Mar 31, 2023
GENERAL INFORMATION
Gabriel India Limited (the "Companyâ) offers ride control products catering to all segments in the automotive industry. The Company has seven manufacturing plants spread accross India. The Company is domiciled in India and is listed on Bombay Stock exchange and National Stock Exchange of India.
The financial statements are approved for issue by the Company''s Board of Directors on May 23, 2023.
1 SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1. Basis of preparation, measurement and transition to Ind AS
1.1.1. Basis of preparation
The financial statements have been prepared taking into consideration all material aspects with Indian Accounting Standards (Ind-AS) notified under section 133 of the Companies Act, 2013 (the "Actâ) [Companies (Indian Accounting Standards) Rules, 2015, as amended] and the other relevant provisions of the Act.
1.1.2. Basis of measurement
The financial statements have been prepared on a historical cost convention except for the following. Certain financial assets and liabilities (including derivative instruments) are measured at fair value
Defined benefit plans - plan assets measured at fair value.
1.2. Summary of significant accounting policies 1.2.1. Current versus 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 I t 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 noncurrent.
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 for the purpose of current and non-current classification of assets and liabilities.
Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors of the Company assesses the financial performance and position of the Company, and makes strategic decisions. The board of directors of the Company have been identified as being the chief operating decision maker. It consists of Chief Executive Officer of the Company, Chief Financial Officer of the Company assists board of directors in their decision making process. The Company is in the business of
manufacture and sale automobile components, which in the context of Indian Accounting Standard 108 ''Segment Information'' represents single reportable business segment.
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (''), which is Gabriel India Limited''s functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on nonmonetary assets such as equity investments classified as at FVOCI are recognised in other comprehensive income.
The Company offers ride control products catering to all segments in the automotive industry. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. Revenue from providing services is recognised in the accounting period in which the services are rendered.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration such as various discounts and schemes offered by the Company as a part of contract and revision for changes in commodity prices) allocated to that performance obligation.
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties. If the consideration promised in a contract includes a variable amount, the Company estimates the
amount of consideration to which the Company will be entitled in exchange for transferring the promised goods or services to a customer.
Accumulated experience is used to estimate and provide for the discounts and returns, expected customer settlement for price changes and expected future sales volume for amortisation of upfront payment to customers, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element of financing is deemed present as the sales are made with an average credit term of 45-60 days, which is consistent with market practice.
Contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. Contract modification are accounted based on the prospective accounting and cumulative catch up.
An company accounts for a modification as a separate contract, if both the scope increases due to the addition of ''distinct'' goods or services and the price increase reflects the goods'' or services'' stand-alone selling prices under the circumstances of the modified contract.
Interest income from debt instruments is recognised using the effective interest rate method as per Ind AS 109. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar
options) but does not consider the expected credit losses.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
Benefit on account of entitlement of import of goods free of duty under the "Duty Entitlement Pass Bookâ (DEPB Scheme) and "Merchandise Export Incentive Schemeâ under Duty Exemption Scheme is accounted in the year of export, if the entitlements can be estimated with reasonable assurance and condition precedent to claim are fulfilled as per Ind AS 20.
A government grant is not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to it, and that the grant will be received. Accounting of grant in the nature of subsidy/revenue is on the basis of Income approach.
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to income are
deferred and recognised in the Statement of profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Current and deferred tax is recognised in Statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date amounts expected to be payable by the Company under residual value guarantees the exercise price of a purchase option if the Company is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee''s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received any initial direct costs restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset''s useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset''s useful life.
Payments associated with short-term leases of equipment and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over
the lease term on the same basis as lease income. The respective leased assets are included in the balance sheet based on their nature.
Property, plant and equipment and Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are companyed at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or companys of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, 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.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.
Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials and traded goods comprises cost of purchases. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Cost includes the reclassification from equity of any gains or losses on qualifying cash flow hedges relating to purchases of raw material but excludes borrowing costs. Costs are assigned to individual items of inventory on the basis of weighted average basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
A financial instrument is any contract that gives rise to a financial asset of one company and a financial liability or equity instrument of another company. Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value.
The Company classifies its financial assets in the following measurement categories: those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss)
those to be measured at amortised cost.
The classification depends on the Company''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.
Regular way purchases and sales of financial assets are recognised on trade-date, being the date on which the Company commits to purchase or sale the financial asset. the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets are held to collect (HTC Business Model) 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.
There are three measurement categories into which the Company classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these
financial assets is included in Other Income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses). Impairment losses are presented as separate line item in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in statement of profit and loss.
Fair value through profit or loss (FVTPL):
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
A financial asset is derecognised only when the Company has transferred the rights to receive cash flows from the financial asset or
retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised. Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 37 details how the Company determines whether there has been a significant increase in credit risk. For trade receivables only, the Company applies the simplified approach required by Ind AS 109, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The Company subsequently measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification
of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/ (losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at April 01,2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment which will be depreciated over its remaining useful life. Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate the cost of the assets, net of their residual values, over their estimated useful lives as follows:
Asset Class |
Estimated Useful Life (No. of Years) |
Specified Useful Life in Schedule II (No. of Years) |
Building 1 |
60 |
60 |
Factory Building |
30 |
30 |
Roads |
3-8 |
5 |
Plant & Machinery* |
1-15 |
15 |
Furniture & Fixtures |
3-10 |
10 |
Office Equipments |
3-10 |
10 |
Computer Hardware |
1-3 |
1-3 |
Servers & Networks |
6 |
6 |
Vehicle |
3-8 |
8 |
more than 5% of the original cost of the asset. The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset''s carrying amount is written down immediately to its recoverable amount
if the asset''s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other gains/ (losses).
Tools, dyes and moulds are depreciated over their estimated economic life determined on the basis of their usage or under straight line method in the manner specified in schedule II. Assets less than '' 5000 are fully depreciated in the year of acquisition.
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
Investment properties are depreciated using ''Straight Line Method'' over the estimated useful life of the assets, based on the technical evaluation performed by the management''s expert. Useful
Life of Investment properties is estimated at 60 years.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. Expenditure on the development costs is recognised only when criteria for recognition is met.
Amortisation methods and periods
The amortisation period and the amortisation method for an intangible asset is reviewed at least at the end of each reporting period. The amortisation expense on intangible assets is recognised in the statement of profit and loss. The Company amortises intangible assets with a finite useful life using the straight-line method, commencing from the date the asset is available to the Company.
Estimated useful lives are as under: |
|
Asset Class |
Estimated Useful Life (No. of Years) |
Computer software |
3-6 |
Technical Knowhow |
6 or period of agreement |
whichever is lower |
On transition to Ind AS, the Company has elected to continue with the carrying value of all its Intangible assets recognised as at April 01, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the Intangible assets which will be depreciated over its remaining useful life.
Trade and other payable
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables
are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
Provisions for legal claims and service warranties are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Provisions for restructuring are recognised by the Company when it has developed a detailed formal plan for restructuring and has raised a valid expectation in those affected that the Company will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
The measurement of provision for restructuring includes only direct expenditures arising from the restructuring, which are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
A disclosure for a contingent liability is made where there is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from the past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and
changes in actuarial assumptions are recognised in profit or loss.
The liability or asset recognised in the balance sheet in respect of defined benefit pension and gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation denominated in '' is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The estimated future payments which are denominated in a currency other than '', are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in finance cost in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Equity shares issued to shareholders are classified as equity. Incremental costs directly attributable to the issue of new equity shares or stock options are recognised as a deduction from equity, net of any related income tax effects.
The Company reports basic and diluted earnings per share in accordance with Ind AS 33 on Earnings per share.
Basic earnings per share is computed by dividing the net profit or loss for the period by the weighted average number of equity shares outstanding during the period.
Diluted earnings per share is computed by dividing the net profit or loss for the period by the weighted average number of equity shares outstanding during the period as adjusted for the effects of all diluted potential equity shares except where the results are anti-dilutive.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all years presented for any share splits and bonus shares issues including for changes effected prior to the authorisation for issue of the financial statements by the Board of Directors.
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest million as per the requirement of Schedule III, unless otherwise stated.
The Cash Flow Statement is prepared by the indirect method set out in Ind AS 7 on Cash Flow Statements and presents cash flows by operating, investing and financing activities of the Company.
a. New and amended standards adopted by the Company
The Ministry of Corporate Affairs had vide notification dated 23 March 2022 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amended certain accounting standards, and are effective 1 April 2022. These amendments did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
b. New and amended standards issued but not effective
The Ministry of Corporate Affairs has vide notification dated 31 March 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2023 (the ''Rules'') which amends certain accounting standards, and are effective 1 April 2023.
The Rules predominantly amend Ind AS 12, Income taxes, and Ind AS 1, Presentation of financial statements. The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications.
These amendments are not expected to have a material impact on the company in
the current or future reporting periods and on foreseeable future transactions.
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company''s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements included in relevant notes together with information about the basis of calculation of each different line item in the financial statements.
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods. Useful life is determined based on the technical evaluation done by the management''s expert which are higher than those specified by Schedule II to the Companies Act 2013, in order to reflect the actual usage of the assets.
A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. A contingent asset is
neither recognised nor disclosed in the financial statements.
The estimated liability for product warranties is accounted when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures.
Revenue recognition includes variable consideration such as discounts, revision for changes in commodity prices and amortisation of upfront payment to customers which involves estimates and judgements with respect to region and product wise sales volume, expected customer settlement on price changes and expected future sales volume for amortisation of upfront payment to customers.
The Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. The cost of providing benefits under abovementioned defined benefit plan is determined using the projected unit credit method
with actuarial valuations being carried out at each balance sheet date, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Allowances for bad and doubtful debts disclosed under note 37A are based on assumptions about risk of default and expected loss rates and timing of the cash flows. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Components pertaining to Building in nature ancilliaries like Flooring, Liaisoning works etc. has estimated life other than 30 years and 60 years * Electrical installations & Equipments, Material Handling Equipment and Air Conditioner are included in Plant and Machinery The useful lives have been determined based on technical evaluation done by the management''s expert which are higher than those specified by Schedule II to the Companies Act, 2013, in order to reflect the actual usage of the assets. The residual values are not
Mar 31, 2022
GENERAL INFORMATION
Gabriel India Limited (the "Company") offers ride control products catering to all segments in the automotive industry. The Company has seven manufacturing plants spread across India. The Company is domiciled in India and is listed on Bombay Stock exchange and National Stock Exchange of India.
The financial statements are approved for issue by the Companyâs Board of Directors on May 24, 2022.
1 SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1. Basis of preparation, measurement and transition to Ind AS1.1.1. Basis of preparation
The financial statements have been prepared taking into consideration all material aspects with Indian Accounting Standards (Ind-AS) notified under section 133 of the Companies Act, 2013 (the "Act") [Companies (Indian Accounting Standards) Rules, 2015, as amended] and the other relevant provisions of the Act.
The financial statements have been prepared on a historical cost convention except for the following.
Certain financial assets and liabilities (including derivative instruments) are measured at fair value
Defined benefit plans - plan assets measured at fair value.
1.2. Summary of significant accounting policies1.2.1. Current versus 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 noncurrent.
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 for the purpose of current and non-current classification of assets and liabilities.
Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors of the Company assesses the financial performance and position of the Company, and makes strategic decisions. The board of directors of the Company have been identified as being the chief operating decision maker. It consists of Chief Executive officer of the Company, Chief financial officer of the Company assists board of directors in their decision making
process. The Company is in the business of manufacture and sale automobile components, which in the context of Indian Accounting Standard 108 ''Segment Informationâ represents single reportable business segment.
1.2.3. Foreign currencies
1. Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currencyâ). The financial statements are presented in Indian rupee (''), which is Gabriel India Limitedâs functional and presentation currency.
2. Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on nonmonetary assets such as equity investments classified as at FVOCI are recognised in other comprehensive income.
1.2.4. Revenue Recognition a) Sale of goods
i) Timing of recognition:
The Company offers ride control
products catering to all segments in the automotive industry. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.
ii) Measurement of revenue:
Transaction price is the amount of consideration expected to be entitled to in exchange for transferring of goods and services excluding the amount collected from third party. If the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which the Company will be entitled in exchange for transferring the promised goods or services to a customer.
Revenue from sales is based on the price specified in the sales contracts, net of the estimated volume discounts and returns at the time of sale. Accumulated experience is used to estimate and provide for the discounts and returns. The volume discounts are assessed based on anticipated annual purchases. No element of financing is deemed present as the sales are made with an average credit term of45-60 days, which is consistent with market practice.
b) Sale of services
i) Timing of recognition
Revenue from rendering of services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service
provided to the end of the reporting period as a proportion of the total services to be provided (percentage of completion method).
ii) Measurement of revenue
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change, are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.
c) Modification of Transaction price
Contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. Contract modification are accounted based on the prospective accounting and cumulative catch up.
The company accounts for a modification as a separate contract, if both the scope increases due to the addition of ''distinct'' goods or services and the price increase reflects the goods'' or services'' stand-alone selling prices under the circumstances of the modified contract.
d) Interest income
Interest income from debt instruments is recognised using the effective interest rate method as per Ind AS 109. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured
reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
e) Dividend
Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
f) Other Operating Income
Benefit on account of entitlement of import of goods free of duty under the "Duty Entitlement Pass Book" (DEPB Scheme) and "Merchandise Export Incentive Scheme" under Duty Exemption Scheme is accounted in the year of export, if the entitlements can be estimated with reasonable assurance and condition precedent to claim are fulfilled as per Ind AS 20.
A government grant is not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to it, and that the grant will be received. Accounting of grant in the nature of subsidy/revenue is on the basis of Income approach.
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to income are deferred and recognised in the Statement of profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are
credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.
The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Current and deferred tax is recognised in Statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date
amounts expected to be payable by the Company under residual value guarantees
the exercise price of a purchase option if the Company is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lesseeâs incremental borrowing rate is used, being the rate that the individual lessee
would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs
restoration costs.
Right-of-use assets are generally depreciated over the shorter of the assetâs useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying assetâs useful life.
Payments associated with short-term leases of equipment and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. The respective leased assets are included in the balance sheet based on their nature.
1.2.8. Impairment of assets- Non Financial Assets
Property, plant and equipment and Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are companied at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or companyâs of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, 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.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.
Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials and traded goods comprises cost of purchases. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Cost includes the reclassification
from equity of any gains or losses on qualifying cash flow hedges relating to purchases of raw material but excludes borrowing costs. Costs are assigned to individual items of inventory on the basis of weighted average basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
1.2.10.Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one company and a financial liability or equity instrument of another company. Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value.
Financial Assets
a) Classification
The Company classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss)
those to be measured at amortised cost.
The classification depends on the Companyâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.
b) Recognition & Measurement
Regular way purchases and sales of financial assets are recognised on trade-date, being
the date on which the Company commits to purchase or sale the financial asset. The Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
c) Financial Assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets are held to collect (HTC Business Model) 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.
There are three measurement categories into which the Company classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in Other Income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses). Impairment losses are presented as separate line item in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in statement of profit and loss.
Fair value through profit or loss (FVTPL):
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
f) De-recognition
A financial asset is derecognised only when
the Company has transferred the rights to receive cash flows from the financial asset or
retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
g) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 37 details how the Company determines whether there has been a significant increase in credit risk. For trade receivables only, the Company applies the simplified approach required by Ind AS 109, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The Company subsequently measures all equity investments at fair value. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/ (losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
I.2.H. Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
On transition to Ind AS, the Company has elected
to continue with the carrying value of all its property, plant and equipment recognised as at April 01,2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment which will be depreciated over its remaining useful life.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate the cost of the assets, net of their residual values, over their estimated useful lives as follows:
Asset Class |
Estimated Useful Life (No. of Years) |
Specified Useful Life in Schedule II (No. of Years) |
Building 1 |
60 |
60 |
Factory Building |
30 |
30 |
Roads |
3-8 |
5 |
Plant & Machinery* |
1-15 |
15 |
Furniture & Fixtures |
3-10 |
10 |
Office Equipment''s |
3-10 |
10 |
Computer Hardware |
1-3 |
1-3 |
Servers & Networks |
6 |
6 |
Vehicle |
3-8 |
8 |
are included in profit or loss within other gains/ (losses).
Tools, dyes and moulds are depreciated over their estimated economic life determined on the basis of their usage or under straight line method in the manner specified in schedule II. Assets less than '' 5000 are fully depreciated in the year of acquisition.
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment
property is replaced, the carrying amount of the replaced part is derecognised.
Investment properties are depreciated using ''Straight Line Methodâ over the estimated useful life of the assets, based on the technical evaluation performed by the managementâs expert. Useful Life of Investment properties is estimated at 60 years
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
Internally generated intangibles, excluding capitalised development costs, are not capitalised
and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. Expenditure on the development costs is recognised only when criteria for recognition is met.
Amortisation methods and periods
The amortisation period and the amortisation method for an intangible asset is reviewed at least at the end of each reporting period. The amortisation expense on intangible assets is recognised in the statement of profit and loss. The Company amortises intangible assets with a finite useful life using the straight-line method, commencing from the date the asset is available to the Company.
Estimated useful lives are as under: |
|
Asset Class |
Estimated Useful Life (No. of Years) |
Computer software |
3-6 |
Technical Knowhow |
6 or period of agreement whichever is lower |
On transition to Ind AS, the Company has elected to continue with the carrying value of all its Intangible assets recognised as at April 01, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the Intangible assets which will be depreciated over its remaining useful life.
Trade and other payable
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
1.2.14. BorrowingsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
1.2.15. Borrowing costsGeneral and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
1.2.16. Provisions and contingent liabilityProvisions for legal claims and service warranties are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources
will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Provisions for restructuring are recognised by the Company when it has developed a detailed formal plan for restructuring and has raised a valid expectation in those affected that the Company will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. The measurement of provision for restructuring includes only direct expenditures arising from the restructuring, which are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company." A disclosure for a contingent liability is made where there is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from the past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
1.2.17.Employee benefits1. Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in
respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
2. Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service.
They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
3. Post-employment obligations
The liability or asset recognised in the balance sheet in respect of defined benefit pension and gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The estimated future payments which are denominated in a currency other than INR, are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the currency in which the benefits will be
paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in finance cost in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Equity shares issued to shareholders are classified as equity. Incremental costs directly attributable to the issue of new equity shares or stock options are recognised as a deduction from equity, net of any related income tax effects.
1.2.19. Earnings per share (EPS)
The Company reports basic and diluted earnings per share in accordance with Ind AS 33 on Earnings per share.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively
for all years presented for any share splits and bonus shares issues including for changes effected prior to the authorisation for issue of the financial statements by the Board of Directors.
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest million as per the requirement of Schedule III, unless otherwise stated.
The Cash Flow Statement is prepared by the indirect method set out in Ind AS 7 on Cash Flow Statements and presents cash flows by operating, investing and financing activities of the Company.
1.3. Critical estimates and judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Companyâs accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements included in relevant notes together with information about the basis of calculation of each different line item in the financial statements.
The areas involving critical estimates or judgements are1.3.1. Estimation of useful life of property, plant and equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods. Useful life
is determined based on the technical evaluation done by the management''s expert which are higher than those specified by Schedule II to the Companies Act 2013, in order to reflect the actual usage of the assets.
1.3.2. Estimation of provision and for contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. A contingent asset is neither recognised nor disclosed in the financial statements.
1.3.3. Estimation of provision for warranty obligation
The estimated liability for product warranties is accounted when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures.
1.3.4. Estimation in determination of variable consideration
Revenue recognition includes variable consideration such as discounts, revision for
changes in commodity prices and amortisation of upfront payment from customers which involves estimates and judgements with respect to region and product wise sales volume, expected customer settlement on price changes and expected future sales volume for amortisation of upfront payment from customers.
1.3.5. Estimation of defined benefit obligation
The Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. The cost of providing benefits under above mentioned defined benefit plan is determined using the projected unit credit method with actuarial valuations being carried out at each balance sheet date, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
1.3.6. Estimation of expected credit Losses on trade receivables
Allowances for bad and doubtful debts disclosed under note 37A are based on assumptions about risk of default and expected loss rates and timing of the cash flows. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Components pertaining to Building in nature ancillaries like Flooring, Liaisoning works etc. has estimated life other than 30 years and 60 years.
* Electrical installations & Equipmentâs, Material Handling Equipment and Air Conditioner are included in Plant and Machinery.
The useful lives have been determined based on technical evaluation done by the managementâs expert which are higher than those specified by Schedule II to the Companies Act, 2013, in order to reflect the actual usage of the assets. The residual values are not more than 5% of the original cost of the asset. The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These
Mar 31, 2018
Note 1. Significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1. Basis of preparation, measurement and transition to Ind AS
1.1.1. Basis of preparation
The financial statements have been prepared taking into consideration all material aspects with Indian Accounting Standards (Ind-AS) notified under section 133 of the Companies Act, 2013 (the âActâ) [Companies (Indian Accounting Standards) Rules, 2015], as amended and the other relevant provisions of the Act.
The financial statements up to year ended March 31 2017 which were prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act, have now been reinstated as per Ind AS. Refer to note 50 for description of effects of transition of Ind AS.
1.1.2. Basis of measurement
The financial statements have been prepared on a historical cost convention except for the following.
Certain financial assets and liabilities (including derivative instruments) are measured at fair value Defined benefit plans - plan assets measured at fair value.
1.2. Summary of significant accounting policies
1.2.1. Current versus 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 realized or intended to be sold or consumed in normal operating cycle Held primarily for the purpose of trading
Expected to be realized 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 realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle for the purpose of current and non-current classification of assets and liabilities.
1.2.2. Cash flow statement
The Cash Flow Statement is prepared by the indirect method set out in Ind AS 7 on Cash Flow Statements and presents cash flows by operating, investing and financing activities of the Company.
1.2.3. Foreign currencies
1. Functional and presentation currency
The functional and presentation currency of the Company is Indian rupee.
2. Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in statement of profit or loss unless they are relating to qualifying cash flow hedges in which case they are deferred in equity.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
1.2.4. Property, plant and equipment
1. Initial Recognition
Property, plant & equipment are stated at cost of acquisition less accumulated depreciation / amortization and impairment loss, if any. All costs directly relating to the acquisition and installation of assets are capitalized and include borrowing costs relating to funds attributable to construction or acquisition of qualifying assets, up to the date the asset / plant is ready for intended use.
Certain assets which are internally developed, all the incidental costs directly attributable to such machinery are capitalized.
The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item of property, plant and equipment, if it is probable that the future economic benefits embodies within the part will flow to the Company and its cost can be measured reliably with the carrying amount of the replaced part getting derecognized.
The cost for day-to-day servicing of property, plant and equipment are recognized in Statement of Profit and Loss as and when incurred.
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation.
Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
2. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognized as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment which will be depreciated over its remaining useful life.
3. Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as prescribed in Part C of Schedule II of the Companies Act, 2013 except in respect of certain assets listed below where the useful life is estimated different from prescribed rate based on internal assessment or independent technical evaluation carried out by external valuers. The Management believes that the useful lives as given below represent the period over which management expects to use these assets
The property, plant and equipment acquired under finance leases is depreciated over the assetâs useful life or over the shorter of the assetâs useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
The residual values are not more than 5% of the original cost of the asset. The assetâs residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period.
An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in profit or loss within other gains/(losses).
1.2.5. Investment properties
1. Classification and Measurement
Property that is held for rental income and that is not occupied by the Company, is classified as investment property.
Investment properties are measured initially at cost, including related transaction cost. It is carried at cost less accumulated depreciation.
Subsequent expenditure is capitalized to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost can be measured reliably. All other repairs and maintenance costs are expensed when incurred. Land is carried at historical cost, however, buildings are depreciated using the written down value method over their estimated useful lives as mentioned in note reference no. 3.
Investment properties are depreciated using âStraight Line Methodâ over the estimated useful life of the assets, based on the technical evaluation performed by the managementâs expert.
Useful Life of Investment properties is estimated at 60 years.
2. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its investment properties recognized as at April 1, 2015 measured as per the previous GAAP and use that carrying value as deemed cost of investment properties.
1.2.6. Intangible assets
1. Initial Recognition
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
2. Amortization methods and periods
The amortization period and the amortization method for an intangible asset is reviewed at least at the end of each reporting period. The amortization expense on intangible assets is recognized in the statement of profit and loss. The Company amortizes intangible assets with a finite useful life using the straight-line method, commencing from the date the asset is available to the Company.
Estimated useful lives are as under
1.2.7. Inventories
Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. Cost of raw materials and traded goods comprises cost of purchases. Cost of work-in progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.
Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis of weighted average basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
1.2.8. Revenue Recognition
1. Initial Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Companyâs activities as described below.
Revenue from operation includes Excise Duty but excludes Sales Tax, Goods & Service Tax, and Value Added Tax.
a) Sale of goods
i) Timing of recognition
Sales are recognized when products are delivered to the customer and there is no unfulfilled obligation that could affect the customerâs acceptance of the products. Delivery occurs when the products have been shipped to the specified location, the risks of obsolescence and loss have been transferred to the customer and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed or the Company has objective evidence that all criteria for acceptance have been satisfied.
ii) Measurement of revenue
Revenue from sales is based on the price specified in the sales contracts, net of the estimated volume discounts and returns at the time of sale. Accumulated experience is used to estimate and provide for the discounts and returns. The volume discounts are assessed based on anticipated annual purchases. No element of financing is deemed present as the sales are made with an average credit term of 45-50 days, which is consistent with market practice.
b) Sale of services
i) Timing of recognition
Revenue from rendering of services is recognized in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognized based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided (percentage of completion method).
Job-work revenues are accounted as and when such services are rendered.
ii) Measurement of revenue
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.
c) Interest income
Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
d) Dividend
Dividends are recognized in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
e) Other Operating Income
Benefit on account of entitlement of import of goods free of duty under the âDuty Entitlement Pass Bookâ (DEPB Scheme) and âMerchandise Export Incentive Schemeâ under Duty exemption Scheme is accounted in the year of export, if the entitlements can be estimated with reasonable assurance and condition precedent to claim are fulfilled.
1.2.9. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value.
1. Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents includes balances with banks which are unrestricted for withdrawal and usage.
2. Financial Assets
a) Classification
On initial recognition the Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
b) Initial Recognition & Measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
c) Financial Assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business whose objective is to hold these assets are held to collect (HTC Business Model) 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.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of EIR. The EIR amortization is included in finance costs/ income in the Statement of Profit or Loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
d) Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business 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.
e) Financial assets at fair value through profit or loss (FVTPL)
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of assets and liabilities at fair value through profit and loss are immediately recognized in the statement of profit and loss.
f) De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognized (i.e. removed from the Companyâs balance sheet) when
a) The rights to receive cash flows from the asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
g) Impairment of financial assets (Other than Fair Value)
The Company assesses at each date of balance sheet whether a financial asset or a Company of financial assets is impaired.
Ind AS 109 requires expected credit losses to be measured through a loss allowance. For trade receivables only, Company performs credit assessment for customers on an annual basis. Company recognizes credit risk, on the basis of lifetime expected losses and where receivables are due for more than twelve months.
3. Equity investments
All equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such an election on an instrument-by-instrument basis, at initial recognition and is irrevocable.
If the Company decides to classify an equity instrument at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to Statement of profit and loss, even on the sale of the investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in Statement of profit and loss.
4. Financial liabilities
1. Classification
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities measured at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value with changes in fair value being recognized in the Statement of Profit and Loss.
2. Initial Recognition
a) Financial Liabilities at amortized cost
Financial liabilities are measured at amortized cost using the effective interest method.
b) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate.
All financial liabilities are recognized initially at fair value and in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Terms of trade payables i.e. non-interest bearing and generally settled in 30 to 60 days to be included.
c) Subsequent measurement
The measurement of financial liabilities depends on their classification (Refer note 36).
d) Financial liabilities at fair value through profit or loss (FVTPL)
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognized in the statement of profit and loss.
5. Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate Method. Gains and losses are recognized in statement of profit and loss when the liabilities are derecognized as well as through the Effective Interest Rate Method amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the Effective Interest Rate. The Effective Interest Rate amortization is included as finance costs in the statement of profit and loss.
6. Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
7. Embedded derivatives
If the hybrid contract contains a host that is a financial asset within the scope Ind AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109 to the entire hybrid contract.
Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss.
These embedded derivatives are measured at fair value with changes in fair value recognized in Consolidated Statement of Profit and Loss, unless designated as effective hedging instruments. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows.
8. Derivative financial instruments and hedging activities
a) Classification
The Company uses derivative financial instruments, such as foreign exchange forward contracts in to manage its exposure to interest rate and foreign exchange risks.
b) Initial Recognition
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated.
The Company designates their derivatives as hedges of foreign exchange risk associated with the cash flows of underlying assets or liabilities or firm commitments.
The Company documents at the inception of the hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset changes in cash flows of hedged items. The Company documents its risk management objective and strategy for undertaking various hedge transactions at the inception of each hedge relationship.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.
c) Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges, is recognized in the other comprehensive income in cash flow hedging reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognized immediately in statement of profit or loss.
d) Designation of Hedging Instrument
The Company uses forward contracts to hedge exposure to foreign currency forecast transactions and firm commitment. The Company designates the full change in fair value of the forward contract (including forward points) as the hedging instrument. In such cases, the gains and losses relating to the effective portion of the change in fair value of the entire forward contract are recognized in the cash flow hedging reserve within equity. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss.
When the hedged forecast transaction results in the recognition of a non-financial asset the amounts accumulated in equity are transferred to the initial carrying amount of non-financial asset or liability.
When a hedging instrument expires or is sold or terminated or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to Statement of profit and loss.
1.2.10. Government Grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognized in the Statement of profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income. Government grant whose primary condition is that the Company should purchase, construct or otherwise acquire capital assets is accounted for as deferred income. The grant is recognized as income over the life of a depreciable asset by accounting deferred income in the Statement of Profit and Loss on a systematic and rational basis over the useful life of the asset.
1.2.11. Share capital
Equity shares issued to shareholders are classified as equity. Incremental costs directly attributable to the issue of new equity shares or stock options are recognized as a deduction from equity, net of any related income tax effects.
1.2.12. Taxation
1. Initial Recognition
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively. Income tax expense represents the sum of the tax currently payable and deferred tax.
2. Current income-tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible.
The Companyâs current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying unit intends to settle the asset and liability on a net basis.
3. Deferred tax
Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount.
Deferred income tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Current and deferred tax is recognized in Statement of profit and loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The Company recognizes interest levied and penalties related to income tax assessments in income tax expenses.
1.2.13. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset.
All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
1.2.14. Leases
1. Initial Recognition
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to 1 April 2016, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
2. Company as a lessee
Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
3. Company as a lessor
Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
1.2.15. Impairment of assets- Non Financial Assets
Tangible and intangible assets Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognized in the statement of profit and loss.
1.2.16. Provisions and Contingent Liability
1. Recognition
Provisions for legal claims, service warranties, volume discounts and returns are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date adjusted to reflect the current best estimates. Contingent liabilities are not recognized in the financial statements. A contingent asset is neither recognized nor disclosed in the financial statements.
A disclosure for a contingent liability is made where there is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from the past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
2. Product warranty expenses
The estimated liability for product warranties is accounted when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures.
1.2.17. Employee benefits
1. Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
2. Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service.
They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
3. Gratuity obligations
The Company operates defined benefit plan for its employees viz. Gratutity. The liability or asset recognized in the balance sheet in respect of defined benefit pension and gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in finance costs in the statement of profit and loss. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
4. Provident Fund
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due.
1.2.18. Earnings per share (EPS)
The Company reports basic and diluted earnings per share in accordance with Ind AS 33 on Earnings per share. Basic earnings per share is computed by dividing the net profit or loss for the period by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit or loss for the period by the weighted average number of equity shares outstanding during the period as adjusted for the effects of all diluted potential equity shares except where the results are anti-dilutive.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all years presented for any share splits and bonus shares issues including for changes effected prior to the authorization for issue of the financial statements by the Board of Directors.
1.2.19. Dividend
The Company recognizes a liability to make cash or non -cash distribution to equity shareholders when the distribution is authorized. on the date of approval by the shareholders.
1.2.20. Segment reporting
Information reported to the Chief Operating Decision Maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker.
The board of directors of the Company assesses the financial performance and position of the Company, and makes strategic decisions. The board of directors of the Company have been identified as being the chief operating decision maker. It consists of Chief Executive officer of the Company. Chief financial officer of the Company assists board of directors in their decision making process. The Company is in the business of manufacture and sale automobile components, which in the context of Indian Accounting Standard 108 âSegment Informationâ represents single reportable business segment.
1.2.21. Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest million as per the requirement of Schedule III, unless otherwise stated.
1.2.22. Standards issued but not yet effective
In MarcRs.2018, the MCA issued the Companies (Indian Accounting Standards) Amendments Rules, 2018, notifying Ind AS 115 - Revenue from Contracts with Customers. The amendment is applicable from 1 April, 2018 and will be given effect to from the financial year beginning from 1 Apr 2018 subsequent to evaluation by the Company.
1.2.23. Critical estimates and judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Companyâs accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements included in relevant notes together with information about the basis of calculation of each different line item in the financial statements.
The areas involving critical estimates or judgements are
1. Estimation of useful life of asset (Refer note 1.2.4. & 1.2.5)
2. Estimation of provision and for contingent liabilities (Refer note 42)
3. Estimation of provision for warranty obligation (Refer note 26)
4. Accounting for arrangements in the nature of lease (Refer note 45)
5. Estimation of defined benefit obligation (Refer note 41).
1. Useful lives of property, plant and equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods. Useful life is determined based on the technical evaluation done by the managementâs expert which are higher than those specified by Schedule II to the Companies Act 2013, in order to reflect the actual usage of the assets.
2. Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date adjusted to reflect the current best estimates. Contingent liabilities are not recognized in the financial statements. A contingent asset is neither recognized nor disclosed in the financial statements.
3. Product warranty expenses
The estimated liability for product warranties is accounted when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures.
4. Lease
Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.
The determination of whether an agreement is, or contains, a lease is based on the substance of the agreement at the date of inception.
5. Estimation of defined benefit obligations
The Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. The cost of providing benefits under abovementioned defined benefit plan is determined using the projected unit credit method with actuarial valuations being carried out at each balance sheet date, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Mar 31, 2017
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES a) Basis of Accounting
These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been prepared to comply in all material aspects with the accounting standards notified under section 133 of Companies Act, 2013.
All assets and liabilities have been classified as current or non-current as per the companies operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent classification of assets and liabilities.
b) Use of Estimates
The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.
c) Tangible Assets
Tangible Assets are stated at their original cost (net of CENVAT where applicable) including freight, duties, customs and other incidental expenses relating to acquisition and installation. Interest and other finance charges paid on loans for the acquisition of tangible qualifying assets are apportioned to the cost of fixed assets till they are ready for use.
Effective April 01, 2016, the Company has changed its accounting policy, whereby, the cost also includes the initial estimate of the costs of dismantling, removing the item and restoring the site on which it is located, referred to as âdecommissioning, restoration and similar liabilitiesâ, the obligation for which the Company incurs either when the item is acquired or as consequence of having used the item during a particular period for purposes other than to produce inventories during that period. Also, subsequent costs are included in the assetâs carrying amount or recognized as a separate asset only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which it is incurred. The changes in the policies are made in order to comply with the Companies (Accounting Standards) Amendment Rules, 2016 notified by the Ministry of Corporate Affairs on March 30, 2016,
- Expenditure incurred during the period of construction is carried as capital work-in-progress and on completion the costs are allocated to the respective fixed assets.
- Foreign exchange fluctuations on payment / restatement of long term liabilities related to fixed assets are charged to Statement of Profit and Loss.
- Assets held for sale or disposal are stated at the lower of their net book value and net realizable value.
d) Intangible Assets
Intangible assets comprising of computer software and technical know-how fee are initially measured at cost and amortized so as to reflect the pattern in which the assetâs economic benefits are consumed.
e) Depreciation / Amortization :
- Tangible Assets
f) Investments
Long term investments are stated at cost. Provision is made for any diminution other than temporary in the value of investments.
Current investments are stated at cost or fair value, whichever is lower.
g) Inventories
Inventories are stated at lower of cost or net realizable value. Cost of raw materials, stores and spares and packing materials are determined on weighted average basis. Cost of finished goods and work in progress comprises raw material, direct labour, other direct costs and related production overheads.
The Company has changed its accounting policy for inventory, whereby, parts, servicing equipment and standby equipment which meet the definition of Property Plant and Equipment are capitalized at respective carrying amounts and depreciated over their useful lives prospectively in accordance with revised Accounting Standard 10, Property Plant and Equipment pursuant to the Companies (Accounting Standards) Amendment Rules, 2016 notified by the Ministry of Corporate Affairs on March 30, 2016.
h) Government Grants and subsidies
Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Company will comply with the conditions attached to them, and (ii) the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, they are deducted from gross value of such assets.
Government grants of the nature of promotersâ contribution are credited to capital reserve and treated as a part of the shareholdersâ funds.
i) Revenue Recognition
- Domestic sales are recognized at the point of dispatch/delivery of goods to the customers as per terms of contract, which is, when substantial risks and rewards of ownership passes to the customers, and are stated net of trade discounts, rebates, sales tax, value added tax and excise duty.
- Export sales are recognized based on the date of bill of lading except, sales to Nepal which are recognized when the goods cross the Indian territory, which is when substantial risks and rewards of ownership passes to the customers.
- Revenue from services is recognized on rendering of services.
- Interest and other income are recognized on accrual basis.
- Income from export incentives such as premium on sale of import licenses, duty drawback etc. are recognized on accrual basis to the extent the ultimate realization is reasonably certain.
- Dividend income is recognized when right to receive dividend is established.
j) 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 substantively 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.
k) Foreign Currency Transactions
- Initial Recognition : - Transactions in foreign currencies are recognized at the prevailing exchange rates between the reporting currency and a foreign currency on the transaction dates.
- Conversion : -Foreign currency monetary assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognized in the Statement of profit and loss. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Nonmonetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
- Exchange differences:- The Company accounts for exchange differences arising on translation/settlement of foreign currency monetary items as below:
- Realized gains and losses on settlement of foreign currency transactions are recognized in the Statement of Profit and Loss.
- Foreign currency monetary assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognized in the Statement of Profit and Loss.
- Effective April 01, 2016, the Company has changed its policy for accounting of derivative transactions to align with the Guidance Note for Derivative transactions issued by The Institute of Chartered Accountants of India and in order to comply with the Companies (Accounting Standards) Amendment Rules, 2016 notified by the Ministry of Corporate Affairs on March 30, 2016, the Company has adopted hedge accounting in respect of derivative contracts entered on or after 01.04.2016. Consequently Mark to Market loss of '' 32.49 million, in respect of such contracts outstanding as on March 31, 2017, is carried to Cash Flow Hedge Reserve. Mark to Market gain of '' 0.02 million (net of tax) for the contracts outstanding as on April 01, 2016 is taken to opening reserves.
l) Research and Development
Equipment purchased and cost of construction of assets used for research and development is capitalized when commissioned and included in the fixed assets. Revenue expenditure on research and development is charged in the period in which it is incurred.
m) Retirement Benefits
- Provident Fund:-Contribution towards provident fund is made to the regulatory authorities. Such benefits are classified as defined contribution schemes as the Company does not carry any further obligations, apart from the contribution made on a monthly basis.
- National Pension Scheme: - Contribution towards pension fund is made to the various funds. Such benefits are classified as defined contribution schemes as the Company does not carry any further obligations, apart from the contribution made on a yearly basis.
- Superannuation Fund: - The Company has Defined Contribution plans for Superannuation Fund. Contributions payable to the Superannuation Fund maintained by LIC are charged to the Statement of Profit and Loss. The Company does not carry any further obligations, apart from the contribution made.
- Gratuity: - The Company provides for gratuity, a defined Benefit plans (the âGratuity Planâ) covering eligible employees in accordance with the payment of Gratuity Act, 1972. The Gratuity plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the nature of employment. The Companyâs liability is actuarially determined (using the Projected Unit Credit Method) at the end of each year. Actuarial losses / gains are recognized in the statement of Profit and Loss account in the year in which they arise. The Gratuity Fund is maintained with LIC which is recognized by the income tax authorities.
- Compensatory Absence:- The Company provides for the encashment/a ailment of leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/a ailment. 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.
n) Borrowing Cost
Borrowing Costs attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of the asset till the asset is ready for use. Interest on other borrowings is charged to Statement of Profit and Loss.
o) Leases
Lease arrangement where the risks and rewards incidental to the ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rent under operating leases are recognized in the Statement of Profit and Loss as per terms of agreement.
Assets acquired under finance leases are recognized at the lower of the fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.
p) Warranty Provision
The estimated liability for product warranties is recorded at the time of the sale of the products. The provision is based on managementâs estimate of the future cost of corrective action on product failure considering the claims received in the past.
q) Provisions and Contingencies
Provisions are recognized when there is a present obligation as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
Effective April 01, 2016, the Company has changed its policy, whereby, it recognizes a liability to make cash or non-cash distributions to equity holders of the parent when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders. The change in policy is done in order to comply with the Companies (Accounting Standards) Amendment Rules, 2016 notified by the Ministry of Corporate Affairs on March 30, 2016.
r) Impairment
The carrying value of assets/cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life to their present value based on an appropriate discount factor.
s) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Companyâs earnings per share is the net profit for the period after deducting preference dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, sub-division of shares etc. that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
t) Proposed dividend
In terms of the revised Accounting Standard (AS) - 4 âContingencies and Events occurring after Balance Sheet dateâ as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, dated March 30, 2016, the Company has not accounted for proposed dividend as liability as at March 31, 2017. However, the proposed dividend was accounted for as liability as at March 31, 2016 in accordance with the then existing Accounting Standard.
u) Cash and Cash Equivalents
In the Cash Flow Statement, cash and cash equivalents includes cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.
Mar 31, 2016
a) Basis of Accounting
Tese financial statements have been prepared in accordance with the generally accepted accounting principles in India under the
historical cost convention on accrual basis. Tese financial statements have been prepared to comply in all material aspects with
the accounting standards notified under section 133 of Companies Act, 2013.
All assets and liabilities have been classified as current or non-current as per the companies operating cycle and other criteria
set out in the revised Schedule III to the Companies Act, 1930. Based on the nature of products and the time between the
acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its
operating cycle as 12 months for the purpose of current â noncurrent classification of assets and liabilities.
b) Use of Estimates
Te preparation of financial statements requires the management to make estimates and assumptions considered in the reported
amount of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported
income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial
statements are prudent and reasonable. Actual results could differ from these estimates. Any revision to accounting estimates is
recognized prospectively in current and future periods.
c) Tangible Assets
- Tangible Assets are stated at their original cost (net of CENVAT where applicable) including freight, duties, customs and other
incidental expenses relating to acquisition and installation. Interest and other finance charges paid on loans for the
acquisition of tangible qualifying assets are apportioned to the cost of fixed assets till they are ready for use.
- Expenditure incurred during the period of construction is carried as capital work-in-progress and on completion the costs are
allocated to the respective fixed assets.
- Foreign exchange fluctuations on payment / restatement of long term liabilities related to fixed assets are charged to
Statement of Profit and Loss.
- Assets held for sale or disposal are stated at the lower of their net book value and net realizable value.
d) Intangible Assets
- Intangible assets comprising of computer software and technical know-how fee are initially measured at cost and amortized so as
to reflect the pattern in which the asset''s economic benefits are consumed.
e) Depreciation / Amortization :
- Tangible Assets
Depreciation on tangible assets is provided on straight line method over the useful life of asset prescribed in Part C of
schedule II of the Companies Act, 2013 except in respect of certain assets listed below where useful life is estimated different
from the prescribed rate based on internal assessment or independent technical evaluation carried out by external values. Te
management believes that the useful lives as given below represent the period over which management expects to use these assets.
In terms of the requirements of the Company Act, 2013 the company has also identified significant components of the assets and
its useful life based on the internal technical valuation. Depreciation charged on such component is based on its useful life.
f) Investments
Long term investments are stated at cost. Provision is made for any diminution other than temporary in the value of investments.
Current investments are stated at cost or fair value, whichever is lower.
g) Inventories
Inventories are stated at lower of cost or net realizable value. Cost of raw materials, stores and spares and packing materials
are determined on weighted average basis. Cost of finished goods and work in progress comprises raw material, direct labour,
other direct costs and related production overheads.
h) Government Grants and subsidies
Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Company will comply with
the conditions attached to them, and (ii) the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the Statement of Profit and
Loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant
relates to an asset, they are deducted from gross value of such assets.
Government grants of the nature of promoters'' contribution are credited to capital reserve and treated as a part of the
shareholders'' funds.
i) Revenue Recognition
- Domestic sales are recognized at the point of dispatch/delivery of goods to the customers as per terms of contract, which is,
when substantial risks and rewards of ownership passes to the customers, and are stated net of trade discounts, rebates, sales
tax, value added tax and excise duty.
- Export sales are recognized based on the date of bill of lading except, sales to Nepal which are recognized when the goods
cross the Indian territory, which is when substantial risks and rewards of ownership passes to the customers.
- Revenue from services is recognized on rendering of services.
- Interest and other income are recognized on accrual basis.
- Income from export incentives such as premium on sale of import licenses, duty drawback etc. are recognized on accrual basis to
the extent the ultimate realization is reasonably certain.
- Dividend income is recognized when right to receive dividend is established.
j) 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 substantively 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.
k) Foreign Currency Transactions
- Initial Recognition : - Transactions in foreign currencies are recognized at the prevailing exchange rates between the
reporting currency and a foreign currency on the transaction dates.
- Conversion : -Foreign currency monetary assets and liabilities at the year-end are translated at the year-end exchange rates
and the resultant exchange differences are recognized in the Statement of Profit and loss. Non-monetary items, which are measured
in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the
transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency,
are translated using the exchange rate at the date when such value was determined.
- Exchange differences:- Te Company accounts for exchange differences arising on translation/settlement of foreign currency
monetary items as below:
- Realized gains and losses on settlement of foreign currency transactions are recognized in the Statement of Profit and Loss.
- Foreign currency monetary assets and liabilities at the year-end are translated at the year-end exchange rates and the
resultant exchange differences are recognized in the Statement of Profit and Loss.
- Forward exchange and other derivative contracts entered into to hedge foreign currency risk of an existing assets/ liabilities
- In case of forward contracts with underlying assets or liabilities, the difference between the forward rate and the exchange
rate on the date of inception of a forward contract is recognized as income or expense and is amortized over the life of the
contract.
- Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the period in which the exchange
rate changes.
- Any Profit or loss arising on cancellation or renewal of forward exchange contracts are recognized as income or expense for the
period.
- Forward contracts entered into by the company to cover its exposure against firm commitment are marked to market as at the year
end. Te resultant loss is recognized in the Statement of Profit and Loss and gain, if any is ignored.
- Premium or discount on foreign currency forward and option contracts are amortized and recognized in the statement of Profit
and loss over the period of contract.
l) Research and Development
Equipment purchased and cost of construction of assets used for research and development is capitalized when commissioned and
included in the fixed assets. Revenue expenditure on research and development is charged in the period in which it is incurred.
m) Retirement Benefits
- Provident Fund : - Contribution towards provident fund is made to the regulatory authorities. Such benefits are classified as
defined contribution schemes as the Company does not carry any further obligations, apart from the contribution made on a monthly
basis.
- National Pension Scheme : - Contribution towards pension fund is made to the various funds. Such benefits are classified as
defined contribution schemes as the Company does not carry any further obligations, apart from the contribution made on a yearly
basis.
- Superannuation Fund : - Te Company has Defined Contribution plans for Superannuation Fund. Contributions payable to the
Superannuation Fund maintained by LIC are charged to the Statement of Profit and Loss. Te Company does not carry any further
obligations, apart from the contribution made.
- Gratuity : - Te Company provides for gratuity, a defend Benefit plans (the "Gratuity Plan") covering eligible employees in
accordance with the payment of Gratuity Act, 1972. Te Gratuity plan provides a lump sum payment to vested employees at
retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the
nature of employment. Te Company''s liability is actuarially determined (using the Projected Unit Credit Method) at the end of
each year. Actuarial losses / gains are recognized in the statement of Profit and Loss account in the year in which they arise.
Te Gratuity Fund is maintained with LIC which is recognized by the income tax authorities.
- Compensatory Absence : - Te Company provides for the encashment/ a ailment of leave with pay subject to certain rules. Te
employees are entitled to accumulate leave subject to certain limits for future encashment/a ailment. Te 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.
n) Borrowing Cost
Borrowing Costs attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the
cost of the asset till the asset is ready for use. Interest on other borrowings is charged to Statement of Profit and Loss.
o) Leases
Lease arrangement where the risks and rewards incidental to the ownership of an asset substantially vest with the less or are
recognized as operating leases. Lease rent under operating leases are recognized in the Statement of Profit and Loss as per terms
of agreement.
Assets acquired under finance leases are recognized at the lower of the fair value of the leased assets at inception and the
present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the
outstanding liability. Te finance charge is allocated to periods during the lease term at a constant periodic rate of interest on
the remaining balance of the liability.
p) Warranty Provision
Te estimated liability for product warranties is recorded at the time of the sale of the products. Te provision is based on
management''s estimate of the future cost of corrective action on product failure considering the claims received in the past.
q) Provisions and Contingencies
Provisions are recognized when there is a present obligation as a result of a past event, and it is probable that an outfow of
resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of
the obligation.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
Company or a present obligation that arises from past events where it is either not probable that an outfow of resources will be
required to settle the obligation or a reliable estimate of the amount cannot be made.
r) Impairment
Te carrying value of assets/cash generating units at each balance sheet date are reviewed for impairment. If any indication of
impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of
these assets exceeds their recoverable amount. Te recoverable amount is the greater of the net selling price and their value in
use. Value in use is arrived at by discounting the future cash fows expected to arise from the continuing use of an asset and
from its disposal at the end of its useful life to their present value based on an appropriate discount factor.
s) Earnings Per Share
Basic earnings per share is calculated by dividing the net Profit or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s
earnings per share is the net Profit for the period After deducting preference dividends and any attributable tax thereto for the
period. Te weighted average number of equity shares outstanding during the period and for all periods
a) Rights, preferences and restrictions attached to Equity shares:
Te Company has only one class of share referred to as Equity shares having a par value of Re.1 per share. Each holder of Equity
shares is entitled to one vote per share. Te Company declares and pays dividends in Indian rupees. Te final dividend proposed by
the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the unlikely event of liquidation of the Company, the holders of Equity shares will be entitled to receive remaining assets of
the Company, After distribution of all preferential amounts. Te distribution will be in proportion to the number of Equity shares
held by the shareholders.
During the year ended 31st March 2016, the amount of per share dividend recognized as distributions to Equity shareholders was
Rs. 1.20 (31st March 2015: Rs. 1.05).
presented is adjusted for events, such as bonus shares, sub-division of shares etc. that have changed the number of equity shares
outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net
Profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during
the period is adjusted for the effects of all dilutive potential equity shares.
t) Cash and Cash Equivalents
In the Cash Flow Statement, cash and cash equivalents includes cash in hand, demand deposits with banks, other short- term highly
liquid investments with original maturities of three months or less.
Mar 31, 2015
A) Basis of Accounting
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under section 133 of Companies Act, 2013.
All assets and liabilities have been classified as current or
non-current as per the Companies operating cycle and other criteria set
out in the Schedule III to the Companies Act, 2013. Based on the nature
of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current - noncurrent classification of assets and
liabilities.
b) Use of Estimates
The preparation of financial statements requires the management to make
estimates and assumptions considered in the reported amount of assets
and liabilities (including contingent liabilities) as on the date of
financial statements and the reported income and expenses during the
reporting period. Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable.
Actual results could differ from these estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
c) Tangible Assets
- Tangible Assets are stated at their original cost (net of CENVAT
where applicable) including freight, duties, customs and other
incidental expenses relating to acquisition and installation. Interest
and other finance charges paid on loans for the acquisition of tangible
qualifying assets are apportioned to the cost of fixed assets till they
are ready for use.
- Expenditure incurred during the period of construction is carried
as capital work-in-progress and on completion the costs are allocated
to the respective fixed assets.
- Foreign exchange fluctuations on payment / restatement of long term
liabilities related to fixed assets are charged to Statement of Profit
and Loss.
- Assets held for sale or disposal are stated at the lower of their
net book value and net realisable value.
d) Intangible Assets
- Intangible assets comprising of computer software and technical
know-how fee are initially measured at cost and amortised so as to
reflect the pattern in which the asset''s economic benefits are
consumed.
e) Depreciation / Amortization :
- Tangible Assets
Depreciation on tangible assets is provided on straight line method
over the useful life of asset prescribed in Part C of schedule II of
the Companies Act, 2013 except in respect of certain assets listed
below where useful life is estimated different from the prescribed rate
based on internal assessment or independent technical evaluation
carried out by external valuers. The management believes that the
useful lives as given below represent the period over which management
expects to use these assets.
- Intangible Assets
Intangible assets are amortized over their respective individual
estimated useful lives on a straight-line basis, commencing from the
date the asset is available to the Company for its use. Estimated
useful lives are as under:-
f) Investments
Long term investments are stated at cost. Provision is made for any
diminution other than temporary in the value of investments.
Current investments are stated at cost or fair value, whichever is
lower.
g) Inventories
Inventories are stated at lower of cost or net realizable value. Cost
of raw materials, stores and spares and packing materials are
determined on weighted average basis. Cost of finished goods and work
in progress comprises raw material, direct labour, other direct costs
and related production overheads.
h) Government Grants and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that (i) the Company will comply with the
conditions attached to them, and (ii) the grant/subsidy will be
received.
When the grant or subsidy relates to revenue, it is recognized as
income on a systematic basis in the Statement of Profit and Loss over
the periods necessary to match them with the related costs, which they
are intended to compensate. Where the grant relates to an asset, they
are deducted from gross value of such assets.
Government grants of the nature of promoters'' contribution are credited
to capital reserve and treated as a part of the shareholders'' funds.
i) Revenue Recognition
- Domestic sales are recognised at the point of dispatch/delivery of
goods to the customers as per terms of contract, which is, when
substantial risks and rewards of ownership passes to the customers, and
are stated net of trade discounts, rebates, sales tax, value added tax
and excise duty.
- Export sales are recognised based on the date of bill of lading
except, sales to Nepal which are recognised when the goods cross the
Indian territory, which is when substantial risks and rewards of
ownership passes to the customers.
- Revenue from services is recognised on rendering of services.
- Interest and other income are recognised on accrual basis.
- Income from export incentives such as premium on sale of import
licences, duty drawback etc. are recognised on accrual basis to the
extent the ultimate realisation is reasonably certain.
- Dividend income is recognised when right to receive dividend is
established.
j) 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
recognised 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 substantively 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.
k) Foreign Currency Transactions
- Initial recognition : - Transactions in foreign currencies are
recognised at the prevailing exchange rates between the reporting
currency and a foreign currency on the transaction dates.
- Conversion : -Foreign currency monetary assets and liabilities at
the year-end are translated at the year-end exchange rates and the
resultant exchange differences are recognised in the Statement of
profit and loss. Non-monetary items, which are measured in terms of
historical cost denominated in a foreign currency, are reported using
the exchange rate at the date of the transaction. Non-monetary items,
which are measured at fair value or other similar valuation denominated
in a foreign currency, are translated using the exchange rate at the
date when such value was determined.
- Exchange differences:- The Company accounts for exchange
differences arising on translation/settlement of foreign currency
monetary items as below:
- Realized gains and losses on settlement of foreign currency
transactions are recognised in the Statement of Profit and Loss.
- Foreign currency monetary assets and liabilities at the year-end
are translated at the year-end exchange rates and the resultant
exchange differences are recognised in the Statement of Profit and
Loss.
- Forward exchange and other derivative contracts entered into to
hedge foreign currency risk of an existing assets/ liabilities In case
of forward contracts with underlying assets or liabilities, the
difference between the forward rate and the exchange rate on the date
of inception of a forward contract is recognised as income or expense
and is amortised over the life of the contract.
- Exchange differences on such contracts are recognised in the
Statement of Profit and Loss in the period in which the exchange rate
changes.
- Any profit or loss arising on cancellation or renewal of forward
exchange contracts are recognised as income or expense for the period.
- Forward contracts entered into by the company to cover its exposure
against firm commitment are marked to market as at the year end. The
resultant loss is recognized in the Statement of Profit and Loss and
gain, if any is ignored.
- Premium or discount on foreign currency forward and option
contracts are amortized and recognized in the statement of profit and
loss over the period of contract.
l) Research and Development
Equipment purchased and cost of construction of assets used for
research and development is capitalised when commissioned and included
in the fixed assets. Revenue expenditure on research and development is
charged in the period in which it is incurred.
m) Retirement Benefits
- Provident Fund:- Contribution towards provident fund is made to the
regulatory authorities. Such benefits are classified as defined
contribution schemes as the Company does not carry any further
obligations, apart from the contribution made on a monthly basis.
- Superannuation Fund: - The Company has Defined Contribution plans
for Superannuation Fund. Contributions payable to the Superannuation
Fund maintained by LIC are charged to the Statement of Profit and Loss.
The Company does not carry any further obligations, apart from the
contribution made.
- Gratuity: - The Company provides for gratuity, a defined Benefit
plans (the "Gratuity Plan") covering eligible employees in
accordance with the payment of Gratuity Act, 1972. The Gratuity plan
provides a lump sum payment to vested employees at retirement, death,
incapacitation or termination of employment, of an amount based on the
respective employee''s salary and the nature of employment. The
Company''s liability is actuarially determined (using the Projected Unit
Credit Method) at the end of each year. Actuarial losses / gains are
recognized in the statement of Profit and Loss account in the year in
which they arise. The Gratuity Fund is maintained with LIC which is
recognized by the income tax authorities.
- Compensatory Absence:- The Company provides for the
encashment/availment 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.
n) Borrowing Cost
Borrowing Costs attributable to the acquisition, construction or
production of qualifying assets are capitalised as part of the cost of
the asset till the asset is ready for use. Interest on other borrowings
is charged to Statement of Profit and Loss.
o) Leases
Lease arrangement where the risks and rewards incidental to the
ownership of an asset substantially vest with the lessor are recognised
as operating leases. Lease rent under operating leases are recognised
in the Statement of Profit and Loss as per terms of agreement.
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the reduction of the outstanding liability. The
finance charge is allocated to periods during the lease term at a
constant periodic rate of interest on the remaining balance of the
liability.
p) Warranty Provision
The estimated liability for product warranties is recorded at the time
of the sale of the products. The provision is based on management''s
estimate of the future cost of corrective action on product failure
considering the claims received in the past.
q) Provisions and Contingencies
Provisions are recognised when there is a present obligation as a
result of a past event, and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and there is a reliable estimate of the amount of the obligation.
Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company or
a present obligation that arises from past events where it is either
not probable that an outflow of resources will be required to settle
the obligation or a reliable estimate of the amount cannot be made.
r) Impairment
The carrying value of assets/cash generating units at each balance
sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows expected to arise from
the continuing use of an asset and from its disposal at the end of its
useful life to their present value based on an appropriate discount
factor.
s) Earnings per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Earnings
considered in ascertaining the Company''s earnings per share is the net
profit for the period after deducting preference dividends and any
attributable tax thereto for the period. The weighted average number of
equity shares outstanding during the period and for all periods
presented is adjusted for events, such as bonus shares, sub-division of
shares etc. that have changed the number of equity shares outstanding,
without a corresponding change in resources. For the purpose of
calculating diluted earnings per share, the net profit or loss for the
period attributable to equity shareholders and the weighted average
number of shares outstanding during the period is adjusted for the
effects of all dilutive potential equity shares.
t) Cash and Cash Equivalents
In the Cash Flow Statement, cash and cash equivalents includes cash in
hand, demand deposits with banks, other short- term highly liquid
investments with original maturities of three months or less.
Mar 31, 2014
A) Basis of Accounting
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under section 133 of Companies Act, 2013.
All assets and liabilities have been classified as current or
non-current as per the companies operating cycle and other criteria set
out in the revised Schedule VI to the Companies Act, 1956. Based on the
nature of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current - noncurrent classification of assets and
liabilities.
b) Use of Estimates
The preparation of financial statements requires the management to make
estimates and assumptions considered in the reported amount of assets
and liabilities (including contingent liabilities) as on the date of
financial statements and the reported income and expenses during the
reporting period. Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable.
Actual results could differ from these estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
c) Tangible Assets
- Tangible Assets are stated at their original cost (net of CENVAT
where applicable) including freight, duties,customs and other
incidental expenses relating to acquisition and installation. Interest
and other finance charges paid on loans for the acquisition of tangible
qualifying assets are apportioned to the cost of fixed assets till they
are ready for use.
- Expenditure incurred during the period of construction is carried as
capital work-in-progress and on completion the costs are allocated to
the respective fixed assets.
- Foreign exchange fluctuations on payment / restatement of long term
liabilities related to fixed assets are charged to Statement of Profit
and Loss.
- Assets held for sale or disposal are stated at the lower of their net
book value and net realisable value.
d) Intangible Assets
Intangible assets comprising of computer software and technical
know-how fee are initially measured at cost and amortised so as to
reflect the pattern in which the asset''s economic benefits are
consumed.
e) Depreciation / Amortization :
Depreciation on fixed assets, is charged on Straight Line Method (SLM)
at rates specified in Schedule XIV to Companies Act, 1956 on a pro-rata
basis except that:
- Assets costing less than Rs.5000/- are fully depreciated in the
period of purchase ,
- Vehicles used by employees are depreciated over the period of 60
months considering this period as the useful life of vehicle for the
Company.
- Computer hardware and software are being depreciated over a period of
three years.
- Leasehold land is amortised over the lease period.
- Buildings on leasehold land are amortised over the lease period or
useful life of the building whichever is shorter.
- Technical know-how fee is amortised over a period of 6 years or
period of agreement, whichever is shorter.
- Tools and dies are depreciated over a period, upto eight years,
determined based on technical evaluation.
f) Investments
Long term investments are stated at cost. Provision is made for any
diminution other than temporary in the value of investments.
Current investments are stated at cost or fair value, whichever is
lower.
g) Inventories
Inventories are stated at lower of cost or net realizable value. Cost
of raw materials, stores and spares and packing materials are
determined on weighted average basis. Cost of finished goods and work
in progress comprises raw material, direct labour, other direct costs
and related production overheads.
h) Government Grants and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that (i) the Company will comply with the
conditions attached to them, and (ii) the grant/subsidy will be
received.
When the grant or subsidy relates to revenue, it is recognized as
income on a systematic basis in the Statement of Profit and Loss over
the periods necessary to match them with the related costs, which they
are intended to compensate. Where the grant relates to an asset, they
are deducted from gross value of such assets.
Government grants of the nature of promoters'' contribution are credited
to capital reserve and treated as a part of the shareholders'' funds.
i) Revenue Recognition
- Domestic sales are recognised at the point of dispatch/delivery of
goods to the customers as per terms of contract, which is, when
substantial risks and rewards of ownership passes to the customers, and
are stated net of trade discounts, rebates, sales tax, value added tax
and excise duty.
- Export sales are recognised based on the date of bill of lading
except, sales to Nepal which are recognised when the goods cross the
Indian territory, which is when substantial risks and rewards of
ownership passes to the customers.
- Revenue from services is recognised on rendering of services.
- Interest and other income are recognised on accrual basis.
- Income from export incentives such as premium on sale of import
licenses, duty drawback etc. are recognised on accrual basis to the
extent the ultimate realisation is reasonably certain.
- Dividend income is recognised when right to receive dividend is
established. j) 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
recognised 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 substantively 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.
k) Foreign Currency Transactions
- Initial Recognition: - Transactions in foreign currencies are
recognised at the prevailing exchange rates between the reporting
currency and a foreign currency on the transaction dates.
- Conversion: -Foreign currency monetary assets and liabilities at the
year-end are translated at the year-end exchange rates and the
resultant exchange differences are recognised in the Statement of
profit and loss. Non-monetary items, which are measured in terms of
historical cost denominated in a foreign currency, are reported using
the exchange rate at the date of the transaction. Non- monetary items,
which are measured at fair value or other similar valuation denominated
in a foreign currency, are translated using the exchange rate at the
date when such value was determined.
- Exchange differences:- The Company accounts for exchange differences
arising on translation/ settlement of foreign currency monetary items
as below:
- Realized gains and losses on settlement of foreign currency
transactions are recognised in the Statement of Profit and Loss.
- Foreign currency monetary assets and liabilities at the year-end are
translated at the year-end exchange rates and the resultant exchange
differences are recognised in the Statement of Profit and Loss.
- Forward exchange and other derivative contracts entered into to hedge
foreign currency risk of an existing assets/liabilities
- In case of forward contracts with underlying assets or liabilities,
the difference between the forward rate and the exchange rate on the
date of inception of a forward contract is recognised as income or
expense and is amortised over the life of the contract.
- Exchange differences on such contracts are recognised in the
Statement of Profit and Loss in the period in which the exchange rate
changes.
- Any profit or loss arising on cancellation or renewal of forward
exchange contracts are recognised as income or expense for the period.
- Forward contracts entered into by the Company to cover its exposure
against firm commitment are marked to market as at the year end. The
resultant loss is recognized in the Statement of Profit and Loss and
gain, if any is ignored.
I) Research and Development
Equipment purchased and cost of construction of assets used for
research and development is capitalised when commissioned and included
in the fixed assets. Revenue expenditure on research and development is
charged in the period in which it is incurred.
m) Retirement Benefits
- Provident Fund:- Contribution towards provident fund is made to the
regulatory authorities. Such benefits are classified as defined
contribution schemes as the Company does not carry any further
obligations, apart from the contribution made on a monthly basis.
- Superannuation Fund: - The Company has Defined Contribution plans for
Superannuation Fund. Contributions payable to the Superannuation Fund
maintained by LIC are charged to the Statement of Profit and Loss. The
Company does not carry any further obligations, apart from the
contribution made.
- Gratuity: - The Company provides for gratuity.a defined Benefit plans
(the "Gratuity Plan") covering eligible employees in accordance with
the payment of Gratuity Act, 1972. The Gratuity plan provides a lump
sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employee''s salary and the nature of employment. The Company''s liability
is actuarially determined (using the Projected Unit Credit Method) at
the end of each year. Actuarial losses/ gains are recognized in the
statement of Profit and Loss account in the year in which they arise.
The Gratuity Fund is maintained with LIC which is recognized by the
income tax authorities.
- Compensatory Absence:- The Company provides for the
encashment/availment 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.
n) Borrowing Cost
Borrowing Costs attributable to the acquisition, construction or
production of qualifying assets are capitalised as part of the cost of
the asset till the asset is ready for use. Interest on other borrowings
is charged to Statement of Profit and Loss.
o) Leases
Lease arrangement where the risks and rewards incidental to the
ownership of an asset substantially vest with the lessor are recognised
as operating leases. Lease rent under operating leases are recognised
in the Statement of Profitand Loss as per terms of agreement.
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the reduction of the outstanding liability. The
finance charge is allocated to periods during the lease term at a
constant periodic rate of interest on the remaining balance of the
liability.
p) Warranty Provision
The estimated liability for product warranties is recorded at the time
of the sale of the products. The provision is based on management''s
estimate of the future cost of corrective action on product failure
considering the claims received in the past.
q) Provisions and Contingencies
Provisions are recognised when there is a present obligation as a
result of a past event, and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and there is a reliable estimate of the amount of the obligation.
Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company or
a present obligation that arises from past events where it is either
not probable that an outflow of resources will be required to settle
the obligation or a reliable estimate of the amount cannot be made.
r) Impairment
The carrying value of assets/cash generating units at each balance
sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the
greater of the net selling price and their value in use. Value in use
is arrived at by discounting the future cash flows expected to arise
from the continuing use of an asset and from its disposal at the end of
its useful life to their present value based on an appropriate discount
factor.
s) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Earnings considered in ascertaining the Company''s earnings per share is
the net profit for the period after deducting preference dividends and
any attributable tax thereto for the period. The weighted average
number of equity shares outstanding during the period and for all
periods presented is adjusted for events, such as bonus shares,
sub-division of shares etc. that have changed the number of equity
shares outstanding, without a corresponding change in resources. For
the purpose of calculating diluted earnings per share, the net profit
or loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
t) Cash and Cash Equivalents
In the Cash Flow Statement, cash and cash equivalents includes cash in
hand, demand deposits with banks, other short-term highly liquid
investments with original maturities of three months or less.
Mar 31, 2013
A) Basis of Accounting
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under section 211(3c) [Companies (Accounting
Standard) Rules, 2006, as amended ] and other relevant provisions of
Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the companies operating cycle and other criteria set
out in the revised Schedule VI to the Companies Act, 1956. Based on the
nature of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalents, the
company has ascertained its operating cycle as 12 months for the
purpose of current - non current cycle of assets and liabilities.
b) Use of Estimates
The preparation of financial statements requires the management to make
estimates and assumptions considered in the reported amount of assets
and liabilities (including contingent liabilities) as on the date of
financial statements and the reported income and expenses during the
reporting period. Management believes that the estimates used in the
preparation of the financial statement are prudent and reasonable.
Actual results could differ from these estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
c) Tangible Assets
1) Tangible Assets are stated at their original cost (net of MODVAT
where applicable) including freight, duties, customs and other
incidental expenses relating to acquisition and installation. Interest
and other finance charges paid on loans for the acquisition of tangible
qualifying assets are apportioned to the cost of fixed assets till they
are ready for use.
2) Expenditure incurred during the period of construction is carried as
capital work-in-progress and on completion the costs are allocated to
the respective fixed assets.
3) Foreign exchange fluctuation on payment / restatement of long term
liabilities related to fixed assets are charged to Statement of Profit
and Loss.
4) Assets held for sale or disposals are stated at the lower of their
net book value and net realisable value.
d) Intangible Assets
Intangible assets comprising of computer software and technical
know-how fee are initially measured at cost and amortised so as to
reflect the pattern in which the asset''s economic benefits are
consumed.
e) Depreciation / Amortization.
Depreciation on fixed assets, is charged on Straight Line Method (SLM)
at rates specified in Schedule XIV to The Companies Act, 1956 on a
pro-rata basis except that :
1. Assets costing less than Rs.5000/- are fully depreciated in the
period of purchase
2. Vehicles used by employees are depreciated over the period of 60
months considering this period as the useful life of vehicle for the
Company.
3. Computer hardware and software are being depreciated over a period
of three years.
4. The leasehold land is amortised over the lease period.
5. Buildings on leasehold land are amortised over the lease period or
useful life of the building whichever is shorter.
6. Technical know-how fee is amortised over a period of 6 years or
period of agreement, whichever is shorter.
7. Tools and dies are depreciated over a period, upto eight years,
determined based on technical evaluation.
f) Investments
Long term investments are stated at cost. Provision is made for any
permanent diminution in the value of investments.
Current investments are stated at cost or fair value, whichever is
lower.
g) Inventories
Inventories are stated at lower of cost or net realizable value. Cost
of inventories comprises of cost of purchase, cost of conversion and
other cost incurred in bringing them to their respective location and
condition. Cost of raw materials, stores and spares and packing
materials are determined on weighted average basis.
h) Capital Grants
Grants received from the Government are retained as Capital Reserve
until the conditions stipulated in the respective schemes are complied
with. However, the grants related to specific assets are deducted from
the gross value of such assets.
i) Revenue Recongition
i) Domestic sales are recognised at the point of dispatch of goods to
the customers, which is when substantial risks and rewards of ownership
passed to the customers, and are stated net of trade discounts,
rebates, sales tax, value added tax and excise duty.
ii) Export sales are recognised based on the date of bill of lading
except, sales to Nepal which are recognised when the goods cross the
Indian territory, which is when substantial risks and rewards of
ownership is passed to the customers.
(iii) Revenue from services is recognised on rendering of services.
(iv) Interest and other income are recognised on accrual basis.
(v) Income from export incentives such as premium on sale of import
licences, duty drawback etc. are recognised on accrual basis to the
extent the ultimate realisation is reasonably certain.
(vi) Dividend income is recognised when right to receive dividend is
established.
j) Accounting for taxes on income
(i) 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
recognised 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.
(ii) Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantively 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.
k) Foreign Currency Transactions
Foreign Currency transactions are recorded at the exchange rates
prevailing on the date of such transactions. Foreign currency monetary
assets and liabilities as at the Balance Sheet date are translated at
the rates of exchange prevailing on the Balance Sheet date. Gains and
losses arising on account of differences in foreign exchange rates on
settlement/ translation of foreign currency monetary assets and
liabilities are recognised in the Statement of profit and loss.
Non-monetary foreign currency items are carried at cost.
The premium or discount arising at the inception of forward exchange
contract to hedge an underlying asset or liability of the Company is
amortised as expense or income over the life of the contract. Exchange
differences on such contracts are recognised in the Statement of profit
and loss in the reporting period in which the exchange rates change.
Any profit or loss arising on cancellation or renewal of such forward
exchange contracts is recognised as income or expense during the year.
l) Research and Development
Equipment purchased for research and development is capitalised when
commissioned and included in the fixed assets. Revenue expenditure on
research and development is charged in the period in which it is
incurred.
m) Retirement Benefits
Provident Fund: Contribution towards provident fund is made to the
regulatory authorities. Such benefits are classified as defined
contribution schemes as the company does not carry any further
obligations, apart from the contribution made on a monthly basis.
Superannuation Fund: The Company has Defined Contribution plans for
Superannuation Fund. Contributions payable to the Superannuation Fund
maintained by the LIC are charged to the Statement of profit and loss.
Gratuity:
The Company provides for gratuity, a Defined Benefit plan (the
"Gratuity Plan") covering eligible employees in accordance with the
payment of Gratuity Act, 1972. The Gratuity plan provides a lump sum
payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employee''s salary and the nature of employment. The Company''s liability
is actuarially determined (using the Projected Unit Credit Method) at
the end of each year. Actuarial losses / gains are recognized in the
Statement of profit and loss in the year in which they arise. The
Gratuity Fund is maintained with LIC which is recognized by the income
tax authorities.
Compensatory Absence:
Accumulated compensated absences which are expected to be availed or
encashed within 12 months from the end of the year end are treated as
short term employee benefits. The obligation towards the same is
measured at the expected cost of accumulating compensated absences as
the additional amount expected to be paid as a result of the unused
entitlement as at the year end.
n) Borrowing Cost
Borrowing Costs directly attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of the asset till the asset is ready for use. Interest on other
borrowings is charged to Statement of profit and loss.
o) Leases
Lease arrangement where the risks and rewards incidental to the
ownership of an asset substantially vest with the lessor are recognised
as operating leases. Lease rent under operating leases are recognised
in the Statement of profit and loss on straight line basis.
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the reduction of the outstanding liability. The
finance charge is allocated to periods during the lease term at a
constant periodic rate of interest on the remaining balance of the
liability.
p) Warranty Provision
The estimated liability for product warranties is recorded at the time
of the sale of the products. The provision is based on management''s
estimate of the future cost of corrective action on product failure
established using historical information regarding frequency and
average cost of servicing the warranty claims.
q) Provisions and Contingencies
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure of contingent liability is made when there is a possible
obligation or a present obligation that will probably not require
outflow of resources or where a reliable estimate of the obligation
cannot be made.
r) Impairment
The management periodically assesses, using external and internal
sources, whether there is an indication that an asset may be impaired.
If an asset is impaired, the Company recognises an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount.
s) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Earnings
considered in ascertaining the Company''s earnings per share is the net
profit for the period after deducting preference dividends and any
attributable tax thereto for the period. The weighted average number of
equity shares outstanding during the period and for all periods
presented is adjusted for events, such as bonus shares, sub-division of
shares etc. that have changed the number of equity shares outstanding,
without a corresponding change in resources. For the purpose of
calculating diluted earnings per share, the net profit or loss for the
period attributable to equity shareholders and the weighted average
number of shares outstanding during the period is adjusted for the
effects of all dilutive potential equity shares.
t) Segment Reporting
The accounting policies adopted for segment reporting are in conformity
with the accounting policies adopted for the Company. Further
intersegment revenue have been accounted for based on the transaction
price agreed to between segments.
u) Cash and Cash Equivalents
In the Cash Flow statement cash and cash flow equivalents includes cash
in hand, demand deposits with banks, other short-term highly liquid
investments with original maturities of three months or less.
Mar 31, 2012
During the year ended 31st March, 2012, the revised schedule VI
notified under the Companies Act, 1956 has become applicable to the
company, for preparation and presentation of its financial statement.
The adoption of revised schedule VI does not impact recognition and
measurement principles followed for preparation of financial statement.
However it has significant impact on presentation and disclosures made
in the financial statements. Assets and liabilities have been
classified as current and non - current as per the Company's normal
operating cycle and other criteria set out in the Revised Schedule VI
of the Companies Act, 1956. Based on the nature of activity carried out
by the company and the period between the procurement of materials and
realisation in cash and cash equivalents, the Company has ascertained
its operating cycle as 12 months for the purpose of current, non -
current classification of assets & liabilities. The Company has also
reclassified / regrouped the previous year figures in accordance with
the requirements applicable in the current year.
a) Basis of Accounting
The Financial statements have been prepared to comply in all material
aspects with all the applicable accounting principles in India, the
applicable accounting standards notified under Section 211(3C) of the
Companies Act, 1956 and the relevant provisions of the Companies Act,
1956.
b) Fixed Assets and Depreciation
a) Fixed Assets are stated at their original cost (net of MODVAT where
applicable) including freight, duties, customs and other incidental
expenses relating to acquisition and installation. Interest and other
finance charges paid on loans for the acquisition of fixed assets are
apportioned to the cost of fixed assets till they are ready for use.
b) Expenditure incurred during the period of construction is carried as
capital work-in-progress and on completion the costs are allocated to
the respective fixed assets.
c) Foreign exchange fluctuation on payment / restatement of long term
liabilities related to fixed assets are charged to profit and loss
Account.
d) Depreciation has been provided on straight-line method at the rates
and in the manner specified under Schedule XIV of the Companies Act,
1956, except for the following:
i. Computer hardware and software are being depreciated over a period
of three years.
ii. The leasehold land is amortised over the lease period.
iii. Buildings on leasehold land are amortised over the lease period or
useful life of the building whichever is shorter.
iv. Technical know-how fee is amortised over a period of 6 years or
period of agreement, whichever is shorter.
v. Tools and dies are depreciated over a period, upto eight years,
determined based on technical evaluation.
vi. VSAT communication equipment is depreciated over a period of 5
years.
c) Investments
Long term investments are stated at cost. Provision is made for any
permanent diminution in the value of investments.
Current investments are stated at cost or fair value, whichever is
lower.
d) Inventories
Inventories are stated at lower of cost or net realizable value. Cost
of inventories comprises of cost of purchase, cost of conversion and
other cost incurred in bringing them to their respective location and
condition. Cost of raw materials, stores and spares and packing
materials are determined on weighted average basis.
e) Capital Grants
Grants received from the Government are retained as Capital Reserve
until the conditions stipulated in the respective schemes are complied
with. However, the grants related to specific assets are deducted from
the gross value of such assets.
f) Revenue and Expense Recognition
Revenue from sale of goods is accounted for on dispatch of goods which
represents transfer of significant risks and rewards to the customers.
Sales are inclusive of excise duty and net of sales return and trade
discounts.
Expenses are accounted for on an accrual basis.
g) Taxation
Tax expense (credit) is the aggregate of current tax and deferred tax.
a) Current Tax
Provision for current income tax is made on the assessable income at
the tax rate applicable to the relevant assessment year.
b) Deferred Tax
Deferred tax for timing differences between the book profits and tax
profits is accounted for using the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date.
Deferred tax assets for tax losses and unabsorbed depreciation are
recognized to the extent that the realisation of the related tax
benefit through the future taxable profits is virtually certain.
Deferred tax assets arising from other timing differences are
recognised to the extent there is reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
h) Foreign Currency Transactions
Foreign Currency transactions are recorded at the exchange rates
prevailing on the date of such transactions. Foreign currency monetary
assets and liabilities as at the Balance Sheet date are translated at
the rates of exchange prevailing on the Balance Sheet date. Gains and
losses arising on account of differences in foreign exchange rates on
settlement/ translation of foreign currency monetary assets and
liabilities are recognised in the Profit and Loss Account. Non-monetary
foreign currency items are carried at cost.
The premium or discount arising at the inception of forward exchange
contract to hedge an underlying asset or liability of the Company is
amortised as expense or income over the life of the contract. Exchange
differences on such contracts are recognised in the Profit and Loss
Account in the reporting period in which the exchange rates change. Any
profit or loss arising on cancellation or renewal of such forward
exchange contracts is recognised as income or expense during the year.
Pursuant to The Institute of Chartered Accountants of India's
announcement 'Accounting for Derivatives', the Company marks-to-market
all other derivative contracts (forward contracts in respect of firm
commitments and highly probable forecast transactions, swaps and
currency options) outstanding at the end of the year and the resultant
mark-to-market losses, if any, are recognised in the Profit and Loss
Account. Any profit or loss arising on settlement or cancellation of
such derivative contracts is recognised as income or expense for the
year.
i) Research and Development
Equipment purchased for research and development is capitalised when
commissioned and included in the fixed assets. Revenue expenditure on
research and development is charged in the period in which it is
incurred.
j) Retirement Benefits
The Company has Defined Contribution plans for post employment
benefits' namely Provident Fund and Superannuation Fund. Contributions
payable to Provident Fund and the Superannuation Fund maintained by the
LIC are charged to the Profit and Loss Account.
The Company has Defined Benefit plans, namely compensated absences and
gratuity for employees, the liability for which is determined on the
basis of actuarial valuation at the end of the year. The Gratuity Fund
is recognised by the income tax authorities and is administered through
trusts.
Gains and losses arising out of actuarial valuations are recognised
immediately in the Profit and Loss Account. k) Borrowing Cost
Borrowing Costs directly attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of the asset till the asset is ready for use. Interest on other
borrowings is charged to Profit and Loss Account.
l) Leases
Lease arrangement where the risks and rewards incidental to the
ownership of an asset substantially vest with the lessor are recognised
as operating leases. Lease rent under operating leases are recognised
in the Profit and Loss Account on straight line basis.
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the reduction of the outstanding liability. The
finance charge is allocated to periods during the lease term at a
constant periodic rate of interest on the remaining balance of the
liability.
m) Warranty Provision
The estimated liability for product warranties is recorded at the time
of the sale of the products. The provision is based on management's
estimate of the future cost of corrective action on product failure
established using historical information regarding frequency and
average cost of servicing the warranty claims.
n) Provisions and Contingencies
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure of contingent liability is made when there is a possible
obligation or a present obligation that will probably not require
outflow of resources or where a reliable estimate of the obligation
cannot be made.
o) Impairment
The management periodically assesses, using external and internal
sources, whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognises an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount.
Mar 31, 2011
1. Basis of Accounting
The Financial statements have been prepared to comply in all material
aspects with all the applicable accounting principles in India, the
applicable accounting standards notified under Section 211(3C) of the
Companies Act, 1956 and the relevant provisions of the Companies Act,
1956.
2. Fixed Assets and Depreciation
a) Fixed Assets are stated at their original cost (net of MODVAT where
applicable) including freight, duties, customs and other incidental
expenses relating to acquisition and installation. Interest and other
finance charges paid on loans for the acquisition of fixed assets are
apportioned to the cost of fixed assets till they are ready for use.
b) Expenditure incurred during the period of construction is carried as
capital work-in-progress and on completion the costs are allocated to
the respective fixed assets.
c) Foreign exchange fluctuation on payment / restatement of long term
liabilities related to fixed assets are charged to profit and loss
Account.
d) Depreciation has been provided on straight-line method at the rates
and in the manner specified under Schedule XIV of the Companies Act,
1956, except for the following:
i. Computer hardware and software are being depreciated over a period
of three years.
ii. The leasehold land is amortised over the lease period.
iii. Buildings on leasehold land are amortised over the lease period
or useful life of the building whichever is shorter.
iv. Technical know-how fee is amortised over a period of 6 years or
period of agreement, whichever is shorter.
v. Tools and dies are depreciated over a period, upto eight years,
determined based on technical evaluation.
vi. VSAT communication equipment is depreciated over a period of 5
years.
3. Investments
Long term investments are stated at cost. Provision is made for any
permanent diminution in the value of investments.
Current investments are stated at cost or fair value, whichever is
lower.
4. Inventories
Inventories are stated at lower of cost or net realizable value. Cost
of inventories comprises of cost of purchase, cost of conversion and
other cost incurred in bringing them to their respective location and
condition. Cost of raw materials, stores and spares and packing
materials are determined on weighted average basis.
5. Capital Grants
Grants received from the Government are retained as Capital Reserve
until the conditions stipulated in the respective schemes are complied
with. However, the grants related to specific assets are deducted from
the gross value of such assets.
6. Revenue and Expense Recognition
Revenue from sale of goods is accounted for on dispatch of goods which
represents transfer of significant risks and rewards to the customers.
Sales are inclusive of excise duty and net of sales return and trade
discounts.
Expenses are accounted for on an accrual basis.
7. Taxation
a) Current Tax
Provision for current income tax is made on the assessable income at
the tax rate applicable to the relevant assessment year.
b) Deferred Tax
Deferred tax is recognised, on timing differences, being the difference
between taxable income and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
The effect on deferred tax assets and liabilities of a change in the
tax rates is recognised using the tax rates and tax laws enacted or
substantially enacted at the balance sheet date. Where the Company has
carried forward losses or unabsorbed depreciation deferred tax assets
are not recognised unless there is virtual certainty that sufficient
future taxable income will be available against which such deferred tax
asset can be realised.
8. Foreign Currency Transactions
Foreign Currency transactions are recorded at the exchange rates
prevailing on the date of such transactions. Foreign currency monetary
assets and liabilities as at the Balance Sheet date are translated at
the rates of exchange prevailing on the Balance Sheet date. Gains and
losses arising on account of differences in foreign exchange rates on
settlement/ translation of foreign currency monetary assets and
liabilities are recognised in the Profit and Loss Account. Non-monetary
foreign currency items are carried at cost.
The premium or discount arising at the inception of forward exchange
contract to hedge an underlying asset or liability of the Company is
amortised as expense or income over the life of the contract. Exchange
differences on such contracts are recognised in the Profit and Loss
Account in the reporting period in which the exchange rates change. Any
profit or loss arising on cancellation or renewal of such forward
exchange contracts is recognised as income or expense during the year.
Pursuant to The Institute of Chartered Accountants of India's
announcement 'Accounting for Derivatives', the Company marks-to-market
all other derivative contracts (forward contracts in respect of firm
commitments and highly probable forecast transactions, swaps and
currency options) outstanding at the end of the year and the resultant
mark-to-market losses, if any, are recognised in the Profit and Loss
Account. Any profit or loss arising on settlement or cancellation of
such derivative contracts is recognised as income or expense for the
year.
9. Research and Development
Equipment purchased for research and development is capitalised when
commissioned and included in the fixed assets. Revenue expenditure on
research and development is charged in the period in which it is
incurred.
10. Employee Benefits
(i) Post- Employment Benefits
a) Defined Contribution Plans
The Company has Defined Contribution Plans for post employment benefits
in the form of Superannuation Fund which
is administered through trustees and Life Insurance Corporation of
India and Provident Fund which is administered by Regional Provident
Fund Commissioner.
The Company has no further obligation beyond making the contributions.
The Company's contributions are charged to the Profit and Loss Account
as and when incurred.
b) Defined Benefit Plans
The Company has Defined Benefit Plan for post employment benefit in the
form of Gratuity. Gratuity Fund is administered through trustees and
Life Insurance Corporation of India. Liability for Defined Benefit Plan
is provided on the basis of valuation, as at the Balance Sheet date,
carried out by independent actuary. The actuarial valuation method used
by independent actuary for measuring the liability is the Projected
Unit Credit method.
(ii) Other Long-term Employee Benefit
Provision for Compensated Absences is based on an actuarial valuation
carried out at Balance Sheet date.
(iii) Termination benefits are recognised as an expense as and when
incurred.
(iv) The Actuarial gains and losses arising during the year are
recognized in the Profit and Loss Account.
11. Borrowing Cost
Borrowing Costs directly attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of the asset till the asset is ready for use. Interest on other
borrowings is charged to Profit and Loss Account.
12. Leases
Lease arrangement where the risks and rewards incidental to the
ownership of an asset substantially vest with the lessor are recognised
as operating leases. Lease rent under operating leases are recognised
in the Profit and Loss Account on straight line basis.
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the reduction of the outstanding liability. The
finance charge is allocated to periods during the lease term at a
constant periodic rate of interest on the remaining balance of the
liability.
13. Warranty Provision
The estimated liability for product warranties is recorded at the time
of the sale of the products. The provision is based on management's
estimate of the future cost of corrective action on product failure
established using historical information regarding frequency and
average cost of servicing the warranty claims.
14. Provisions And Contingencies
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure of contingent liability is made when there is a possible
obligation or a present obligation that will probably not require
outflow of resources or where a reliable estimate of the obligation
cannot be made.
15. Impairment
The management periodically assesses, using external and internal
sources, whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognises an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount.
Mar 31, 2010
1. Basis of Accounting
The Financial statements have been prepared to comply in all material
aspects with all the applicable accounting principles in India, the
applicable accounting standards notified under Section 211(3C) of the
Companies Act, 1956 and the relevant provisions of the Companies Act,
1956.
2. Fixed Assets and Depreciation
a) Fixed Assets are stated at their original cost (net of MODVAT where
applicable) including freight, duties, customs and other incidental
expenses relating to acquisition and installation. Interest and other
finance charges paid on loans for the acquisition of fixed assets are
apportioned to the cost of fixed assets till they are ready for use.
b) Expenditure incurred during the period of construction is carried as
capital work-in-progress and on completion the costs are allocated to
the respective fixed assets.
c) Foreign exchange fluctuation on payment / restatement of long term
liabilities related to fixed assets are charged to profit and loss
Account.
d) Depreciation has been provided on straight-line method at the rates
and in the manner specified under Schedule XIV of the Companies Act,
1956, except for the following:
i. Computer hardware and software are being depreciated over a period
of three years.
ii. The leasehold land is amortised over the lease period.
iii. Buildings on leasehold land are amortised over the lease period
or useful life of the building whichever is shorter.
iv. Technical know-how fee is amortised over a period of 6 years or
period of agreement, whichever is shorter.
v. Tools and dies are depreciated over a period, upto eight years,
determined based on technical evaluation.
vi. VSAT communication equipment is depreciated over a period of 5
years.
3. Investments
Long term investments are stated at cost. Provision, if any, is made
for permanent diminution in the value of investments.
Current investments are stated at cost or fair value, whichever is
lower.
4. Inventories
Inventories are stated at lower of cost or net realizable value after
providing for obsolescence, if any. Cost of inventories comprises of
cost of purchase, cost of conversion and other cost incurred in
bringing them to their respective location and condition. Cost of raw
materials, stores and spares and packing materials are determined on
weighted average basis.
5. Capital Grants
Grants received from the Government are retained as Capital Reserve
until the conditions stipulated in the respective schemes are complied
with. However, the grants related to specific assets are deducted from
the gross value of such assets.
6. Revenue and Expense Recognition
Revenue from sale of goods is accounted for on dispatch of goods which
represents transfer of significant risks and rewards to the customers.
Sales are inclusive of excise duty and net of sales return and trade
discounts.
Claims recoverable on account of insurance are accounted for as and
when the amounts recoverable can be reasonably determined.
Expenses are accounted for on an accrual basis.
7. Taxation
Tax expense (credit) is the aggregate of current tax and deferred tax
charged (credited) to the Profit and Loss Account for the year.
a) Current Tax
Provision for current income tax is made on the assessable income at
the tax rate applicable to the relevant assessment year.
b) Deferred Tax
Deferred tax for timing differences between the book profits and tax
profits is accounted for using the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date.
Deferred tax assets for tax losses and unabsorbed depreciation are
recognized to the extent that the realisation of the related tax
benefit through the future taxable profits is virtually certain.
Deferred tax assets arising from other timing differences are
recognised to the extent there is reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
8. Foreign Currency Transactions
Foreign Currency transactions are recorded at the exchange rates
prevailing on the date of such transactions. Foreign currency monetary
assets and liabilities as at the Balance Sheet date are translated at
the rates of exchange prevailing on the Balance Sheet date. Gains and
losses arising on account of differences in foreign exchange rates on
settlement/ translation of foreign currency monetary assets and
liabilities are recognised in the Profit and Loss Account. Non-
monetary foreign currency items are carried at cost.
The premium or discount arising at the inception of forward exchange
contract to hedge an underlying asset or liability of the Company is
amortised as expense or income over the life of the contract. Exchange
differences on such contracts are recognised in the Profit and Loss
Account in the reporting period in which the exchange rates change. Any
profit or loss arising on cancellation or renewal of such forward
exchange contracts is recognised as income or expense during the year.
Pursuant to The Institute of Chartered Accountants of Indias
announcement Accounting for Derivatives, the Company marks-to-market
all other derivative contracts (forward contracts in respect of firm
commitments and highly probable forecast transactions, swaps and
currency options) outstanding at the end of the year and the resultant
mark-to-market losses, if any, are recognised in the Profit and Loss
Account. Any profit or loss arising on settlement or cancellation of
such derivative contracts is recognised as income or expense for the
year.
9. Research and Development
Equipment purchased for research and development is capitalised when
commissioned and included in the fixed assets. Revenue expenditure on
research and development is charged in the period in which it is
incurred.
10. Retirement Benefits
The Company has Defined Contribution plans for post employment
benefits namely Provident Fund and Superannuation Fund. Regular
contributions made to Provident Fund are charged to the Profit and Loss
Account. Regular contributions to the superannuation fund maintained by
the LIC are charged to the Profit and Loss Account.
The Company has Defined Benefit plans namely compensated absences and
Gratuity for employees, the liability for which is determined on the
basis of actuarial valuation at the end of the year. The Gratuity Fund
is recognised by the income tax authorities and is administered through
trusts.
Gains and losses arising out of actuarial valuations are recognised
immediately in the Profit and Loss Account as income or expense.
11. Borrowing Cost
Borrowing Costs directly attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of the asset till the asset is ready for use. Interest on other
borrowings is charged to Profit and Loss Account.
12. Leases
Lease arrangement where the risks and rewards incidental to the
ownership of an asset substantially vest with the lessor are recognised
as operating leases. Lease rent under operating leases are recognised
in the Profit and Loss Account on straight line basis.
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the reduction of the outstanding liability. The
finance charge is allocated to periods during the lease term at a
constant periodic rate of interest on the remaining balance of the
liability.
13. Warranty
The estimated liability for product warranties is recorded at the time
of the sale of the products. The provision is based on managements
estimate of the future cost of corrective action on product failure
established using historical information regarding frequency and
average cost of servicing the warranty claims.
14. Provisions And Contingencies
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure of contingent liability is made when there is a possible
obligation or a present obligation that will probably not require
outflow of resources or where a reliable estimate of the obligation
cannot be made.
15. Impairment
The management periodically assesses, using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognises an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount.