and
deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit
method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present
value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions
to the plan (âthe asset ceilingâ). In order to calculate the present value of economic benefits, consideration is given to any
minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets
(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company
determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the
discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined
benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a
result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans
are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past
service (âpast service costâ or âpast service gainâ) or the gain or loss on curtailment is recognised immediately in profit or
loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
III) Provident fund:
Provident fund contributions are made to a trust administered by the Company and are charged to the Statement of Profit
and Loss. The Company has an obligation to make good the shortfall if any, between return of investment by the trust
and government administered interest rate. It is to be construed as a defined benefit plan. However, in the absence of
guidance note from the Actuarial Society of India, the Companyâs actuary has expressed his inability to reliably measure
the provident fund liability. Accordingly, the Company has accounted for the same as a defined contribution plan.
IV) Share based payments
The grant date fair value of equity settled share-based payment awards granted to employees is recognised as an
employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become
entitled to the awards. The amount recognised as expense is based on the estimate of the number of awards for which
the related service conditions are expected to be met, such that the amount ultimately recognised as an expense is
based on the number of awards that do meet the related service condition at the vesting date.
Mar 31, 2018
a. Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of company at the exchange rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined.
Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange differences are recognised in profit or loss.
b. Cash and cash equivalents
Cash and cash equivalents includes cash on hand, call deposits and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
c. Financial instruments
i. Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
ii. Classification and subsequent measurement Financial assets
On initial recognition, a financial asset is classified as measured at amortised cost;
- FVOCI (fair value through other comprehensive income) - Debt investment;
- FVOCI (fair value through other comprehensive income) - Equity investment; or
- FVTPL (fair value through profit and loss)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investmentâs fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment by investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
- The stated policies and objectives for the portfolio and the operation of those policies in practice.
These include whether managementâs strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;
- How the performance of the portfolio is evaluated and reported to the Companyâs management;
- The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
- How managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
- The frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Companyâs continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and Interest
For the purposes of this assessment, âprincipalâ is defined as the fair value of the financial asset on initial recognition. âInterestâ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:
- Contingent events that would change the amount or timing of cash flows;
- Terms that may adjust the contractual coupon rate, including variable interest rate features;
- Prepayment and extension features; and
- Terms that limit the Companyâs claim to cash flows from specified assets (e.g. non recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Financial assets: Subsequent measurement and gains and losses
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
iii. Derecognition Financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
iv. Impairment of financial instruments
In accordance with Ind-AS 109, the company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance
b) Lease receivables
c) Trade receivables
The company follows âsimplified approachâ for recognition of impairment loss allowance on:
- Trade receivables which do not contain a significant financing component.
- All lease receivables resulting from transactions.
The application of simplified approach does not require the company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLâs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.
v. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
d. Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labor, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
ii. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at April 1, 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment (see Note 54).
iii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
iv. Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values over their estimated useful lives using the straight-line method, and is generally recognised in the statement of profit and loss. The useful life of the asset is determined as prescribed in schedule II to the Companies Act, 2013.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best represent the period over which management expects to use these assets.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (upto) the date on which asset is ready for use (disposed of).
v. Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, the property is reclassified as investment property at its carrying amount on the date of reclassification.
e. Other intangible assets Service concession arrangements
i) Windmill
The Company recognises an intangible asset arising from a service concession arrangement to the extent it has a right to charge the regulator for sale of electricity at agreed prices. On transition to Ind AS, the Company has elected to measure the intangible asset at their previous GAAP carrying value as at date of transition as it is impracticable for the company to apply the Appendix retrospectively at the date of transition to Ind Ass. Subsequent to initial recognition the intangible asset is measured at cost, less any accumulated amortisation and accumulated impairment losses. (See Note 54 for further information)
ii) Others
Other intangible assets include software and technical know-how which are measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses.
iii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.
iv) Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at April 1, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of such intangible assets.
v) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method, and is included in depreciation and amortisation in Statement of Profit and Loss. The useful life of the asset is determined as prescribed in schedule II to the Companies Act, 2013.
f. Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.
Upon initial recognition, an investment property is measured at cost. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses, if any.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment property recognised as at April 1, 2016, measured as per the previous GAAP and use that carrying value as the deemed cost of such investment property.
Depreciation is calculated on cost of items of investment property less their estimated residual values over their estimated useful lives using the straight-line method, and is generally recognised in the statement of profit and loss. The useful life of the asset is determined as prescribed in schedule II to the Companies Act, 2013.
Any gain or loss on disposal of an investment property is recognised in profit or loss.
The fair values of investment property is disclosed in the notes. Fair values is determined by an independent valuer who holds a recognised and relevant professional qualification and has recent experience in the location and category of the investment property being valued.
Investment property under construction
Property that is being constructed for future use as investment property is accounted for as investment property under construction until construction or development is complete. All costs which are directly attributable to construction of the investment property are capitalized.
g. Inventories
Inventories are stated at the lower of cost and net realizable value. In determining the cost of loose tools, stores and spares, raw materials and components, the weighted average method is used. Cost of manufactured components, work in progress and manufactured finished goods include cost of conversion and other costs incurred in bringing the inventories to their present location and condition which is determined on absorption cost basis.
Inventories - Project in progress
Project in progress is valued at lower of cost or net realisable value. Cost includes cost of land, materials, construction, services, borrowing costs and other overheads relating to the particular projects.
h. Impairment of non-financial assets
The Companyâs non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assetâs recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into Cash-Generating Units (CGUâs). Each CGU represents the smallest Company of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUâs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets of the CGU (or group of CGUâs) on a pro rata basis.
In respect of assets for which impairment loss has been recognised in prior periods, the company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
i. Employee benefits Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
i) Gratuity :
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The
Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan (âthe asset ceilingâ). In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (âpast service costâ or âpast service gainâ) or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
ii) Provident fund:
Provident fund contributions are made to a trust administered by the Company and are charged to the Statement of Profit and Loss. The Company has an obligation to make good the shortfall if any, between return of investment by the trust and government administered interest rate. It is to be construed as a defined benefit plan. However, in the absence of guidance note from the Actuarial Society of India, the Companyâs actuary has expressed his inability to reliably measure the provident fund liability. Accordingly, the Company has accounted for the same as a defined contribution plan.
j. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized if as a result of a past event, the Company has a present obligation (legal or constructive) that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognized at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are disclosed in the financial statements when an inflow of economic benefit is probable. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
k. Onerous contracts
A contract is considered to be onerous when the expected economic benefits to be derived by the
Company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
Before such a provision is made, the Company recognises any impairment loss on the assets associated with that contract.
l. Revenue
i) Sale of goods is recognised on dispatch to customer and are recorded net of sale tax and excise duties and excludes export incentives such as duty drawbacks.
ii) Rental income is recognised on accrual basis.
iii) Revenue from wind mill power project is recognised on the basis of actual power sold as per the terms of the power purchase agreements entered into with the respective parties.
iv) Revenue from real estate projects:
Revenue from constructed properties for all projects is recognized in accordance with the âGuidance Note on Accounting for Real Estate Transactionsâ (âGuidance Noteâ). As per this Guidance Note, the revenue has been recognized on percentage of completion method and on the percentage of actual project costs incurred thereon to total estimated project cost, provided the conditions specified in Guidance Note are satisfied.
v) Recognition of Dividend income
Dividend is recognized as revenue when the right to receive payment has been established.
vi) Recognition of interest expense or income
For all interest bearing financial assets measured at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset.
m. Leases
i. Determining whether an arrangement contains a lease
At inception of an arrangement, it is determined whether the arrangement is or contains a lease.
At inception or on reassessment of the arrangement that contains a lease, the payments and other consideration required by such an arrangement are separated into those for the lease and those for other elements on the basis of their relative fair values. If it is concluded for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. The liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the incremental borrowing rate.
ii. Assets held under leases
Leases of property, plant and equipment that transfer to the Company substantially all the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to similar owned assets.
Assets held under leases that do not transfer to the Company substantially all the risks and rewards of ownership (i.e. operating leases) are not recognised in the Companyâs Balance Sheet.
iii. Lease payments
Payments made under operating leases are generally recognised in profit or loss on a straight-line basis over the term of the lease unless such payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. Lease incentives received are recognised as an integral part of the total lease expense over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
n. Income Tax
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination or to an item recognised directly in equity or in other comprehensive income.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
ii. Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits.
Deferred tax is not recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction;
- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets â unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
o. Borrowing cost
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
p. Basis for segmentation
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). Chief operating decision makerâs function is to allocate the resources of the entity and access the performance of the operating segment of the Group.
The Board of Directors (CODM) assesses the financial performance and position of the Group and makes strategic decisions and is identified as being the chief operating decision maker for the Group. Refer note 44 for segment information presented:
q. Earnings per share (EPS)
Basic EPS is computed using the weighted average number of equity shares outstanding during the period. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the period except where the results would be anti-dilutive.
r. Exceptional Items:
On Certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the company is such that its disclosure improves the understanding of the performance of the company. Such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.
s. Current vs Non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Mar 31, 2017
1. COMPANY OVERVIEW-
Elpro International Limited is engaged in the business of manufacturing of Other Electrical Equipments like Lighting Arresters, Varistors, Surge Arrestor & also engaged in Real Estate development Services. The Company has manufacturing plant located at Chinchwad, Pune,Maharashtra.
2. SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to in all material aspect with accounting principles generally accepted in India, including the accounting standards as prescribed under section 133 of the companyâs Act,2013 (âthe Actâ) read with rule 7 of the companies (Accounts) Rules, 2014 to the extent notified. The financial statements have been prepared on an accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
b. Use of Estimates
The preparation of the financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes and the useful lives of fixed assets and intangible assets.
Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Future results could differ from these estimates.
c. Tangible Fixed Assets
Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises Purchase price, Borrowing Costs if capitalization criteria are met and any other directly attributable cost of bringing the asset to its working condition for the intended use, net off of any trade discounts & rebates. 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 asset, including day to day repair & maintenance expenditure & cost of replacing parts, are changed to the statement of profit & loss for the period during which such expenses are incurred. Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds & the carrying amount of the asset & are recognized in the statement of Profit & Loss when the asset is derecognized. Capital assets under erection/installation are stated in the Balance sheet as âCapital- Work in Progressâ
d. Intangible Assets
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment. They are amortized on a straight line basis over their estimated useful lives.
e. Depreciation and Amortization
In respect of fixed assets (other than capital work-in-progress) acquired during the year, depreciation/amortization is charged on a straight line basis so as to write off the cost of the assets over the useful lives and for the assets acquired prior to April 1, 2014, the carrying amount as on April 1, 2014 is depreciated over the remaining useful life based on an evolution. The useful life of the asset is determined as prescribed in schedule II to the Companies Act, 2013.
f. Assets Taken and Given on Lease Assets taken on lease:
i In respect of finance lease arrangements, the assets are capitalized and depreciated. Finance charges are charged off to the Statement of Profit and Loss of the year in which they are incurred.
ii. Operating lease payments are recognized as expenditure in the Statement of Profit and Loss on straight line basis, representative of the time pattern of benefits received from the use of the assets taken on lease.
Asset given on lease:
Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.
g. Investments
All Investments has been categorized as Long-term investments. Long-term investments are valued at cost. Provision for diminution, if any, in the value of investments is made to recognize a decline, other than temporary.
h. Inventories
Inventories are stated at the lower of cost and net realizable value. In determining the cost of loose tools, stores and spares, raw materials and components, the weighted average method is used. Cost of manufactured components, work in progress and manufactured finished goods include cost of conversion and other costs incurred in bringing the inventories to their present location and condition which is determined on absorption cost basis.
i. Inventories - Project in progress
Project in progress is valued at lower of cost or net realizable value. Cost includes cost of land, materials, construction, services, borrowing costs and other overheads relating to the particular projects.
j. Foreign Exchange Transactions
Transactions in foreign currencies are recorded at the prevailing exchange rates on the transaction dates. Realized gains and losses on settlement of foreign currency transactions are recognized in the Statement of Profit and loss account.
Foreign currency monetary assets and liabilities at the yearend are translated at the yearend exchange rates and resultant exchange differences are recognized in the Statement of Profit and Loss.
k. Revenue recognition
i) Sale of goods is recognized on dispatch to customer and are recorded net of sale tax and excise duties and excludes export incentives such as duty drawbacks.
ii) Rental income is recognized on accrual basis.
iii) Income from Joint development of property will be recognized, when Sale Deed will be executed in favour of the third party.
iv) Revenue from wind mill power project is recognized on the basis of actual power sold as per the terms of the power purchase agreements entered into with the respective parties.
v) Income from Real Estate project is recognized on the transfer of all significant risks and rewards of ownership to the buyers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration. However if, at the time of transfer, substantial acts are yet to be performed under the agreement, revenue is recognized on proportionate basis as the acts are performed, i.e. on the percentage of completion basis, subject to the actual cost incurred being at least 25% of the total estimated project cost involved and further subject to receipt of at least 20% of the total sales consideration. Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project and the foreseeable losses to completion.
l. Research and development expenditure
Research and development expenditure, other than capital expenditure is expense out as and when incurred.
m. Retirement Benefits
- Gratuity :
Liabilities with regard to the gratuity benefits payable in future are determined by actuarial valuation at each Balance Sheet date using the Projected Unit Credit Method and contributed to Employees Gratuity Fund managed by Life Insurance Corporation of India. Actuarial gains and losses arising from changes in actuarial assumptions are recognized in the Statement of Profit and Loss in the period in which they arise.
- Provident fund:
Provident fund contributions are made to a trust administered by the Company and are charged to the Statement of Profit and Loss. The Company has an obligation to make good the shortfall if any, between return of investment by the trust and government administered interest rate.
n. Provisions
Provision is made when there is present obligation as a result of a past event that probably requires an outflow of economic resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made, when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Liquidated damages/penalties are provided for meeting the obligations arising from delay in contractual delivery schedules.
o. Accounting for Taxes on Income
Provision for current tax is made, based on the tax payable under the Income Tax Act, 1961. Minimum Alternative Tax (MAT) credit, which is equal to the excess of MAT (calculated in accordance with provisions of section 115JB of the Income tax Act, 1961) over normal income-tax is recognized as an asset by crediting the Statement of Profit and Loss only when and to the extent there is convincing evidence that the Company will be able to avail the said credit against normal tax payable during the Specified period.
Deferred tax on timing differences between taxable income and accounting income is accounted for, using the tax rates and the tax laws enacted or substantially enacted as on the balance sheet date. Deferred tax assets on unabsorbed tax losses and unabsorbed tax depreciation are recognized only when there is a virtual certainty of their realization. Other deferred tax assets are recognized only when there is a reasonable certainty of their realization.
p. Impairment
The Company reviews the carrying value of tangible and intangible assets for any possible impairment at each balance sheet date. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rates.
q. Contingent Liabilities
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non -occurrence of one or more uncertain future events not wholly within control of the Company. A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation at the yearend date. Contingent assets are not recognized or disclosed in the financial statements.
r. Segment Reporting
Segments have been identified having regard to the dominant source and nature of risks and returns and the internal organization and management structure. Inter-segment revenue is accounted on the basis of market price. Unallocated corporate expenses include revenue and expenses which relate to the enterprise as a whole and are not attributable to segments.
s. Borrowing Costs
Borrowing Costs that are attributable to the acquisition, construction or production of a qualifying asset is capitalized as part of the cost of that asset. Other borrowing costs are recognized as expense in the period in which they are incurred.
Mar 31, 2015
1. COMPANY OVERVIEW-
Elpro International Limited is engaged in the business of manufacturing of
Other Electrical equipments like Lighting Arresters, Varistors, Surge Arrestor
& also engaged in Real Estate development Service. The Company has manufacturing
plant located at Chinchwad, Maharashtra.
a. Basis of Preparation of Financial Statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the historical
cost convention on an accrual basis and are in conformity with
mandatory accounting standards, as prescribed by the Companies
(Accounting Standards) Rules, 2006, the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board of
India (SEBI).
b. Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires Management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosure relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Examples of
such estimates include provision for doubtful debts, future obligations
under employee retirement benefit plans, income taxes and the useful
lives of fixed assets and intangible assets.
Management believes that the estimates used in the preparation of
financial statements are prudent and reasonable. Future results could
differ from these estimates.
c. Tangible Fixed Assets
Fixed assets are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. The cost comprises Purchase
price, Borrowing Costs if capitalization criteria are met and any other
directly attributable cost of bringing the asset to its working
condition for the intended use, net off of any trade discounts &
rebates. 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 asset, including day
to day repair & maintenance expenditure & cost of replacing parts, are
changed to the statement of profit & loss for the period during which
such expenses are incurred. Gains or losses arising from derecognition
of fixed assets are measured as the difference between the net disposal
proceeds & the carrying amount of the asset & are recognized in the
statement of Profit & Loss when the asset is derecognized. Capital
assets under erection/installation are stated in the Balance sheet as
"Capital Work-in-Progress"
d. Intangible Assets
Intangible assets are recorded at the consideration paid for
acquisition of such assets and are carried at cost less accumulated
amortization and impairment. They are amortized on a straight line
basis over their estimated useful lives.
e. Depreciation and Amortisation
In respect of fixed assets (other than capital work-in-progress)
acquired during the year, depreciation/amortization is charged on a
straight line basis so as to write off the cost of the assets over the
useful lives and for the assets acquired prior to April 1, 2014, the
carrying amount as on April 1, 2014 is depreciated over the remaining
useful life based on an evalution. The useful life of the asset is
determined as prescribed in schedule II to the Companies Act, 2013.
f. Assets Taken and Given on Lease Assets taken on lease:
i In respect of finance lease arrangements, the assets are capitalized
and depreciated. Finance charges are charged off to the Statement of
Profit and Loss of the year in which they are incurred.
ii. Operating lease payments are recognized as expenditure in the
Statement of Profit and Loss on straight line basis, representative of
the time pattern of benefits received from the use of the assets taken
on lease.
Asset given on lease:
Lease rentals are accounted on accrual basis in accordance with the
respective lease agreements.
g. Investments
All Investments has been categorized as Long-term investments.
Long-term investments are valued at cost. Provision for diminution, if
any, in the value of investments is made to recognise a decline, other
than temporary.
h. Inventories
Inventories are stated at the lower of cost and net realizable value.
In determining the cost of loose tools, stores and spares, raw
materials and components, the weighted average method is used. Cost of
manufactured components, work in progress and manufactured finished
goods include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition which is
determined on absorption cost basis.
i. Inventories - Project in progress
Project in progress is valued at lower of cost or net realisable value.
Cost includes cost of land, materials, construction, services,
borrowing costs and other overheads relating to the particular
projects.
j. Foreign exchange transactions
Transactions in foreign currencies are recorded at the prevailing
exchange rates on the transaction dates. Realised gains and losses on
settlement of foreign currency transactions are recognized in the
Statement of Profit and loss account.
Foreign currency monetary assets and liabilities at the year end are
translated at the year end exchange rates and resultant exchange
differences are recognised in the Statement of Profit and Loss.
k. Revenue recognition
i) Sale of goods is recognised on dispatch to customer and are recorded
net of sales tax and excise duties and excludes export incentives such
as duty drawbacks.
ii) Rental income is recognised on accrual basis.
iii) Income from Joint development of property will be recognized, when
Sale Deed will be executed in favour of the third party.
iv) Revenue from wind mill power project is recognised on the basis of
actual power sold as per the terms of the power purchase agreements
entered into with the respective parties.
v) Income from projects is recognized on the transfer of all
significant risks and rewards of ownership to the buyers and it is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration. However if,
at the time of transfer, substantial acts are yet to be performed under
the agreement, revenue is recognized on proportionate basis as the acts
are performed, i.e. on the percentage of completion basis, subject to
the actual cost incurred being at least 25% of the total estimated
project cost involved and further subject to receipt of at least 20% of
the total sales consideration. Determination of revenues under the
percentage of completion method necessarily involves making estimates
by the Company, some of which are of a technical nature, concerning,
where relevant, the percentages of completion, costs to completion, the
expected revenues from the project and the foreseeable losses to
completion.
l. Research and development expenditure
Research and development expenditure, other than capital expenditure is
expensed out as and when incurred.
m. Retirement benefits
- Gratuity
Liabilities with regard to the gratuity benefits payable in future are
determined by actuarial valuation at each Balance Sheet date using the
Projected Unit Credit Method and contributed to Employees Gratuity Fund
managed by Life Insurance Corporation of India. Actuarial gains and
losses arising from changes in actuarial assumptions are recognized in
the Statement of Profit and Loss in the period in which they arise.
- Leave Encashment
The Company provides for the encashment of leave with pay subject to
certain rules. The employees are entitled to accumulate leave subject
to certain limits, for future encashment/availment. The liability is
provided based on the number of days of unutilized leave at each
balance sheet date on the basis of an independent actuarial valuation.
- Provident Fund
Provident fund contributions are made to a trust administered by the
Company and are charged to the Statement of Profit and Loss. The
Company has an obligation to make good the shortfall if any, between
return of investment by the trust and government administered interest
rate.
n. Provisions
Provision is made when there is present obligation as a result of a
past event that probably requires an outflow of economic resources and
a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made, when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Liquidated damages/penalties are provided for meeting the obligations
arising from delay in contractual delivery schedules.
Provision for probable warranty claim is based on Management's estimate
and judgment and is provided as a percentage of average claims of past
three years for average warranty period of 18 months.
o. Accounting for Taxes on Income
Provision for current tax is made, based on the tax payable under the
Income Tax Act, 1961. Minimum Alternative Tax (MAT) credit, which is
equal to the excess of MAT (calculated in accordance with provisions of
section 115JB of the Income tax Act, 1961) over normal income-tax is
recognized as an asset by crediting the Statement of Profit and Loss
only when and to the extent there is convincing evidence that the
Company will be able to avail the said credit against normal tax
payable during the period of seven succeeding assessment years.
Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets on unabsorbed tax losses and unabsorbed tax
depreciation are recognised only when there is a virtual certainty of
their realisation. Other deferred tax assets are recognised only when
there is a reasonable certainty of their realisation.
p. Impairment
The Company reviews the carrying value of tangible and intangible
assets for any possible impairment at each balance sheet date. An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. In assessing the recoverable amount,
the estimated future cash flows are discounted to their present value
at appropriate discount rates.
q. Contingent liabilities
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence will be confirmed by
the occurrence or non-occurrence of one or more uncertain future events
not wholly within control of the Company. A provision is made based on
a reliable estimate when it is probable that an outflow of resources
embodying economic benefits will be required to settle an obligation at
the year end date. Contingent assets are not recognized or disclosed in
the financial statements.
r. Segment Reporting
Segments have been identified having regard to the dominant source and
nature of risks and returns and the internal organisation and
management structure. Inter-segment revenue is accounted on the basis
of market price. Unallocated corporate expenses include revenue and
expenses which relate to the enterprise as a whole and are not
attributable to segments.
s. Borrowing Costs
Borrowing Costs that are attributable to the acquisition, construction
or production of a qualifying asset is capitalized as part of the cost
of that asset. Other borrowing costs are recognized as expense in the
period in which they are incurred.
Mar 31, 2014
A. Basis of Preparation of Financial Statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the
historical cost convention on an accrual basis and are in conformity
with mandatory accounting standards, as prescribed by the Companies
(Accounting Standards) Rules, 2006, the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board of
India (SEBI).
b. Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires Management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosure relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Examples of
such estimates include provision for doubtful debts, future obligations
under employee retirement benefit plans, income taxes and the useful
lives of fixed assets and intangible assets.
Management believes that the estimates used in the preparation of
financial statements are prudent and reasonable. Future results could
differ from these estimates.
c. Fixed Assets, Intangible Assets and Capital Work in Progress
Fixed assets and intangible assets are stated at cost of acquisition or
construction less accumulated depreciation and impairment. Cost
includes taxes, duties, freight and other incidental expense related to
acquisition and installation. Borrowing costs attributable to
acquisition, construction of qualifying asset (i.e. an asset requiring
substantive period of time to get ready for intended use) are
capitalized in accordance with the requirements of Accounting Standard
16 (AS 16), "Borrowing Costs" mandated by Rule 3 of the Companies
(Accounting Standards) Rules 2006.
Capital work in progress comprises of outstanding advances paid to
acquire fixed assets and cost of fixed assets that are not yet ready
for their intended use at the year end.
d. Depreciation and Amortisation
Depreciation is provided on straight line method, except for assets
acquired prior to January 1, 1987 which are depreciated on reducing
balance method, at the rates and in the manner specified in Schedule
XIV to the Companies Act, 1956 as applicable from time to time, except
for assets costing less than Rs. 5,000 each which are fully depreciated
in the year of purchase.
e. Assets Taken and Given on Lease
Assets taken on lease:
i. In respect of finance lease arrangements, the assets are capitalized
and depreciated. Finance charges are charged off to the Statement of
Profit and Loss of the year in which they are incurred.
ii. Operating lease payments are recognized as expenditure in the
Statement of Profit and Loss on straight line basis, representative of
the time pattern of benefits received from the use of the assets taken
on lease.
Asset given on lease:
Lease rentals are accounted on accrual basis in accordance with the
respective lease agreements.
f. Investments
Long-term investments are valued at cost. Provision for diminution, if
any, in the value of investments is made to recognise a decline, other
than temporary.
Current investments are stated at the lower of cost and fair value,
computed individually for each investment.
In case of investments in mutual funds which are unquoted, net assets
value is taken as fair value.
g. Inventories
Inventories are stated at the lower of cost and net realizable value.
In determining the cost of loose tools, stores and spares, raw
materials and components, the weighted average method is used. Cost of
manufactured components, work in progress and manufactured finished
goods include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition which is
determined on absorption cost basis.
h. Inventories - Project in progress
Project in progress is valued at lower of cost or net realisable value.
Cost includes cost of land, materials, construction, services,
borrowing costs and other overheads relating to the particular
projects.
i. Foreign exchange transactions
Transactions in foreign currencies are recorded at the prevailing
exchange rates on the transaction dates. Realised gains and losses on
settlement of foreign currency transactions are recognized in the
Statement of Profit and loss account.
Foreign currency monetary assets and liabilities at the year end are
translated at the year end exchange rates and resultant exchange
differences are recognised in the Statement of Profit and Loss.
j. Revenue recognition
i) Sale of goods is recognised on dispatch to customer and are recorded
net of sale tax and excise duties and excludes export incentives such
as duty drawbacks.
ii) Rental income is recognised on accrual basis.
iii) Income from Joint development of property will be recognized, when
Sale Deed will be executed in favour of the third party.
iv) Revenue from wind mill power project is recognised on the basis of
actual power sold as per the terms of the power purchase agreements
entered into with the respective parties.
v) Income from projects is recognized on the transfer of all
significant risks and rewards of ownership to the buyers and it is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration. However if,
at the time of transfer, substantial acts are yet to be performed under
the agreement, revenue is recognized on proportionate basis as the acts
are performed, i.e. on the percentage of completion basis, subject to
the actual cost incurred being at least 25% of the total estimated
project cost involved and further subject to receipt of at least 20% of
the total sales consideration. Determination of revenues under the
percentage of completion method necessarily involves making estimates
by the Company, some of which are of a technical nature, concerning,
where relevant, the percentages of completion, costs to completion, the
expected revenues from the project and the foreseeable losses to
completion.
k. Research and development expenditure
Research and development expenditure, other than capital expenditure is
expensed out as and when incurred.
l. Retirement benefits
Gratuity
Liabilities with regard to the gratuity benefits payable in future are
determined by actuarial valuation at each Balance Sheet date using the
Projected Unit Credit Method and contributed to Employees Gratuity Fund
managed by Life Insurance Corporation of India. Actuarial gains and
losses arising from changes in actuarial assumptions are recognized in
the Statement of Profit and Loss in the period in which they arise.
Leave Encashment
The Company provides for the encashment of leave with pay subject to
certain rules. The employees are entitled to accumulate leave subject
to certain limits, for future encashment/availment. The liability is
provided based on the number of days of unutilized leave at each
balance sheet date on the basis of an independent actuarial valuation.
Provident Fund
Provident fund contributions are made to a trust administered by the
Company and are charged to the Statement of Profit and Loss. The
Company has an obligation to make good the shortfall if any, between
return of investment by the trust and government administered interest
rate.
m. Provisions
Provision is made when there is present obligation as a result of a
past event that probably requires an outflow of economic resources and
a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made, when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Liquidated damages/penalties are provided for meeting the obligations
arising from delay in contractual delivery schedules.
Provision for probable warranty claim is based on Management''s
estimate and judgment and is provided as a percentage of average claims
of past three years for average warranty period of 18 months.
n. Accounting for Taxes on Income
Provision for current tax is made, based on the tax payable under the
Income Tax Act, 1961. Minimum Alternative Tax (MAT) credit, which is
equal to the excess of MAT (calculated in accordance with provisions of
section 115JB of the Income tax Act, 1961) over normal income-tax is
recognized as an asset by crediting the Statement of Profit and Loss
only when and to the extent there is convincing evidence that the
Company will be able to avail the said credit against normal tax
payable during the period of ten succeeding assessment years.
Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets on unabsorbed tax losses and unabsorbed tax
depreciation are recognised only when there is a virtual certainty of
their realisation. Other deferred tax assets are recognised only when
there is a reasonable certainty of their realisation.
o. Impairment
The Company reviews the carrying value of tangible and intangible
assets for any possible impairment at each balance sheet date. An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. In assessing the recoverable amount,
the estimated future cash flows are discounted to their present value
at appropriate discount rates.
p. Contingent Liabilities
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence will be confirmed by
the occurrence or non -occurrence of one or more uncertain future
events not wholly within control of the Company. A provision is made
based on a reliable estimate when it is probable that an outflow of
resources embodying economic benefits will be required to settle an
obligation at the year end date. Contingent assets are not recognized
or disclosed in the financial statements.
q. Segment Reporting
Segments have been identified having regard to the dominant source and
nature of risks and returns and the internal organisation and
management structure. Inter-segment revenue is accounted on the basis
of market price. Unallocated corporate expenses include revenue and
expenses which relate to the enterprise as a whole and are not
attributable to segments.
r. Borrowing Costs
Borrowing Costs that are attributable to the acquisition, construction
or production of a qualifying asset is capitalized as part of the cost
of that asset. Other borrowing costs are recognized as expense in the
period in which they are incurred.
Mar 31, 2013
A. Basis of Preparation of Financial Statements
The financial statements are prepared In accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the historical
cost convention on an accrual basis and are In conformity with
mandatory accounting standards , as prescribed by the Companies
(Accounting Standards) Rules, 2006, the provisions of the Companies
Act, 195S and guidelines issued by the Securities and Exchange Board of
India (SEBI).
b. Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires Management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosure relating to
contingent liabilities as at the date of the financial statements and
reported amounts of Income and expenses during the period. Examples of
such estimates include provision for doubtful debts, future obligations
under employee retirement benefit plans, income taxes and the useful
lives of fixed assets and Intangible assets.
Management believes that the estimates used in the preparation of
financial statements are prudent and reasonable. Future results could
differ from these estimates.
c. Fixed Assets, Intangible Assets and Capital Work in Progress
Fixed assets and intangible assets are stated at cost Df acquisition or
construction less ''accumulated depreciation and Impairment. Cost
includes taxes, duties, freight and other incidental expense related to
acquisition and installation.''Borrowing costs attributable to
acquisition, construction of qualifying asset (i.e. an asset requiring
substantive period of time to get ready for intended use) are
capitalized in accordance with the requirements of Accounting Standard
16(AS 16)," Borrowing Costs" mandated by Rule 3 of the Companies
(Accounting Standards) Rules 2006.
Capita! work in progress comprises of outstanding advances paid to
acquire fixed assets and cost of fixed assets that are - not yet ready
for their intended use at the year end.
d. Depreciation and Amortisation
Depreciation is provided on straight line method, except for assets
acquired prior to January 1,19B7 which are depreciated on reducing
balance method, at the rates and in the manner specified in Schedule
XIV to the Companies Act, 1956 as applicable from time to time, except
for assets costing less than Rs. 5,000 each which are fully depreciated
in the year of purchase.
e. Assets Taken and Given on Lease Assets taken on lease:
i In respect of finance lease arrangements, the assets are capitalized
and depreciated. Finance charges are charged
off to the Statement of Profit and Loss of the year in which they are
incurred. it. Operating lease payments are recognized as expenditure
in the Statement of Profit and Loss on straight line basis,
representative of the time pattern of benefits received from the use of
the assets taken on lease.
Asset given on lease:
Lease rentals are accounted on accruaJ''basis in accordance with the
respective lease agreements.
f. Investments
Long-term investments are valued at cost. Provision for''diminufion, if
any, in the value of Investments is made to recognise a decline, other
than temporary.
Current investments are stated at the lower of cost and fair value,
computed individually for each investment. In case of investments in
mutual funds which are unquoted, net assets'' value is taken as fair
value.
g. Inventories
Inventories are stated at the lower of cost and net realizable value.
In determining the cost of loose tools, stores and spares, raw
materials and components, the weighted average method is used. Cost of
manufactured components, work In progress and manufactured finished
goods include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition which is
determined on absorption cost basis.
h. Inventories - Project in progress
Project in progress is valued at lower of cost or net realisable value.
Cost Includes cost of land, materials, construction, services,
borrowing costs and other overheads relating to the particular
projects.
E. Foreign exchange transactions
Transactions in foreign currencies are recorded at the prevailing
exchange rates on the transaction dates. Realised gains and losses on
settlement of foreign currency transactions are recognized in the
Statement of Profit and loss account. Foreign currency monetary assets
and liabilities at the year end are translated at the year end exchange
rates and resultant exchange differences are recognised in the
Statement of Profit and Loss.
F. Revenue recognition
i) Sale of goods is recognised on dispatch to customer and are records
net of sale tax and excise duties and excludes export Incentives such
as duty drawbacks.
ii) Rental income is recognised on accrual basis.
iii) Income from Joint development of property will be recognized, when
Sale Deed will be executed in favour of the third parly.
iv) - Revenue from wind mill power project Is recognised on the basis
of actual power sold as per the terms of the power purchase agreements
entered into with the respective parties.
v) Income from projects is recognized on the transfer of all
significant risks and rewards of ownership to the buyers and it is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration. However if,
at the time of transfer, substantial acts are yet to be performed under
the agreement, revenue is recognized on proportionate basis as the acts
are performed, l.e. on the percentage of completion basts, subject to
the actual cost incurred being at least 25% of the total estimated
project cost involved and further subject to receipt of at least 20% of
the total sales consideration. Determination of revenues under the
percentage of completion method necessarily involves making estimates
by the Company, some of which are of a technical nature, concerning,
where relevant, the percentages of completion, costs to completion, the
expected revenues from the project and the foreseeable losses to
completion.
k. Research and development expenditure
Research and development expenditure, other than capital expenditure is
expensed out as arid when incurred. --"
I. Retirement benefits
- Gratuity:
Liabilities with regard to the gratuity benefits payable in future are
determined by actuarial valuation at each Balance Sheet date using the
Projected Unit Credit Method and contributed to Employees Gratuity Fund
managed by Life Insurance Corporation of India. Actuarial gains and
losses arising from changes in actuarial assumptions are recognized in
the Statement of Profit and Loss in the period in which they arise.
Leave encashment
The Company provides for the encashment of leave with pay subject to
certain rules. The employees are entitled to1 accumulate leave subject
to certain limits, for future encashment/availment. The liability Is
provided based on the number of days of unutilized leave at each
balance sheet date on the basis of an independent actuarial valuation.
- Provident fund
Provident fund contributions are made to a trust administered by the
Company and are charged to the Statement of Profit and Loss. The
Company has an obligation to make good the shortfall if any, between
return of investment by the trust and government administered interest
rate.
m. Provisions
Provision is made when there is present obligation as a result of a
past event that probably requires an outflow of economic resources and
a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made, when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources Is remote, no provision or disclosure Is made.
Liquidated damages/penalties are provided for meeting the obligations
arising from delay in contractual delivery schedules.
Provision for probable warranty claim is based on Management''s estimate
and judgment and is provided as a percentage of average claims of past
three years for average warranty period of 1B months.
n. Accounting for Taxes on Income
Provision for current tax is made, based on the tax payable under the
Income Tax Act, 1961. Minimum Alternative Tax (MAT) credit, which is
equal to the excess of MAT (calculated in accordance with provisions of
section 115JB of the Income tax Act, 1961) over normal Income-tax is
recognized as an asset by crediting the Statement of Profit and Loss
only when and to the extent there Is convincing evidence that the
Company will be able to avail the said credit against normal tax
payable during the period of ten succeeding assessment years.
Deferred tax on timing differences between taxable Income and
accounting income Is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets on unabsorberj lax losses and unabsorbed tax
depreciation are recognised only when there is a virtual certainly of
their realisation. Other deferred tax assets are recognised only when
there is a reasonable certainty of their realisation.
o. Impairment
The Company reviews the carrying value of tangible and intangible
assets for any possible impairment at each balance sheet date. An
Impairment loss Is recognized when the carrying amount of an asset
exceeds its recoverable amount. In assessing the recoverable amount,
the estimated future cash flows are discounted to their present value
at appropriate discount rates,
p.Contingent liabilities
Contingent liabilities are disclosed !n respect of possible obligations
that arise from past events but their existence will be confirmed by
the occurrence or non -occurrence of one or more uncertain future
events not wholly within control of the Company. A provision is made
based on a reliable estimate when it is probable that an outflow of
resources embodying economic benefits will be required to settle an
obligation at the year end date. Contingent assets are not recognized
or disclosed in the financial statements.
q. Segment Reporting
Segments have been identified having regard to the dominant source and
nature of risks and returns and the internal organisation and
management structure. Inter-segment revenue is accounted on the basis
of market price. Unallocated corporate expenses include revenue and
expenses which relate to the''enterprise as a whole and are not
attributable to segments.
r. Borrowing Costs
Borrowing Costs that are attributable to the acquisition, construction
or production of a qualifying asset is capitalized as part of the cost
of that asset Other borrowing costs are recognized as expense in the
period in which they are incurred.
Mar 31, 2012
A. Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the
historical cost convention on an accrual basis and are in conformity
with mandatory accounting standards, as prescribed by the Companies
(Accounting Standards) Rules, 2006, the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board of
India (SEBI).
b. Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires Management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosure relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Examples of
such estimates include provision for doubtful debts, future obligations
under employee retirement benefit plans, income taxes and the useful
lives of fixed assets and intangible assets.
Management believes that the estimates used in the preparation of
financial statements are prudent and reasonable.
Future results could differ from these estimates.
c. Fixed assets, intangible assets and capital work in progress
Fixed assets and intangible assets are stated at cost of acquisition or
construction less accumulated depreciation and impairment. Cost
includes taxes, duties, freight and other incidental expense related to
acquisition and installation. Borrowing costs attributable to
acquisition, construction of qualifying asset (i.e. an asset requiring
substantive period of time to get ready for intended use) are
capitalized in accordance with the requirements of Accounting Standard
16(AS 16)," Borrowing Costs" mandated by Rule 3 of the Companies
(Accounting Standards) Rules 2006. .
Capital work in progress comprises of outstanding advances paid to
acquire fixed assets and cost of fixed assets that are not yet
ready for their intended use at the year end.
d. Depreciation and Amortisation
Depreciation is provided on straight line method, except for assets
acquired prior to January 1,1987 which are depreciated on reducing
balance method, at the rates and in the manner specified in Schedule
XIV to the Companies Act, 1956 as applicable from time to time, except
for assets costing less than Rs. 5,000 each which are fully depreciated
in the year of purchase. .
e. Assets Taken and Given on Lease Assets taken on lease:
i In respect of finance lease arrangements, the assets are capitalized
and depreciated. Finance charges are charged off to the Statement of
Profit and Loss account of the year in which they are incurred. '
ii. Operating lease payments are recognized as expenditure in the
Statement of Profit and Loss account on straight line basis,
representative of the time pattern of benefits received from the use of
the assets taken on lease.
Asset given on lease:
Lease rentals are accounted on accrual basis in accordance; with the
respective lease agreements. :
f. Investments
Long-term investments are valued at cost. Provision for diminution, if
any, in the value of investments is made to recognise a decline, other
than temporary.
Current investments are stated at the lower of cost and fair value,
computed individually for each investment. In case of investments in
mutual funds which are unquoted, net assets value is taken as fair
value.
g. Inventories
Inventories are stated at the lower of cost and net realizable value.
In determining the cost of loose tools, stores and spares, raw
materials and components, the weighted average method is used. Cost of
manufactured components, work in progress and manufactured finished
goods include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition which is
determined on absorption cost basis.
h. inventories - Project in progress
Project in progress is valued at lower of cost or net realisable value.
Cost includes cost of land, materials, construction, services,
borrowing costs and other overheads relating to the particular
projects.
i. Foreign exchange transactions
Transactions in foreign currencies are recorded at the prevailing
exchange rates on the transaction dates. Realised gains . and losses
on settlement of foreign currency transactions are recognized in the
Statement of Profit and loss account.
Foreign currency monetary assets and liabilities at the year end are
translated at the year end exchange rates and resultant exchange
differences are recognised in the Statement of Profit and loss account.
j. Revenue recognition
i) Sale of goods is recognised be dispatch to customer and are recorded
net of sale tax and excise duties and excludes export incentives such
as duty drawbacks.
ii) Rental income is recognised on accrual basis. -
iii) Income from Joint development of property .will be recognized,
when Sale Deed will be executed in favour of the third party. ;
iv) Revenue from wind mill power project is recognised on the basis of
actual power sold as per the terms of the power purchase agreements
entered into with tha respective parties:
iv) Income from projects is recognized on the transfer of all
significant risks and rewards of ownership to the buyers and it is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration. However
if, at the time of transfer, substantial acts are yet to be performed
under the agreement, revenue is recognized on proportionate basis as
the acts are performed, i.e. on the percentage of completion basis,
subject to the actual cost incurred being at least 25% of the total
estimated project cost involved and further subject to. receipt of at
least 20% of the total sales consideration. Determination of revenues
under the percentage of completion method necessarily involves making
estimates by the Company, some of which are of a technical nature,
concerning, where. relevant, the percentages of completion, costs to
completion, the expected revenues from the project and the ;
foreseeable losses to completion.
k. Research and development expenditure ;
Research and development expenditure, other than capital expenditure is
expensed out as and when incurred. '
I. Retirement benefits
- Gratuity:
Liabilities with regard to the gratuity benefits payable In future are
determined by actuarial valuation at each Balance Sheet date using the
Projected Unit Credit method and contributed to Employees Gratuity Fund
managed by Life Insurance Corporation of India. Actuarial gains and
losses arising from changes in actuarial assumptions are recognized in
the Statement of Profit and Loss account in the period which they
arise.
- Leave encashment ;
The Company provides for the encashment of leave with pay subject to
certain rules. The employees are entitled to accumulate leave subject
to certain limits, for future encashment/availment. The liability is
provided based on the number of days of unutilized leave at each
balance sheet date on the basis of an independent actuarial valuation.
- Provident fund
Provident fund contributions are made to a trust administered by the
Company and are charged to the Statement of Profit and loss account.
The Company has an obligation to make good the shortfall if any,
between return of investment by the trust and government administered
interest rate.
m. Provisions
Provision is made when there is present obligation as a result of a
past event that probably requires an outflow of economic resources and
a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made, when there is a
possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is
made.
Liquidated damages/penalties are provided for meeting the obligations
arising from delay in contractual delivery schedules. Provision for
probable warranty claim is based on Management's estimate and
judgment and is provided as a percentage of average claims of past
three years for average warranty period of 18 months.
n. Accounting for taxes on income
Provision for current tax is made, based on the tax payable under the
Income Tax Act, 1961. Minimum Alternative Tax (MAT) credit, which is
equal to the excess of MAT (calculated in accordance with provisions of
section 115JB of the | Income tax Act, 1961) over normal income-tax is
recognized as an asset by crediting the Statement of Profit and Loss ;
Account only when and to the extent there is convincing evidence that
the Company will be able to avail the said credit against normal tax
payable during the period of ten succeeding assessment years.
Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets on unabsorbed tax - losses and unabsorbed tax
depreciation are recognised only when there is a virtual certainty of
their realisation. Other deferred tax assets are recognised only when
there is a reasonable certainty of their realisation.
o. Impairment
The Company reviews the carrying value of tangible and intangible
assets for any possible impairment at each balance sheet date. An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. In assessing the recoverable amount,
the estimated future cash flows are discounted to their present value
at appropriate discount rates.
p. Contingent liabilities
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence will be confirmed by
the occurrence or non -occurrence of one or more uncertain future
events not wholly within control of the Company. A provision is made
based on a reliable estimate when it is probable that an outflow of
resources embodying economic benefits will be required to settle an
obligation at the year end date. Contingent assets are not recognized
or disclosed in the financial statements. :
q. Segment Reporting
Segments have been identified having regard to the dominant source and
nature of risks and returns and the internal organisation and
management structure. Inter-segment revenue is accounted on the basis
of market price. Unallocated corporate expenses include revenue and
expenses which relate to the enterprise as a whole and are not
attributable to segments.
r. Borrowing Costs
Borrowing Costs that are attributable to the acquisition, construction
or production of a qualifying asset is capitalized as | part of the
cost of that asset. Other borrowing costs are recognized as expense in
the period in which they are incurred.
Mar 31, 2011
A. Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the historical
cost convention on an accrual basis and are in conformity with
mandatory accounting standards, as prescribed by the Companies
(Accounting Standards) Rules, 2006, the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board of
India (SEBI).
b. Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires Management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosure relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Examples of
such estimates include provision for doubtful debts, future obligations
under employee retirement benefit plans, income taxes and the useful
lives of fixed assets and intangible assets.
Management believes that the estimates used in the preparation of
financial statements are prudent and reasonable. Future results could
differ from these estimates.
c. Fixed assets, intangible assets and capital work in progress
Fixed assets and intangible assets are stated at cost of acquisition or
construction less accumulated depreciation and impairment. Cost
includes taxes, duties, freight and other incidental expense related to
acquisition and installation. Borrowing costs attributable to
acquisition, construction of qualifying asset (i.e. an asset requiring
substantive period of time to get ready for intended use) are
capitalized in accordance with the requirements of Accounting Standard
16 (AS 16)," Borrowing Costs" mandated by Rule 3 of the Companies
(Accounting Standards) Rules 2006.
Capital work in progress comprises of outstanding advances paid to
acquire fixed assets and cost of fixed assets that are not yet ready
for their intended use at the year end.
d. Depreciation and Amortisation
Depreciation is provided on straight line method, except for assets
acquired prior to January 1,1987 which are depreciated on reducing
balance method, at the rates and in the manner specified in Schedule
XIV to the Companies Act, 1956 as applicable from time to time, except
for assets costing less than Rs. 5,000 each which are fully depreciated
in the year of purchase.
e. Assets Taken and Given on Lease Assets taken on lease:
i In respect of finance lease arrangements, the assets are capitalized
and depreciated. Finance charges are charged off to the Profit and Loss
account of the year in which they are incurred.
ii. Operating lease payments are recognized as expenditure in the
Profit and Loss account on straight line basis, representative of the
time pattern of benefits received from the use of the assets taken on
lease.
Asset given on lease:
Lease rentals are accounted on accrual basis in accordance with the
respective lease agreements.
f. Investments
Long-term investments are valued at cost. Provision for diminution, if
any, in the value of investments is made to recognise a decline, other
than temporary.
Current investments are stated at the lower of cost and fair value,
computed individually for each investment. In case of investments in
mutual funds which are unquoted, net assets value is taken as fair
value.
g. Inventories
Inventories are stated at the lower of cost and net realizable value.
In determining the cost of loose tools, stores and spares, raw
materials and components, the weighted average method is used. Cost of
manufactured components, work in progress and manufactured finished
goods include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition which is
determined on absorption cost basis.
h. Inventories - Project in progress
Project in progress is valued at lower of cost or net realisable value.
Cost includes cost of land, materials, construction, services,
borrowing costs and other overheads relating to the particular
projects.
i. Foreign exchange transactions
Transactions in foreign currencies are recorded at the prevailing
exchange rates on the transaction dates. Realised gains and losses on
settlement of foreign currency transactions are recognized in the
profit and loss account.
Foreign currency monetary assets and liabilities at the year end are
translated at the year end exchange rates and resultant exchange
differences are recognised in the profit and loss account.
j. Revenue recognition
i) Sale of goods is recognised on dispatch to customer and are recorded
net of sale tax and excise duties and excludes export incentives such
as duty drawbacks.
ii) Rental income is recognised on accrual basis.
iii) Income from Joint development of property will be recognized, when
Sale Deed will be executed in favour of the third party.
iv) Revenue from wind mill power project is recognised on the basis of
actual power sold as per the terms of the power purchase agreements
entered into with the respective parties.
v) Income from projects is recognized on the transfer of all
significant risks and rewards of ownership to the buyers and it is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration. However if,
at the time of transfer, substantial acts are yet to be performed under
the agreement, revenue is recognized on proportionate basis as the acts
are performed, i.e. on the percentage of completion basis, subject to
the actual cost incurred being at least 25% of the total estimated
project cost involved and further subject to receipt of at least 20% of
the total sales consideration. Determination of revenues under the
percentage of completion method necessarily involves making estimates
by the Company, some of which are of a technical nature, concerning,
where relevant, the percentages of completion, costs to completion, the
expected revenues from the project and the foreseeable losses to
completion.
k. Research and development expenditure
Research and development expenditure, other than capital expenditure is
expensed out as and when incurred.
I. Retirement benefits
- Gratuity
Liabilities with regard to the gratuity benefits payable in future are
determined by actuarial valuation at each Balance* Sheet date using the
Projected Unit Credit method and contributed to Employees Gratuity Fund
managed by Life Insurance Corporation of India. Actuarial gains and
losses arising from changes in actuarial assumptions are recognized in
the Profit and Loss account in the period which they arise.
- Leave encashment
The Company provides for the encashment of leave with pay subject to
certain rules. The employees are entitled to accumulate leave subject
to certain limits, for future encashment/availment.The liability is
provided based on the number of days of unutilized leave at each
balance sheet date on the basis of an independent actuarial valuation.
- Provident fund
Provident fund contributions are made to a trust administered by the
Company and are charged to the Profit and loss account. The Company has
an obligation to make good the shortfall if any, between return of
investment by the trust and government administered interest rate.
m. Provisions
Provision is made when there is present obligation as a result of a
past event that probably requires an outflow of economic resources and
a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made, when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Liquidated damages/penalties are provided for meeting the obligations
arising from delay in contractual delivery schedules.
Provision for probable warranty claim is based on Managements estimate
and judgment and is provided as a percentage of average claims of past
three years for average warranty period of 18 months
n. Accounting for taxes on income
Provision for current tax is made, based on the tax payable under the
Income Tax Act, 1961. Minimum Alternative Tax (MAT) credit, which is
equal to the excess of MAT (calculated in accordance with provisions of
section 115JB of the Income tax Act, 1961) over normal income-tax is
recognized as an asset by crediting the Profit and Loss Account only
when and to the extent there is convincing evidence that the Company
will be able to avail the said credit against normal tax payable during
the period of ten succeeding assessment years.
Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets on unabsorbed tax losses and unabsorbed tax
depreciation are recognised only when there is a virtual certainty of
their realisation. Other deferred tax assets are recognised only when
there is a reasonable certainty of their realisation.
o. impairment
The Company reviews the carrying value of tangible and intangible
assets for any possible impairment at each balance sheet date. An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. In assessing the recoverable amount,
the estimated future cash flows are discounted to their present value
at appropriate discount rates.
p. Contingent liabilities
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence will be confirmed by
the occurrence or non - occurrence of one or more uncertain future
events not wholly within control of the Company. A provision is made
based on a reliable estimate when it is probable that an outflow of
resources embodying economic benefits will be required to settle an
obligation at the year end date. Contingent assets are not recognized
or disclosed in the financial statements.
q. Segment Reporting
Segments have been identified having regard to the dominant source and
nature of risks and returns and the internal organisation and
management structure. Inter-segment revenue is accounted on the basis
of market price. Unallocated corporate expenses include revenue and
expenses which relate to the enterprise as a whole and are not
attributable to segments.
r. Borrowing Costs
Borrowing Costs that are attributable to the acquisition, construction
or production of a qualifying asset is capitalized as part of the cost
of that asset. Other borrowing costs are recognized as expense in the
period in which they are incurred.
Mar 31, 2010
A. Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the historical
cost convention on an accrual basis and are in conformity with
mandatory accounting standards, as prescribed by the Companies
(Accounting Standards) Rules, 2006, the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board
of India (SEBI).
b. Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires Management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosure relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Examples of
such estimates include provision for doubtful debts, future obligations
under employee retirement benefit plans, income taxes and the useful
lives of fixed assets and intangible assets.
Management believes that the estimates used in the preparation of
financial statements are prudent and reasonable. Future results could
differ from these estimates.
c. Fixed assets, intangible assets and capital work in progress
Fixed assets and intangible assets are stated at cost of acquisition or
construction less accumulated depreciation and impairment. Cost
includes taxes, duties, freight and other incidental expense related to
acquisition and installation. Borrowing costs attributable to
acquisition, construction of qualifying asset (i.e. an asset requiring
substantive period of time to get ready for intended use) are
capitalized in accordance with the requirements of Accounting Standard
16 . (AS 16)," Borrowing Costs" mandated by Rule 3 of the Companies
(Accounting Standards) Rules 2006.
Capital work in progress comprises of outstanding advances paid to
acquire fixed assets and cost of fixed assets that are not yet ready
for their intended use at the year end.
d. Depreciation and Amortisation
Depreciation is provided on straight line method, except for assets
acquired prior to January 1,1987 which are depreciated on reducing
balance method, at the rates and in the manner specified in Schedule
XIV to the Companies Act, 1956 as applicable from time to time, except
for assets costing less than Rs. 5,000 each which are fully depreciated
in the year of purchase.
e. Assets Taken and Given on Lease Assets taken on lease:
i In respect of finance lease arrangements, the assets are capitalized
and depreciated. Finance charges are charged off to the Profit and Loss
account of the year in which they are incurred.
ii. Operating lease payments are recognized as expenditure in the
Profit and Loss account on straight line basis, representative of the
time pattern of benefits received from the use of the assets taken on
lease.
Asset given on lease:
Lease rentals are accounted on accrual basis in accordance with the
respective lease agreements.
f. Investments
Long-term investments are valued at cost. Provision for diminution, if
any, in the value of investments is made to. recognise a decline,
other than temporary.
Current investments are stated at the lower of-cost and fair value,
computed individually for each investment. In case of investments in
mutual funds which are unquoted, net assets value is taken as fair
value.
g. Inventories
Inventories are stated at the lower of cost and net realizable value.
In determining the cost of loose tools, stores and spares, raw
materials and components, the weighted average method is used. Cost of
manufactured components, work in progress and manufactured finished
goods include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition which is
determined on absorption cost basis.
h. Inventories - Project in progress
Project in progress is valued at lower of cost or net realisable value.
Cost includes cost of land, materials, construction, services,
borrowing costs and other overheads relating to the particular
projects.
i. Foreign exchange transactions
Transactions in foreign currencies are recorded at the prevailing
exchange rates on the transaction dates. Realised - gains and losses on
settlement of foreign currency transactions are recognized in the
profit and loss account.
Foreign currency monetary assets and liabilities at the year end are
translated at the year end exchange rates and resultant exchange
differences are recognised in the profit and loss account.
j. Revenue recognition
i) Sale of goods is recognised on dispatch to customer and are recorded
net of sale tax and excise duties and excludes export incentives such
as duty drawbacks.
ii) Rental income is recognised on accrual basis.
iii) Income from Joint development of property will be recognized, when
Sale Deed will be executed in favour of the third party.
iv) Revenue from wind mill power project is recognised on the basis of
actual power sold as per the terms of the power purchase agreements
entered into with the respective parties.
v) Income from projects is recognized on the transfer of ail
significant risks and rewards of ownership to the buyers and it is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of . consideration. However
if, at the time of transfer, substantial acts are yet to be performed
under the agreement, revenue is recognized on proportionate basis as
the acts are performed, i.e. on the percentage of completion basis,
subject to the actual cost incurred being at least 25% of the total
estimated project cost involved and further subject to receipt of at
least 10% of the total sales consideration. Determination of revenues
under the percentage of completion method necessarily involves making
estimates by the Company, some of which are of a technical nature,
concerning, where relevant, the percentages of completion, costs to
completion, the expected revenues from the project and the foreseeable
losses to completion.
k. Research and development expenditure
Research and development expenditure, other than capital expenditure is
expensed out as and when incurred.
I. Retirement benefits
- Gratuity:
Liabilities with regard to the gratuity benefits payable in future are
determined by actuarial valuation at each Balance Sheet date using the
Projected Unit Credit method and contributed to Employees Gratuity Fund
managed by Life Insurance Corporation of India. Actuarial gains and
losses arising from changes in actuarial assumptions are recognized in
the Profit and Loss account in the period which they arise.
- Leave encashment
The Company provides for the encashment of leave with pay subject to
certain rules. The employees are entitled to accumulate leave subject
to certain limits, for future encashment/availment. The liability is
provided based on the number of days of unutilized leave at each
balance sheet date on the basis of an independent actuarial valuation.
- Provident fund
Provident fund contributions are made to a trust administered by the
Company and are charged to the Profit and loss account. The Company has
an obligation to make good the shortfall if any, between return of
investment by the trust and government administered interest rate.
m. Provisions
Provision is made when there is present obligation as a result of a
past event that probably requires an outflow of economic resources and
a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made, when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation on
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Liquidated damages/penalties are provided for meeting the obligations
arising from delay in coniractuai delivery schedules.
Provision for probable warranty claim is based on Managements estimate
and judgment and is provided as a percentage of average claims of past
three years for average warranty period of 18 months.
n. Miscellaneous expenditure (to the extent not written off)
Compensation paid under Voluntary Retirement Scheme is amortized fully
up to March 31,2010, as per the provisions of Accounting Standard 15 -
on Employee Benefits.
o. . Accounting for taxes on income
Provision for current tax is made, based on the tax payable under the
Income Tax Act, 1961. Minimum Alternative Tax (MAT) credit, which is
equal to the excess of MAT (calculated in accordance with provisions of
section 115 JB of the income tax Act, 1961) over normal income-tax is
recognized as an asset by crediting the Profit and Loss Account only
when and to the extent there is convincing evidence that the Company
will be able to avail the said credit against normal tax payable during
the period of ten succeeding assessment years.
Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets on unabsorbed tax losses and unabsorbed tax
depreciation are recognised only when there is a virtual certainty of
their realisation. Other deferred tax assets are recognised only when
there is a reasonable certainty of their realisation.
p. Impairment - i
The Company reviews the carrying value of tangible and intangible
assets for any possible impairment at each balance sheet date. An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. In assessing the recoverable amount,
the estimated future cash flows are discounted to their present value
at appropriate discount rates.
q. Contingent liabilities
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence will be confirmed by
the occurrence or non -occurrence of one or more uncertain future
events not wholly within control of the Company. A provision is made
based on a reliable estimate when it is probable that an outflow of
resources embodying economic benefits will be required to settle an
obligation at the year end date. Contingent assets are not recognized
or disclosed in the financial statements.
r. Segment Reporting
Segments have been identified having regard to the dominant source and
nature of risks and returns and the internal organisation and
management structure. Inter-segment revenue is accounted on the basis
of market price. Unallocated corporate expenses include revenue and
expenses which relate to the enterprise as a whole and are not
attributable to segments.
s. Borrowing Costs
Borrowing Costs that are attributable to the acquisition, construction
or production of a qualifying asset is capitalized as part of the cost
of that asset. Other borrowing costs are recognized as expense in the
period in which they are incurred.
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