Accounting Policies of Gillanders Arbuthnot & Company Ltd. Company
Mar 31, 2023
1. CORPORATE AND GENERAL INFORMATION
Gillanders Arbuthnot and Company Limited (GACL) was incorporated as a Limited Company in India under the Companies Act in the year 1935 having its registered office at Kolkata. It became part of well-known Kothari Group of Companies in the late sixties. The Company primarily deals in manufacture and sale of tea, manufacture and sale of yarn made out of Cotton and Man Made Fibres, Manufacture and sale of Steel Structural, Pipes and Equipment and designing, supplying, erectioning and commissioning of projects on turnkey basis and letting out of property on Rent.
2. BASIS OF PREPARATION2.1. Statement of Compliance
These financial statements have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as prescribed by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 ("the Act"), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.
The financial statements of the Company for the year ended 31st March, 2023 have been approved by the Board of Directors in their meeting held on 12th May, 2023.
The Company maintains accounts on accrual basis following the historical cost convention, except for followings:
> Certain Financial Assets and Liabilities are measured at Fair value/ Amortized cost (Refer Note 49);
> Derivative Financial Instruments measured at fair value;
> Defined Benefit Plans - Plan assets measured at Actuarial Valuation; and
> Biological Assets - At fair value less cost to sell
2.3. Functional and Presentation Currency
The Financial Statements are presented in Indian Rupee (INR), which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates. All financial information presented in INR has been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.
2.4. Use of Estimates and Judgements
The preparation of financial statements in conformity with Ind AS requires judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Revision to accounting estimates are recognized in the period in which the estimates are revised and future periods affected. For details of estimates and judgements used in preparation of financial statements refer Note 3.19.
2.5. Presentation of Financial Statements
The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule III to the Companies Act, 2013 ("the Act"). The Statement of Cash Flows has been prepared and presented as per the requirements of Ind AS 7 "Statement of Cash flows". The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Division II of Schedule III to the Act, are presented by way of notes forming part of the financial statements along with the other notes required to be disclosed under the notified Accounting Standards and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended).
2.6. Operating Cycle for current and non-current classification
All assets and liabilities have been classified as current or non-current as per the Company>s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1 "Presentation of Financial Statements". The Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
An asset is classified as current when it is:
> Expected to be realized or is intended to be sold or consumed in the normal operating cycle; or
> Held primarily for the purpose of trading; or
> Expected to be realized within twelve months after the reporting period; or
> Cash or cash equivalent unless it is 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.
Similarly a liability is current if:
> It is expected to be settled in normal operating cycle; or
> It is held primarily for the purpose of trading; or
> 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 respectively.
2.7. Measurement of Fair Values
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
> In the principal market for the asset or liability, or
> In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the input that is significant to the fair value measurement as a whole:
> Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
> Level 2 â Inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
> Level 3 â Inputs which are unobservable inputs for the asset or liability.
External valuers are involved for valuation of significant assets and liabilities. Involvement of external valuers is decided by the management of the company considering the requirements of Ind AS and selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.
3. SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.
Inventories are valued at the lower of cost and net realizable value (NRV). Cost is measured by including, unless specifically mentioned below, cost of purchase and other costs incurred in bringing the inventories to their present location and condition. NRV is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
> Raw Materials, Stores and Spare Parts: At Cost (on weighted average basis) or Net Realizable Value whichever is lower. Cost of harvested tea leaves, produced from own gardens, is measured at fair value less cost to sell at the point of harvest of tea leaves. Materials and other items held for use in the production of inventories are not written down below costs, if finished goods in which they will be incorporated are expected to be sold at or above cost.
> Stock in Process: Is valued with material at lower of weighted average cost and market rate and estimated conversion cost. In case of textile, in view of substantially large number of items in stock in progress, it is not feasible to maintain the status of movement of each item at shop floor on perpetual basis. The Company, however, physically verifies such stocks at the end of the year and valuation is made on the basis of such physical verification.
> Finished Goods: Finished goods produced from agricultural produce are valued at lower of cost and the net realizable value. Cost is arrived at by adding the cost of conversion to the fair value of agricultural produce. Other finished goods are measured at cost or NRV whichever is lower.
> Contract in Progress: For long term contracts, contract in progress is valued at realizable value/ contractual rate and provision for losses, as may be estimated for completion thereof.
> Stock in Trade: Measured at cost (i.e., purchase cost) or net realizable value whichever is lower.
> Waste/ Scrap: Waste and Scrap (including tea waste) are valued at estimated realizable value.
3.2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand and short-term deposits with banks that are readily convertible into cash which are subject to insignificant risk of changes in value and are held for the purpose of meeting short-term cash commitments.
Income Tax expenses comprise current tax and deferred tax charge or credit.
Current Tax is measured on the basis of estimated taxable income for the current accounting period in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws.
Deferred tax is provided, on all temporary differences at the reporting date between the carrying amount of assets and liabilities for financial reporting purposes and its tax base. Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. Tax relating to items recognized directly in equity or Other Comprehensive Income (OCI) is recognized in equity or OCI and not in the Statement of Profit and Loss. Deferred tax assets include
Minimum Alternate Tax (MAT) paid (tax credit) in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability and is considered as an asset if it is probable that future taxable profit will be available against which these tax credit can be utilized.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable.
3.4. PROPERTY, PLANT AND EQUIPMENT3.4.1. Tangible Assets (Other than Bearer Plants)3.4.1.1. Recognition and Measurement:
> Property, plant and equipment held for use in the production and/or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any accumulated depreciation and accumulated impairment losses (if any).
> Cost of an item of property, plant and equipment acquired comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting any trade discounts and rebates, any directly attributable costs of bringing the assets to its working condition and location for its intended use and present value of any estimated cost of dismantling and removing the item and restoring the site on which it is located.
> In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of directly attributable overheads, directly attributable borrowing costs incurred in bringing the item to working condition for its intended use, and estimated cost of dismantling and removing the item and restoring the site on which it is located. The costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling items produced while bringing the asset to that location and condition are also added to the cost of self-constructed assets.
> If significant parts of an item of property, plant and equipment have different useful lives then they are accounted for as separate items (major components) of property, plant and equipment.
> Profit or loss arising on the disposal of property, plant and equipment are recognized in the Statement of Profit and Loss in the year of disposal.
3.4.1.2. Subsequent Measurement:
> Subsequent costs are included in the asset''s carrying amount, only when it is probable that future economic benefits associated with the cost incurred 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.
> Major Inspection/ Repairs/ Overhauling expenses are recognized in the carrying amount of the item of property, plant and equipment as a replacement if the recognition criteria are satisfied. Any unamortized part of the previously recognized expenses of similar nature is derecognized.
> Depreciation on Property, Plant and Equipment is provided under Straight Line Method at rates determined based on the useful life of the respective assets and their residual value in accordance
with Schedule II of the Companies Act, 2013 or as reassessed by the Company based on the technical evaluation.
> In respect of the Plant and Machinery other than continuous process plant under Textile Division, useful life of 30 years has been considered on the basis of technical evaluation, which is different from life specified in Schedule II.
> In respect of spares for specific machinery, it is depreciated over the remaining useful life of the related machinery as estimated by the management.
> Depreciation on additions / (disposals) during the year is provided on a pro-rata basis i.e., from / (up to) the date on which asset is ready for use / (disposed of).
> Depreciation method, useful life and residual values are reviewed at each financial year-end and adjusted if appropriate.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognized in the statement of profit and loss.
3.4.1.5. Capital Work in Progress
Capital work-in-progress is stated at cost which includes expenses incurred during construction period, interest on amount borrowed for acquisition of qualifying assets and other expenses incurred in connection with project implementation in so far as such expenses relate to the period prior to the commencement of commercial production.
3.4.2. Bearer Plants3.4.2.1. Recognition and Measurement:
> Bearer Plants, comprising of mature tea bushes are stated in the balance sheet at cost, less any accumulated depreciation and accumulated impairment losses (if any).
> Cost of bearer plants includes the cost of uprooting, land development, rehabilitation, planting of Guatemala, planting of shade trees, cost of nursery, drainage, cultivation, fertilizers, agrochemicals, pruning and infilling etc.
3.4.2.2. Subsequent Measurement:
Costs incurred for infilling including block infilling are generally recognized in the Statement of Profit and Loss unless there is a significant increase in the yield of the sections, in which case such costs are capitalized and depreciated over the remaining useful life of the respective sections.
> Depreciation on bearer plants is recognized so as to write off its cost over useful lives, using the straight-line method.
> Estimated useful life of the bearer plants has been determined by the Management. The residual value in case of Bearer Plants has been considered as NIL.
> The estimated useful life, residual value and depreciation method are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective basis.
3.4.2.4. Capital Work in Progress
Young tea bushes and shade trees, including the cost incurred for procurement of new seeds and maintenance of nurseries, are carried at cost less any recognized impairment losses under capital work-in-progress. Cost includes the cost of land preparation, new planting and maintenance of
newly planted bushes until maturity. On maturity, these costs are classified under bearer plants. Depreciation of bearer plants commence on maturity.
3.5. INTANGIBLE ASSETS3.5.1. Recognition and Measurement
Software which is not an integral part of related hardware is treated as intangible asset and is stated at cost on initial recognition and subsequently measured at cost less accumulated amortization and accumulated impairment loss, if any.
Subsequent costs are included in the asset''s carrying amount, only when it is probable that future economic benefits associated with the cost incurred will flow to the Company and the cost of the item can be measured reliably. All other expenditure is recognized in the Statement of Profit and Loss.
> Intangible assets are amortized over a period of five years.
> The amortization period and the amortization method are reviewed at the end of each financial year. If the expected useful life of the assets is significantly different from previous estimates, the amortization period is changed accordingly.
3.5.4. Intangible Assets under Development
Intangible Assets under development is stated at cost which includes expenses incurred in connection with their development in so far as such expenses relate to the period prior to their getting the assets ready for use.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company applies a single recognition and measurement approach for all leases, except for shortterm leases and leases of low value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use Assets (ROU Assets)
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies in Note 3.15 Impairment of non-financial assets.
ii) Lease Liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable
lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of properties, machinery and equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.
Lease income from operating leases where the Company is a lessor is recognized as 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.
Revenue from contracts with customers is recognized on transfer of control of promised goods or services to a customer at an amount that reflects the consideration to which the Company is expected to be entitled to in exchange for those goods or services.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract. This variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is recognized only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved.
Revenue from sale of products is recognized when the control on the goods have been transferred to the customer. The performance obligation in case of sale of product is satisfied at a point in time i.e., when the material is shipped to the customer or on delivery to the customer, as may be specified in the contract.
3.7.2. Revenue from construction contracts:
Revenue from fixed-price construction contract, where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion method. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is assessed by the
Management. Efforts or costs expended have been used to measure progress towards completion. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date. The significant terms of payment of the contract are the Job advances, progressive payments and mile stone payments as mutually agreed upon.
Rental income from operating lease is recognized on a straight-line basis over the term of the relevant lease unless the payments are structured to increase in line with expected general inflation to compensate for the company''s expected inflationary cost increases.
3.7.4.1. Interest Income: For all debt instruments measured either at amortized cost or at fair value through other comprehensive income (FVTOCI), interest income is recorded using the effective interest rate (EIR) through Statement of Profit and Loss. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset.
3.7.4.2. Dividend Income: It is accounted for in the period in which the right to receive the same is established.
3.7.4.3. Other Income: Other items of income are accounted for as and when the right to receive such income arises, it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably.
3.8. EMPLOYEE BENEFITS3.8.1. Short Term Benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related services are provided. Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period.
3.8.2. Other Long Term Employee Benefits
The liabilities for earned leaves that are not expected to be settled wholly within twelve months are measured as the present value of the 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 government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation. Re-measurements as the result of experience adjustment and changes in actuarial assumptions are recognized in statement of profit and loss immediately.
3.8.3. Post-Employment Benefits
The Company operates the following post-employment schemes:
Defined contribution plans such as Provident Fund, Employee State Insurance etc. are charged to the statement of profit and loss as and when incurred. Further the monthly contribution for provident fund of all the members are made to the Regional Provident Fund.
The liability or asset recognized in the Balance Sheet in respect of defined benefit 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 Company''s net obligation in respect of defined benefit plans is calculated
separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods. The defined benefit obligation is calculated annually by Actuaries using the projected unit credit method.
The liability recognized for defined benefit plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. 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. The benefits are discounted using the government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation.
Re-measurement of the net defined benefit obligation, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling, are recognized in other comprehensive income. Re-measurement recognized in other comprehensive income will not be reclassified to the statement of profit and loss.
Government grants are recognized at their fair value, where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
The grant relating to the acquisition/ construction of an item of property, plant and equipment is included in non-current liability as deferred income and is credited to statement of profit and loss on the same systematic basis as the respective asset is depreciated over its expected life and is presented in other operating income.
Alternatively, the same can be presented by deducting the grant from the carrying amount of the asset.
3.10. FOREIGN CURRENCY TRANSACTIONS
> Foreign currency (other than the functional currency) transactions are translated into the functional currency using the spot rates of exchanges at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchanges at the reporting date.
> Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities are generally recognized in statement of profit and loss in the year in which they arise except for exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those qualifying assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings, the balance is presented in the Statement of Profit and Loss within finance costs.
> Non- monetary items are not retranslated at period end and are measured at historical cost (translated using the exchange rate at the transaction date).
> Borrowing Costs consists of interest and other costs that an entity incurs in connection with the borrowings of funds. Borrowing costs also includes foreign exchange difference to the extent regarded as an adjustment to the borrowing costs.
> Borrowing costs directly attributable to the acquisition or construction of a qualifying asset are capitalized as a part of the cost of that asset which necessarily takes a substantial period of time to complete and prepare the asset for its intended use or sale.
> Transaction costs in respect of long term borrowing are amortized over the tenure of respective loans using Effective Interest Rate (EIR) method. All other borrowing costs are recognized in the statement of profit and loss in the period in which they are incurred.
3.12. INVESTMENTS IN SUBSIDIARIES
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the statement of profit and loss.
A financial instrument is any contract that gives rise to a financial asset to one entity and a financial liability or equity instrument to another entity.
> Recognition and Initial Measurement:
All financial assets are initially recognized when the company becomes a party to the contractual provisions of the instruments. A financial asset is initially measured at fair value plus, in the case of financial assets not recorded at fair value through statement of profit and loss, transaction costs that are attributable to the acquisition of the financial asset.
> Classification and Subsequent Measurement:
For the purposes of subsequent measurement, financial assets are classified in four categories:
⢠Measured at Amortized Cost;
⢠Measured at Fair Value Through Other Comprehensive Income (FVTOCI);
⢠Measured at Fair Value Through Statement of Profit and Loss (FVTPL); and
⢠Equity Instruments measured at Fair Value through Other Comprehensive Income (FVTOCI).
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
⢠Measured at Amortized Cost: A debt instrument is measured at the amortized cost if both the following conditions are met:
The ess model whose objective is to hold assets for collecting
contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the Statement of profit and loss. This category generally applies to trade receivables, cash and bank balances, loans and other financial assets of the company.
⢠Measured at FVTOCI: A debt instrument is measured at the FVTOCI if both the following conditions are met:
The objective of the business model is achieved by both collecting contractual cash flows and selling the financial assets; and
The asset''s contractual cash flows represent SPPI.
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on re-measurement recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains
or losses. Interest calculated using the effective interest rate method is recognized in the statement of
profit and loss in investment income.
⢠Measured at FVTPL: FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as FVTPL. In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
⢠Equity Instruments measured at FVTOCI:_AN equity investments in the 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 election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable. In case the company decides to classify an equity instrument as 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 sale of investment.
> Derecognition:
The Company derecognizes a financial asset on trade date only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
> Impairment of Financial Assets:
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS - 109 requires expected credit losses to be measured through a loss allowance. The company recognizes impairment loss for trade receivables that do not constitute a financing transaction using expected credit loss model, which involves use of a provision matrix constructed on the basis of historical credit loss experience. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
> Recognition and Initial Measurement:
Financial liabilities are classified, at initial recognition, as at fair value through Statement of profit and loss, loans and borrowings, payables or as derivatives, 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.
> Subsequent Measurement:
Financial liabilities are measured subsequently at amortized cost or FVTPL. A financial liability is classified as FVTPL if it is held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in Statement of profit and loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Interest expense and foreign exchange gains and losses are recognized in statement of profit and loss. Any gain or loss on derecognition is also recognized in statement of profit and loss.
> Financial Guarantee Contracts:
Financial guarantee contracts issued by the company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee
contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirement of Ind AS- 109 and the amount recognized less cumulative amortization.
> Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
3.13.3. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when 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 counterparty.
3.13.4. Derivative financial instruments:
The Company enters into derivative financial instruments viz. foreign exchange forward contracts, to manage its exposure to foreign exchange rate risks. The Company does not hold derivative financial instruments for speculative purposes.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in Statement of profit and loss immediately.
Basic Earnings per share (EPS) amounts are calculated by dividing the profit for the year attributable to equity shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity shareholders adjusted for the effects of potential ordinary shares by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.
3.15. IMPAIRMENT OF NON-FINANCIAL ASSETS
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful lives of the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash flows from other assets or group of assets (Cash Generating Units - CGU).
An impairment loss is recognized as an expense in the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in earlier accounting period is reversed if there has been a change in recoverable amount.
3.16. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS3.16.1. Provisions:
Provisions are recognized when there is a present obligation (legal or constructive) 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 a reliable estimate can be made of the amount of the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the liability. The unwinding of the discount is recognized as finance cost.
3.16.2. Contingent Liabilities:
Contingent liability is a possible obligation arising 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 past events but is not recognized because it is not probable that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent liabilities in Other Notes to the Financial Statements.
Contingent asset usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognized though are disclosed, where an inflow of economic benefits is probable and where the amount can be measured reliably.
3.17. BIOLOGICAL ASSETS AND AGRICULTURAL PRODUCE3.17.1. Biological Assets:
Biological assets of the company comprise of un-harvested green tea leaves that are classified as current biological assets.
The Company recognizes biological assets when, and only when, the Company controls the assets as a result of past events, it is probable that future economic benefits associated with such assets will flow to the company and the fair value or cost of the assets can be measured reliably. Expenditure incurred on biological assets is measured on initial recognition and at the end of each reporting period at its fair value less costs to sell. The gain or loss arising from a change in fair value less cost to sell of biological assets is included in Statement of Profit and Loss for the period in which it arises.
The Company recognizes agricultural produce when, and only when, the Company controls the assets as a result of past events, it is probable that future economic benefits associated with such assets will flow to the Company and the fair value or the cost of the assets can be measured reliably. Agricultural produce harvested from the Company''s biological assets are valued at fair value less cost to sell at the point of harvest. A gain or loss arising on initial recognition of agricultural produce at fair value less cost to sell shall be included in Statement of Profit and Loss for the period in which it arises.
The Company''s agricultural produce comprises of green leaves plucked from its tea estates.
Operating Segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors. Segments are organized based on businesses which have similar economic characteristics as well as exhibit similarities in nature of production processes, the type and class of customer and distribution methods.
Segment revenue arising from third party customers is reported on the same basis as revenue in the financial statements. Inter-segment revenue is reported on the basis of transactions which are primarily market led. Segment results represent profits before finance charges, unallocated corporate expenses and taxes. "Unallocated Expenses" include revenue and expenses that relate to initiatives/ costs attributable to the enterprise as a whole and are not attributable to individual segments.
3.19. SIGNIFICANT JUDGEMENTS AND KEY SOURCES OF ESTIMATION IN APPLYING ACCOUNTING POLICIES
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances. Information about significant judgements and key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:
> Revenue Recognition: In case of construction contracts, the Company uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage of completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion.
> Recognition of Deferred Tax Assets: The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
> Useful lives of depreciable/ amortizable assets (tangible and intangible): Management reviews its estimate of the useful lives of depreciable/ amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of property, plant and equipment.
> Classification of Leases: The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
> Defined Benefit Obligation (DBO): Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
> Provisions and Contingencies: The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
> Impairment of Financial Assets: The Company reviews its carrying value of investments carried at amortized cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for.
> Allowances for Doubtful Debts: The Company makes allowances for doubtful debts through appropriate estimations of irrecoverable amount. The identification of doubtful debts requires use of judgment and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.
> Fair value measurement of financial Instruments: When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The input to these models are taken from observable markets where possible, but
where this not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
> Fair Value of Biological Assets: The fair value of Biological Assets is determined based on recent transactions entered into with third parties or available market price.
3.20. RECENT ACCOUNTING PRONOUNCEMENTS:
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
> Ind AS 1 - Presentation of Financial Statements: The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements
> Ind AS 12 - Income Taxes: The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements
> Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors: The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements
Mar 31, 2018
Notes to the Standalone Financial Statements for the year ended 31st March 2018
1. CORPORATE AND GENERAL INFORMATION
Gillanders Arbuthnot and Company Limited (GACL) was incorporated as a Limited Company in India under the Companies Act in the year 1935 having its registered office at Kolkata. It became part of well-known Kothari Group of Companies in the late sixties. The Company primarily deals in manufacture and sale of tea, manufacture and sale of yarn and fabric made out of Cotton and Man Made Fibres, Manufacture and sale of Steel Structural , Pipes and Equipment and designing, supplying , erectioning and commissioning of projects on turnkey basis , and letting out of property on Rent.
2. BASIS OF PREPARATION
2.1. Statement of Compliance
These financial statements have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as prescribed by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 ("the Act"), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.
The financial statements for all periods up to and including the year ended 31st March, 2017, were prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India, which includes the accounting standards prescribed under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 and other provisions of the Act (collectively referred to as "Indian GAAP"). These financial statements for the year ended 31st March, 2018 are the first Ind AS Financial Statements with comparatives, prepared under Ind AS. The Company has consistently applied the accounting policies used in the preparation of its opening Ind AS Balance Sheet at 1st April, 2016 throughout all periods presented, as if these policies had always been in effect and are covered by Ind AS 101 "First Time Adoption of Indian Accounting Standards".
An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note No. 48. Certain of the Company''s Ind-AS accounting policies used in the opening Balance Sheet differed from its Indian GAAP policies applied as at 31st March, 2016 and accordingly the adjustments were made to restate the opening balances as per Ind-AS. The resulting adjustment arising from events and transactions before the date of transition to Ind-AS were recognized directly through retained earnings as at 1st April, 2016 as required by Ind-AS 101. The financial statements of the Company for the year ended 31st March, 2018 has been approved by the Board of Directors in their meeting held on 30th May, 2018.
2.2. Basis of Accounting
The Company maintains accounts on accrual basis following the historical cost convention, except forfollowings:
>Certain Financial Assets and Liabilities is measured at Fair value/Amortized cost (Refer Note 49);
>Derivative Financial Instruments measured at fair value;
>Defined Benefit Plans - Plan assets measured at Actuarial Valuation; and
> Biological Assets-At fair value less cost to sell
2.3. Functional and Presentation Currency
The Financial Statements are presented in Indian Rupee (INR), which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates. All financial information presented in INR has been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.
2.4. Use of Estimates and Judgements
The preparation of financial statements in conformity with Ind AS requires judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Revision to accounting estimates are recognized in the period in which the estimates are revised and future periods affected. For details of estimates and judgements used in preparation of financial statements refer Note 3.19.
2.5. Presentation of Financial Statements
The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule III to the Companies Act, 2013 ("the Act"). The Statement of Cash Flows has been prepared and presented as per the requirements of Ind AS 7 "Statement of Cash flows". The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Division II of Schedule III to the Act, are presented by way of notes forming part of the financial statements along with the other notes required to be disclosed under the notified Accounting Standards and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended).
2.6. Operating Cycle for current and non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Act, and Ind AS 1 (Presentation of Financial Statements). The Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
An asset is classified as current when it is:
>Expected to be realized or is intended to be sold or consumed in the normal operating cycle; or
> Held primarily for the purpose of trading; or
> Expected to be realized within twelve months after the reporting period; or
>Cash or cash equivalent unless it is 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. Similarly a liability is current if:
> It is expected to be settled in normal operating cycle; or
> It is held primarily for the purpose of trading; or
>lt 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 respectively.
2.7. Measurement of Fair Values
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
> In the principal market for the asset or liability, or
> In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the input that is significant to the fair value measurement as a whole:
>Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
>Level 2 â Inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
>Level 3 â Inputs which are unobservable inputs for the asset or liability.
External valuers are involved for valuation of significant assets and liabilities. Involvement of external valuers is decided by the management of the company considering the requirements of Ind AS and selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.
3. SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.
3.1. INVENTORIES
Inventories are valued at the lower of cost and net realizable value (NRV). Cost is measured by including, unless specifically mentioned below, cost of purchase and other costs incurred in bringing the inventories to their present location and condition. NRV is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
>Raw Materials: At Cost (at weighted average basis) or Net Realizable Value whichever is lower. Cost of harvested tea leaves, produced from own gardens, is measured at fair value less cost to sell at the point of harvest of tea leaves..
>Stores and Spare Parts: Measured at cost (on weighted average basis) or net realizable value whichever is lower.
>Stock in Process: Is valued with material at lower of weighted average cost and market rate and estimated conversion cost.
>Finished Goods: Finished goods produced from agricultural produce are valued at lower of cost and the net realizable value. Cost is arrived at by adding the cost of conversion to the fair value of agricultural produce. Other finished goods are measured at cost or NRV whichever is lower.
>Contract in Progress: For long term contracts, contract in progress is valued at realizable value/ contractual rate and provision for losses, as may be estimated for completion thereof.
>Stock in Trade: Measured at cost (i.e., purchase cost) or net realizable value whichever is lower. >Waste/ Scrap: Waste and Scrap (including tea waste) are valued at estimated realizable value.
3.2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand and short-term deposits with banks that are readily convertible into cash which are subject to insignificant risk of changes in value and are held for the purpose of meeting short-term cash commitments.
3.3. INCOME TAX
Income Tax expenses comprise current tax and deferred tax charge or credit.
Current Tax is measured on the basis of estimated taxable income for the current accounting period in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws.
Deferred tax is provided, on all temporary differences at the reporting date between the carrying amount of assets and liabilities for financial reporting purposes and its tax base. Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted orsubstantively enacted at the reporting date. Tax relating to items recognized directly in equity or
OCI is recognized in equity or OCI and not in the Statement of Profit and Loss. Deferred tax assets include Minimum Alternate Tax (MAT) paid (tax credit) in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability and is considered as an asset if it is probable that future taxable profit will be available against which these tax credit can be utilized.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable.
3.4. PROPERTY, PLANT AND EQUIPMENT
3.4.1. Tangible Assets (Other than Bearer Plants)
3.4.1.1. Recognition and Measurement:
> Property, plant and equipment held for use in the production and/or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any accumulated depreciation and accumulated impairment losses (if any).
>Cost of an item of property, plant and equipment acquired comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting any trade discounts and rebates, any directly attributable costs of bringing the assets to its working condition and location for its intended use and present value of any estimated cost of dismantling and removing the item and restoring the site on which it is located.
>ln case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of directly attributable overheads, directly attributable borrowing costs incurred in bringing the item to working condition for its intended use, and estimated cost of dismantling and removing the item and restoring the site on which it is located. The costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling items produced while bringing the asset to that location and condition are also added to the cost of self-constructed assets.
> If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
>Profit or loss arising on the disposal of property, plant and equipment are recognized in the Statement of Profit and Loss in the year of disposal.
3.4.1.2. Subsequent Measurement:
>Subsequent costs are included in the asset''s carrying amount, only when it is probable that future economic benefits associated with the cost incurred 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.
>Major Inspection/ Repairs/ Overhauling expenses are recognized in the carrying amount of the item of property, plant and equipment as a replacement if the recognition criteria are satisfied. Any Unamortized part of the previously recognized expenses of similar nature is derecognized.
3.4.1.3. Depreciation:
> Depreciation on Property, Plant and Equipment is provided under Straight Line Method at rates determined based on the useful life of the respective assets and their residual value in accordance with Schedule II of the Companies Act, 2013 or as reassessed by the Company based on the technical evaluation.
>ln respect of the Plant and Machinery other than continuous process plant under Textile Division, useful life of 30 years has been considered on the basis of technical evaluation, which is different from life specified in Schedule II.
>ln respect of spares for specific machinery, it is depreciated over the remaining useful life of the related machinery as estimated by the management.
>Depreciation on additions / (disposals) during the year is provided on a pro-rata basis i.e., from / (up to) the date on which asset is ready for use / (disposed of).
>Depreciation method, useful life and residual values are reviewed at each financial year-end and adjusted if appropriate.
3.4.1.4. Disposal of Assets
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognized in the statement of profit and loss.
3.4.1.5. Capital Work in Progress
Capital work-in-progress is stated at cost which includes expenses incurred during construction period, interest on amount borrowed for acquisition of qualifying assets and other expenses incurred in connection with project implementation in so far as such expenses relate to the period prior to the commencement of commercial production.
3.4.2. Bearer Plants
3.4.2.1. Recognition and Measurement:
>Bearer Plants, comprising of mature tea bushes and shade trees are stated in the balance sheet at cost, less any accumulated depreciation and accumulated impairment losses (if any).
>Cost of bearer plants includes the cost of uprooting, land development, rehabilitation, planting of Guatemala, planting of shade trees, cost of nursery, drainage, cultivation, fertilizers, agro-chemicals, pruning and infilling etc.
3.4.2.2. Subsequent Measurement:
Costs incurred for infilling including block infilling are generally recognized in the Statement of Profit and Loss unless there is a significant increase in the yield of the sections, in which case such costs are capitalized and depreciated over the remaining useful life of the respective sections.
3.4.2.3. Depreciation:
>Depreciation on bearer plants is recognized so as to write off its cost over useful lives, using the straight-line method.
>Estimated useful life of the bearer plants has been determined to be 50 years. The residual value in case of Bearer Plants has been considered as NIL.
>The estimated useful life, residual value and depreciation method are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective basis.
3.4.2.4. Capital Work in Progress
Young tea bushes and shade trees, including the cost incurred for procurement of new seeds and maintenance of nurseries, are carried at cost less any recognized impairment losses under capital work-in-progress. Cost includes the cost of land preparation, new planting and maintenance of newly planted bushes until maturity. On maturity, these costs are classified under bearer plants. Depreciation of bearer plants commence on maturity.
3.5. Intangible Assets
3.5.1. Recognition and Measurement
Software which is not an integral part of related hardware is treated as intangible asset and is stated at cost on initial recognition and subsequently measured at cost less accumulated amortization and accumulated impairment loss, if any.
3.5.2. Subsequent Expenditure
Subsequent costs are included in the asset''s carrying amount, only when it is probable that future economic benefits associated with the cost incurred will flow to the Company and the cost of the item can be measured reliably. All other expenditure is recognized in the Statement of Profit and Loss.
3.5.3. Amortization
> Intangible assets are amortized over a period of five years.
>The amortization period and the amortization method are reviewed at least at the end of each financial year. If the expected useful life of the assets is significantly different from previous estimates, the amortization period is changed accordingly.
3.5.4. Intangible Assets under Development
Intangible Assets under development is stated at cost which includes expenses incurred in connection with their development in so far as such expenses relate to the period prior to their getting the assets ready for use.
3.6. LEASES As a lessee
Leases in which significant portion of risk and rewards of ownership are not transferred to the Company as lease 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 leases unless the payments are structured to increase in line with expected general inflation to compensate for the lessors expected inflationary cost increases. Leases where the company assumes substantially all risks and rewards incidental to the ownership of the leased assets are classified as finance leases.
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.
3.7. REVENUE RECOGNITION
Revenue is recognized to the extent it is probable that the economic benefit will flow to the company and revenue can be reliably measured regardless of when the payment is being received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment, and excludes taxes and duties collected on behalf of the Government and is reduced for estimated customer returns, rebates and other similar allowances.
3.7.1. Sale of Products:
The Company recognizes revenue when it can be reliably measured, it is probable that future economic benefits will flow to the Company and significant risk and reward incidental to sale of products is transferred to the buyer, usually on delivery of the goods.
3.7.2. Revenue from construction contracts/project related activity and contracts for supply/ commissioning of complex plant and equipment is recognized as follows:
Contract Revenue is recognized by reference to the stage of completion of the contract activity at the reporting date of the financial statements on the basis of percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date, to the total estimated contract costs. Expected loss, if any, on the construction/project related activity is recognized as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. While determining the amount of foreseeable loss, all elements of costs and related incidental income not included in contract revenue is taken into consideration. Extra work, claim and variation in contracts to the extent that is probable that they will result in revenue and can be reliably measured by the management is also covered.
3.7.3. Rental Income:
Rental income from operating lease is recognized on a straight line basis over the term of the relevant lease unless the payments are structured to increase in line with expected general inflation to compensate for the company''s expected inflationary cost increases.
3.7.4. Other Income:
3.7.4.1. Interest Income: For all debt instruments measured either at amortized cost or at fair value through other comprehensive income (FVTOCI), interest income is recorded using the effective interest rate (EIR) through Profit or Loss. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset.
3.7.4.2. Dividend Income: It is accounted for in the period in which the right to receive the same is established.
3.7.4.3. Other Income: Other items of income are accounted for as and when the right to receive such income arises, it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably.
3.8. EMPLOYEE BENEFITS
3.8.1. Short Term Benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related services are provided. Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period.
3.8.2. Other Long Term Employee Benefits
The liabilities for earned leaves that are not expected to be settled wholly within twelve months are measured as the present value of the 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 government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation. Re-measurements as the result of experience adjustment and changes in actuarial assumptions are recognized in statement of profit and loss immediately.
3.8.3. Post-Employment Benefits
The Company operates the following post-employment schemes:
> Defined Contribution Plan
Defined contribution plans such as Provident Fund, Employee State Insurance etc. are charged to the statement of profit and loss as and when incurred. Further for certain employees the monthly contribution for provident fund is made to a trust administered by the company. The interest payable by the trust is notified by the government. The company has an obligation to make good the shortfall, if any. Based on the guidance note on measurement of provident fund liabilities from The Actuarial Society the actuary has provided the valuation of interest guaranteed on Provident Fund.
> Defined Benefit Plans
The liability or asset recognized in the Balance Sheet in respect of defined benefit 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 Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods. The defined benefit obligation is calculated annually by Actuaries using the projected unit credit method.
The liability recognized for defined benefit plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. 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. The benefits are discounted using the government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation.
Re-measurement of the net defined benefit obligation, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling, are recognized in other comprehensive income. Re-measurement recognized in other comprehensive income will not be reclassified to the statement of profit and loss.
3.9. GOVERNMENT GRANTS
Government grants are recognized at their fair value, where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
The grant relating to the acquisition/ construction of an item of property, plant and equipment is included in non-current liability as deferred income and is credited to statement of profit and loss on the same systematic basis as the respective asset is depreciated over its expected life and is presented in other operating income.
3.10. FOREIGN CURRENCY TRANSACTIONS
>Foreign currency (other than the functional currency) transactions are translated into the functional currency using the spot rates of exchanges at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchanges at the reporting date.
>Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities are generally recognized in statement of profit and loss in the year in which they arise except for exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those qualifying assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings, the balance is presented in the Statement of Profit and Loss within finance costs.
>Non- monetary items are not retranslated at period end and are measured at historical cost (translated using the exchange rate at the transaction date).
3.11. BORROWING COSTS
>Borrowing Costs consists of interest and other costs that an entity incurs in connection with the borrowings of funds. Borrowing costs also includes foreign exchange difference to the extent regarded as an adjustment to the borrowing costs.
>Borrowing costs directly attributable to the acquisition or construction of a qualifying asset are capitalized as a part of the cost of that asset which necessarily takes a substantial period of time to complete and prepare the asset for its intended use or sale.
>Transaction costs in respect of long term borrowing are amortized over the tenure of respective loans using Effective Interest Rate (EIR) method. All other borrowing costs are recognized in the statement of profit and loss in the period in which they are incurred.
3.12. INTEREST IN SUBSIDIARIES
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the statement of profit and loss.
3.13. FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset to one entity and a financial liability or equity instrument to another entity.
3.13.1. Financial Assets
>Recognition and Initial Measurement:
All financial assets are initially recognized when the company becomes a party to the contractual provisions of the instruments. A financial asset is initially measured at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
> Classification and Subsequent Measurement:
For purposes of subsequent measurement, financial assets are classified in four categories:
⢠Measured at Amortized Cost;
⢠Measured at Fair Value Through Other Comprehensive Income (FVTOCI);
⢠Measured at Fair Value Through Profit or Loss (FVTPL); and
⢠Equity Instruments measured at Fair Value Through Other Comprehensive Income (FVTOCI).
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
⢠Measured at Amortized Cost: Adebt instrument is measured at the amortized cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is achieved by both collecting contractual cash flows; and
⢠The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade receivables, cash and bank balances, loans and other financial assets of the group.
⢠Measured at FVTOCI: A debt instrument is measured at the FVTOCI if both the following conditions are met:
⢠The objective of the business model is achieved by both collecting contractual cash flows and selling the financial assets; and
⢠The asset''s contractual cash flows represent SPPI.
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains or losses. Interest calculated using the effective interest method is recognized in the statement of profit and loss in investment income.
⢠Measured at FVTPL: FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as FVTPL. In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
⢠Equity Instruments measured at FVTOCI: All equity investments 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 election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable. In case the company decides to classify an equity instrument as 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 P&L, even on sale of investment.
>Derecognition:
The Company derecognizes a financial asset on trade date only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
> Impairment of Financial Assets:
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS - 109 requires expected credit losses to be measured through a loss allowance. The company recognizes impairment loss for trade receivables that do not constitute a financing transaction using expected credit loss model, which involves use of a provision matrix constructed on the basis of historical credit loss experience. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
3.13.2. Financial Liabilities
>Recognition and Initial Measurement:
Financial liabilities are classified, at initial recognition, as at fair value through profit or loss, loans and borrowings, payables or as derivatives, 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.
>Subsequent Measurement:
Financial liabilities are measured subsequently at amortized cost or FVTPL. A financial liability is classified as FVTPL if it is held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Interest expense and foreign exchange gains and losses are recognized in statement of profit and loss. Any gain or loss on derecognition is also recognized in statement of profit and loss.
>Financial Guarantee Contracts:
Financial guarantee contracts issued by the company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirement of Ind AS-109 and the amount recognized less cumulative amortization.
>Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
3.13.3. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when 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 counterparty.
3.13.4. Derivative financial instruments:
The Company enters into derivative financial instruments viz. foreign exchange forward contracts, to manage its exposure to foreign exchange rate risks. The Company does not hold derivative financial instruments for speculative purposes.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately.
3.14. Earnings Per Share
Basic Earnings per share (EPS) amounts are calculated by dividing the profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity shareholders adjusted for the effects of potential equity shares by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.
3.15. Impairment of Non-Financial Assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful lives of the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash flows from other assets or group of assets (Cash Generating Units - CGU).
An impairment loss is recognized as an expense in the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in earlier accounting period is reversed if there has been a change in recoverable amount.
3.16. Provisions, Contingent Liabilities and Contingent Assets
3.16.1. Provisions
Provisions are recognized when there is a present obligation (legal or constructive) 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 a reliable estimate can be made of the amount of the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.
3.16.2. Contingent Liabilities
Contingent liability is a possible obligation arising 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 past events but is not recognized because it is not probable that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent liabilities in Other Notes to the Financial Statements.
3.16.3. Contingent Assets
Contingent asset usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognized though are disclosed, where an inflow of economic benefits is probable and where the amount can be measured reliably.
3.17. Biological Assets and Agricultural Produce 3.17.1. Biological Assets
Biological assets of the company comprise of un-harvested green tea leaves that are classified as current biological assets.
The Company recognizes biological assets when, and only when, the Company controls the assets as a result of past events, it is probable that future economic benefits associated with such assets will flow to the company and the fair value or cost of the assets can be measured reliably. Expenditure incurred on biological assets is measured on initial recognition and at the end of each reporting period at its fair value less costs to sell. The gain or loss arising from a change in fair value less cost to sell of biological assets is included in Statement of Profit and Loss for the period in which it arises.
3.17.2. Agricultural Produce
The Company recognizes agricultural produce when, and only when, the Company controls the assets as a result of past events, it is probable that future economic benefits associated with such assets will flow to the Company and the fair value or the cost of the assets can be measured reliably. Agricultural produce harvested from the Company''s biological assets are valued at fair value less cost to sell at the point of harvest. A gain or loss arising on initial recognition of agricultural produce at fair value less cost to sell shall be included in Statement of Profit and Loss for the period in which it arises.
The Company''s agricultural produce comprises of green leaves plucked from its tea estates.
3.18. Operating Segment
Operating Segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors. Segments are organized based on businesses which have similar economic characteristics as well as exhibit similarities in nature of production processes, the type and class of customer and distribution methods.
Segment revenue arising from third party customers is reported on the same basis as revenue in the financial statements. Inter-segment revenue is reported on the basis of transactions which are primarily market led. Segment results represent profits before finance charges, unallocated corporate expenses and taxes. "Unallocated Corporate Expenses" include revenue and expenses that relate to initiatives/ costs attributable to the enterprise as a whole and are not attributable to individual segments.
3.19. SIGNIFICANT JUDGEMENTS AND KEY SOURCES OF ESTIMATION IN APPLYING ACCOUNTING POLICIES
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances. Information about significant judgements and key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:
>Recognition of Deferred Tax Assets: The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
>Useful lives of depreciable/ amortizable assets (tangible and intangible): Management reviews its estimate of the useful lives of depreciable/ amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of property, plant and equipment.
>Classification of Leases: The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
> Defined Benefit Obligation (DBO): Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
>Provisions and Contingencies: The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
>Impairment of Financial Assets: The Company reviews its carrying value of investments carried at amortized cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for.
> Allowances for Doubtful Debts: The Company makes allowances for doubtful debts through appropriate estimations of irrecoverable amount. The identification of doubtful debts requires use of judgment and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.
> Fair value measurement of financial Instruments: When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The input to these models are taken from observable markets where possible, but where this not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
>Fair Value of Biological Assets: The fair value of Biological Assets is determined based on recent transactions entered into with third parties or available market price.
3.20. Recent accounting pronouncements
The standard issued but not yet effective upto the date of the Company''s financial statements is disclosed below the Company intend to adopt this standard when it becomes effective.
3.20.1 Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
3.20.2 In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying Ind AS 115, ''Revenue from Contracts with Customers''. The amendment is applicable to the Company for the reporting period beginning April 1, 2018. Ind AS 115 replaces existing revenue recognition standards Ind AS 11, Construction Contracts and Ind AS 18, Revenue and revised guidance note of the ICAI on Accounting for Real Estate Transaction for Ind AS entities issued in 2016.
The amendment will come into force from April 1, 2018. The Company is in the process of evaluating the requirement of the amendments as well as the impact of the same.
Mar 31, 2016
1. Significant Accounting Policies
1.1 Basis of Accounting
These financial statements of the Company have been prepared to comply in all material aspects with all the applicable accounting principles in India (Indian GAAP), the applicable accounting standards as prescribed under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013, to the extent notified. The financial statements have been prepared under the historical cost convention on an accrual basis.
1.2 Use of Estimates
The preparation of financial statements in conformity with Indian GAAP requires judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.
1.3 Tangible Fixed Assets
Tangible fixed assets are stated at cost less accumulated depreciation and cumulative impairment losses, if any. Cost includes duties, taxes, incidental expenses, erection/commissioning expenses and borrowing cost attributable to qualifying assets up to the date, the asset is put to use. The cost of extension of planting on cultivable land including cost of development is capitalized.
1.4 Intangible Assets
Costs incurred on intangible assets, resulting in future economic benefits are capitalized as intangible assets. Intangible assets are stated at cost less accumulated amortization and cumulative impairment losses, if any.
1.5 Depreciation & Amortization
a) Depreciation on tangible fixed assets is provided under Straight Line Method at rates determined based on useful lives of the respective assets and the residual values in accordance with Schedule II of the Companies Act, 2013 or reassessed by the Company based on technical evaluation except in respect of the following where written down value method is followed:
i) In respect of assets under Company''s Engineering (MICCO) Division.
ii) In respect of Tea Division, assets acquired from Kothari Plantations and Industries Limited amalgamated with the Company.
iii) In respect of the Plant & Machinery other than continues process plant under Textile Division, useful lives of 30 years has been considered on the basis of technical evaluation, which is different from lives specified in Schedule-II.
b) In respect of spares for specific machinery cost of such spare is amortized over the useful lives of the related machinery as estimated by the management.
c) Leasehold land is amortized over the lease period.
d) Computer software is amortized over a period of five years.
1.6 Impairment of Assets
The carrying amounts of fixed assets are reviewed at each balance sheet date to determine, if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of the fixed assets of a cash generating unit exceeds its recoverable amount. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of the recoverable amount.
1.7 Investments
Long Term Investments are stated at cost with an appropriate provision for diminution in value, other than temporary in nature, in the valuation of long term investments. Current Investments are stated at lower of cost and fair value. Gains/Losses on disposal of investments are recognized as income/expenditure.
1.8 Foreign Currency Transactions
Transactions in foreign currencies are recognized at the rate existing at the time of such transactions. Gain or Loss resulting from the settlement of such transactions is recognized in the Statement of Profit and Loss. At the Balance Sheet date, monetary items denominated in foreign currency are translated at year-end rates or the forward cover rates as applicable. The resultant translation differences, if any, are recognized in the Statement of Profit and Loss.
1.9 Derivative Instruments
The Company uses forward exchange contracts to hedge its risks associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments. In respect of forwards exchange contracts with underlying transactions, the premium or discount arising at the inception of such contract is amortized as expense or income over the life of contract. Other forwards exchange contracts outstanding at the Balance Sheet date are marked to market and in case of loss the same is provided for in the financial statements. Any profit or losses arising on cancellation of forward exchange contracts are recognized as income or expense for the period.
1.11 Employee Benefits
a) Short Term Employee Benefits (i.e. benefits payable within one year) are recognized in the period in which employee services are rendered.
b) Post-employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined using actuarial valuation techniques.
c) Actuarial gains/losses arising under Defined Benefit Plans are recognized immediately in the Statement of Profit and Loss as income/expense for the year in which they occur.
1.12 Provisions, Contingent Liabilities and Contingent Assets
i) Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if
a) the Company has a present obligation as a result of a past event;
b) a probable outflow of resources is expected to settle the obligation; and
c) the amount of the obligation can be reasonably estimated.
ii) Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in case of
a) present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;
b) present obligation when no reliable estimate is possible; and
c) a possible obligation arising from past events where the probability of outflow of resources is not remote.
iii) Contingent Assets are neither recognized, nor disclosed.
Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.
1.13 Recognition of Income and Expenditure
Items of income and expenditure are recognized on accrual and prudent basis. Contract Revenue is recognized by reference to the stage of completion of the contract activity at the reporting date of the financial statements on the basis of percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date, to the total estimated contract costs. Expected loss, if any, on the construction/project related activity is recognized as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. While determining the amount of foreseeable loss, all elements of costs and related incidental income not included in contract revenue is taken into consideration. Dividends income is recognized when right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.
1.14 Taxes on Income
Income tax expense comprises current tax and deferred tax charge. Current tax is determined as the amount of tax payable in respect of taxable income for the year based on applicable tax rates and laws. Deferred tax is recognized 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. Deferred tax assets are recognized only if there is reasonable / virtual certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized. Such assets are reviewed as at each Balance Sheet date to reassess the reliability thereof. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefit in the form of tax credit against future income tax liability, is recognized in the Balance Sheet if there is convincing evidence to the effect that the Company will pay normal income tax during the specified period.
1.15 Leases
For assets acquired under Operating Lease, rentals payable are charged to Statement of Profit and Loss. Assets acquired under Finance Lease are capitalized at lower of the Fair Value and Present Value of Minimum Lease Payments. Lease income from operating leases is recognized in the Statement of Profit and Loss over the period of Lease.
1.16 Government Grants
Government Grants related to specific Tangible fixed assets are deducted from gross values of related assets in arriving at their book value. Government Grants related to revenue are recognized in Statement of Profit and Loss.
1.17 Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.
Mar 31, 2015
1. Basis of Accounting
These financial statements of the Company have been prepared to comply
in all material aspects with all the applicable accounting principles
in India (Indian GAAP), the applicable accounting standards as
prescribed under section 133 of the Companies Act, 2013, read with Rule
7 of the Companies (Accounts) Rules, 2014 and the relevant provisions
of the Companies Act, 2013, to the extent notified. The financial
statements has been prepared under the historical cost convention on an
accrual basis.
2. Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires judgements, estimates and assumptions to be made that affect
the reported amount of assets and liabilities, disclosure of contingent
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which the results are known/materialised.
3. Tangible Fixed Assets
Tangible fixed assets are stated at cost less accumulated depreciation
and cumulative impairment losses, if any. Cost includes duties, taxes,
incidental expenses, erection/commissioning expenses and borrowing cost
attributable to qualifying assets up to the date, the asset is put to
use. The cost of extension planting on cultivable land including cost
of development is capitalised.
4. Intangible Assets
Intangible assets are stated at cost less accumulated amortisation and
cumulative impairment losses, if any. Costs incurred on intangible
assets, resulting in future economic benefits are capitalised as
intangible assets.
5. Depreciation & Amortisation
a) Depreciation on tangible fixed assets is provided under Straight
Line Method at rates determined based on useful lives of the respective
assets and the residual values in accordance with Schedule II of the
Companies Act, 2013 or re- assessed by the Company based on technical
evaluation except in respect of the following where written down value
method is followed:
i) In respect of assets under Company's Engineering (MICCO) Division.
ii) In respect of Tea Division, assets acquired from Kothari
Plantations and Industries Limited amalgamated with the Company.
b) In respect of spares for specific machinery cost of such spare is
amortised over the useful lives of the related machinery as estimated
by the management.
c) Leasehold land is amortised over the lease period.
d) Computer software is amortised over a period of five years.
6. Impairment of Assets
The carrying amounts of fixed assets are reviewed at each balance sheet
date to determine, if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of the fixed assets of a cash generating unit
exceeds its recoverable amount. The impairment loss recognised in prior
accounting periods is reversed if there has been a change in the
estimate of the recoverable amount.
7. Investments
Long Term Investments are stated at cost with an appropriate provision
for diminution in value, other than temporary in nature, in the
valuation of long term investments. Current Investments are stated at
lower of cost and fair value. Gains/Losses on disposal of investments
are recognised as income/expenditure.
8. Foreign Currency Transactions
Transactions in foreign currencies are recognised at the rate existing
at the time of such transactions. Gain or Loss resulting from the
settlement of such transactions is recognised in the Statement of
Profit and Loss. At the Balance Sheet date, monetary items denominated
in foreign currency are translated at year-end rates or the forward
cover rates as applicable. The resultant translation differences, if
any, are recognised in the Statement of Profit and Loss.
9. Derivative Instruments
The Company uses forward exchange contracts to hedge its risks
associated with foreign currency fluctuations relating to the
underlying transactions, highly probable forecast transactions and firm
commitments. In respect of forwards exchange
contracts with underlying transactions, the premium or discount arising
at the inception of such contract is amortized as expense or income
over the life of contract. Other forwards exchange contracts
outstanding at the Balance Sheet date are marked to market and in case
of loss the same is provided for in the financial statements. Any
profit or losses arising on cancellation of forward exchange contracts
are recognised as income or expense for the period.
10. Inventories
Inventories are valued as under: -
a) Stores and Spare Parts - At cost (on weighted average basis)
or net realisable value whichever is
lower.
b) Raw Materials - At cost (on weighted average basis)
or net realisable value whichever is
lower.
c) Stock in Process - Is valued with material at lower of
weighted average cost and market rate
less estimated conversion cost.
d) Finished Goods / - For long term contracts, contract in
Stock in Trade / progress is valued at realisable
Contract in Progress value/ contractual rate and provision
for losses, as may be estimated for
completion thereof.
- Others - At cost or net realisable
value whichever is lower.
e) Waste / Scrap - Waste and Scrap are valued at
estimated realisable value.
11. Employee Benefits
a) Short Term Employee Benefits (i.e. benefits payable within one year)
are recognized in the period in which employee services are rendered.
b) Post-employment and other long term employee benefits are recognized
as an expense in the Statement of Profit and Loss for the year in which
the employee has rendered services. The expense is recognized at the
present value of the amounts payable determined using actuarial
valuation techniques.
c) Actuarial gains/losses arising under Defined Benefit Plans are
recognized immediately in the Statement of Profit and Loss as
income/expense for the year in which they occur.
12. Provisions, Contingent Liabilities and Contingent Assets
i) Provisions are recognised for liabilities that can be measured only
by using a substantial degree of estimation, if
a) the Company has a present obligation as a result of a past event;
b) a probable outflow of resources is expected to settle the
obligation; and
c) the amount of the obligation can be reasonably estimated.
ii) Reimbursement expected in respect of expenditure required to settle
a provision is recognised only when it is virtually certain that the
reimbursement will be received. Contingent liability is disclosed in
case of
a) present obligation arising from past events, when it is not probable
that an outflow of resources will be required to settle the obligation;
b) present obligation when no reliable estimate is possible; and
c) a possible obligation arising from past events where the probability
of outflow of resources is not remote.
iii) Contingent Assets are neither recognised, nor disclosed.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date.
13. Recognition of Income and Expenditure
Items of income and expenditure are recognised on accrual and prudent
basis. Contract Revenue is recognised by reference to the stage of
completion of the contract activity at the reporting date of the
financial statements on the basis of percentage of completion method.
Percentage of completion is the proportion of cost of work performed
to-date, to the total estimated contract costs. Expected loss, if any,
on the construction/project related activity is recognized as an
expense in the period in which it is foreseen, irrespective of the
stage of completion of the contract. While determining the amount of
foreseeable loss, all elements of costs and related incidental income
not included in contract revenue is taken into consideration.
Dividends income is recognised when right to receive is established.
Interest income is recognised on time proportion basis taking into
account the amount outstanding and rate applicable.
14. Taxes on Income
Income tax expense comprises current tax and deferred tax charge.
Current tax is determined as the amount of tax payable in respect of
taxable income for the year based on applicable tax rates and laws.
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.
Deferred tax assets are recognised only if there is reasonable /
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets will be realised.
Such assets are reviewed as at each Balance Sheet date to reassess the
realizability thereof. Deferred tax assets and liabilities are measured
using the tax rates and the tax laws that have been enacted or
substantively enacted by the Balance Sheet date.
15. Leases
For assets acquired under Operating Lease, rentals payable are charged
to Statement of Profit and Loss. Assets acquired under Finance Lease
are capitalised at lower of the Fair Value and Present Value of Minimum
Lease Payments. Lease income from operating leases is recognised in the
Statement of Profit and Loss over the period of Lease.
16. Government Grants
Government Grants related to specific Tangible fixed assets are
deducted from gross values of related assets in arriving at their book
value. Government Grants related to revenue are recognised in Statement
of Profit and Loss.
17. Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset are capitalised as part of cost of
such asset till such time the asset is ready for its intended use or
sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.
Mar 31, 2013
1.1 Basis of Accounting
These Financial Statements are 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 (the ''Act'') and the relevant provisions of the Act.
1.2 Tangible Fixed Assets
Fixed assets are started at cost less accumulated depreciation and
cumulative impairment losses, if any. Cost includes duties, taxes.
Incidental expenses, erection/commisioning expenses and borrowing cost
attributable to qualifying assets up to the date, the asset is put to
use. The cost of extension planting on cultivable land Including cost
of development is capitalised.
1.3 Intangible Assets
Costs incurred on intangible assets, resulting in future economic
benefits are capitalised as intangible assets, Intangible assets are
stated at cost less accumulated amortisation and cumulative impairment
losses, if any,
1.4 Depredation a Amortisation
a) Depredation is calculated Ii the manner and at applicable rates
specified in Schedule XIV of the Act under straight line method except
in respect of the following where written down value method is
followed;
i) In respect of assets under Company''s Engineering (MICCO) Division.
ii) In respect of Tea Division, assets acquired from Kothari
Plantations and Industries Limited amalgamated with the Company.
iii) In respect of Textile Division, the assets acquired before April,
2001 of GIS Cotton Mill Limited amalgamated with the Company.
b) In respect of spares for specific machinery cost of such spare is
amortised over the useful lives of the related machinery as estimated
by the management.
c) Leasehold land is amortised over the lease period.
d) Computer software is amortised over a period of five years.
1.5. Impairment or Assets
The carrying amounts of Fixed Assets are reviewed at each balance sheet
date to determine, if there is any indication of Impairment based on
internal/external factors. An Impairment loss is recognised wherever
the carrying amount of the fixed assets of a & cash generating unit
exceeds its net selling price or value in use whichever is higher
1.6 Investments
Long Term investments are stated at cost with an appropriate provision
for diminution in value, other than temporary in nature. In the
valuation of long term Investments. Current Investments are stated at
lower of cost and fair value. Gains/Losses on disposal of investments
are recognised as income/expenditure.
1.7 Foreign Currency Transactions
Transactions in foreign currencies are recognised at the rate existing
at the time of such transactions.Gain or Loss resulting from the
settlement of such transactions is reconised in the Statement of Profit
and Loss. At the Balance Sheet date, monetary items denominated in
foreign currency are translated at year-end rates or the forward cover
rates as applicable. The resultant translation differencec, if any, are
recognised in the Statement of Profit and Loss.
1.3 Derivative Instruments
The company uses forward exchange contracts to hedge its risks
associated with foreign currency fluctuations relating to the
underlying transactions, highly probable forecast transactions and firm
commitments. In respect of forwards exchange contracts with underlying
transactions, the premium or discount arising at the inception of such
contract is amortised as expens or income over the life of contract.
Ohter forwards exchange contracts outstanding at the Balance Sheet date
are marked to market and in case of loss the same is provided for in
the financial statement. Any profit or losses arising on cancellation
of forward exchange contracts are recognised as income or expense for
the period.
1.9 Inventories
Inventories are valued as under: -
a} Stores and Spars Parts - At cost (on weighted average basis) or net
realisable value whichever is lower.
b) Raw Materials - At cost (on weighted average base) or net realisable
value whichever is lower.
c) Stock In Process - Is valued with material at lower weighted average
cost and market rate less estimated conversion cost.
d) Finished Goods/Stock in Trade/ Contract in Progress - For long term
contracts, contract in progress is valued at realisable value and
provision for losses, as may be estimated for completion thereof.
- Others-At cost or net realisable value whichever is lower.
- Waste and Scrap are valued at estimated realisable value.
e) Waste/ Scrap - Waste and Scrap are valued at estimated realisable
value.
1. 10 Employee Benefits
a) Short Term Employee Benefits (I.e. benefits payable within one year)
are recognised In the period In which employee services are rendered.
b) Post-employment and other long term employee benefits are recognised
as an expense in the Statement of Profit and Loss for the year in which
the employee has rendered services. The expense is recognised at the
present value of the amounts payable determined using actuarial
valuation techniques.
c) Actuarial gains/losses arising under Defined Benefit Plans are
recognised Immediately in the Statement of Pofit and Loss as
income/expense for the year in which they occur.
1.11 Provisions, Contigent Liabilities and Contingent Assets
I) Provisions are recognised for labilities that can be measured only
by using a substantial degree of estimation, If
a) the Company has a present obligation as 3 result of a past event;
b) a probable outflow of resources is expected to settle the
obligation; and and
c) the amount of the obligation can be reasonably estimated.
ii) Reimbursement expected in respect of expenditure required to settle
a provision is reconised only when it is virtually certain that the
reimbursement will be received. Contingent liability is disclosed in
case of
a) present obligation arising from past events, when it is not probable
that an outflow of resources will be required to settle the obligation;
pgation;
b) present oblication when no reliable estimate is possible;and
c) a possible obligation arising from past events where the probability
of outflow of resources is not remote.
iii) Contingent Assets are neither recognised, nor disclosed.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date.
1.12 Recognition of Income and Expenditure
Items of income and expenditure are recognised on accrual and prudent
basis. Revenue from Construction Contracts is recognised based on the
percentage completion method stated on the basis of physical
measurement of work actually completed at the Balance Sheet date taking
into account the contractual price and revision thereto and related
liabilities. Dividends income is recognised when right to receive is
established. Interest income is recognised on time proportion basis
taking into account the amount outstanding and rate applicable.
1.13 Taxes on Income
Income tax expense- comprises current tax and deferred tax charge.
Current tax is determined as the amount of tax payable in resspect of
taxable income for the year based on applicable tax rates and laws.
Deffered 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.
Deferred tax assets are recognised only if there is reasonable /
virtual certainly that sufficient future taxable Income will be
available against which such deferred tax assets will be realised. Such
assets are reviewed as at each Balance Sheet date to reassess the
realizability thereof.
1.14 Leases
For assets acquired under Operating Lease, rentals payable are charged
to Statement of Prifit and Loss. Assets acquired under Finance Lease
are capitalised at lower of the Fair Value and Present Value of Minimum
Lease Payments. Lease income from operating leases is recognised in the
Statement of Profit and Loss over the period of Lease.
1.15 Government Grants
Government Grants related to specific Tangible fixed assets are
deducted from gross values or related assets in arriving at their, book
value. Government Grants related to revenue are recognised in Statement
of Profit and Loss.
1.16 Borrowing Costs
Borrowing costs out are attributable to the acquisition, construction
or production of a qualifying asset are capitalised at part of cost of
such asset till such time the asset is ready for its intended use or
sale. A qualifying asset is an asset that nesessarily requires a
substantial period of time to get ready for its Intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.
Mar 31, 2012
1.1 Basis of Accounting
These Financial Statements are 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 (the 'Act') and the relevant provisions of the Act.
1.2 Tangible Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
cumulative Impairment losses, if any. Cost includes duties, taxes,
incidental expenses, erection/commissioning expenses and borrowing cost
attributable to qualifying assets up to the date, the asset is put to
use. The cost of extension planting on cultivable land including cost
of development is capitalized.
1.3 Intangible Assets
Costs incurred on intangible assets, resulting in future economic
benefits are capitalized as intangible assets. Intangible assets are
stated at cost less accumulated amortization and accumulated impairment
loss, if any.
1.4 Depreciation & Amortization
a) Depreciation is calculated in the manner and at applicable rates
specified in Schedule XIV of the Companies Act, 1956 under straight
line method except in respect of the following where written down value
method is followed:
i) In respect of assets under Company's Engineering (MICCO) Division.
ii) In respect of Tea Division, assets acquired from Kothari
Plantations and Industries Limited amalgamated with the Company.
iii) In respect of Textile Division, the assets acquired before April,
2001 of GIS Cotton Mill Limited amalgamated with the Company.
b) In respect of spares for specific machinery cost of such spare is
amortized over the useful lives of the related machinery as estimated
by the management.
c) Leasehold land is amortized over the lease period.
d) Computer software is amortized over a period of five years.
1.5 Impairment of Assets
The carrying amounts of Fixed Assets are reviewed at each balance sheet
date to determine, if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of the fixed assets of a cash generating unit
exceeds its net selling price or value in use whichever is higher.
1.6 Investments
Long Term Investments are stated at cost with an appropriate provision
for diminution in value, other than temporary in nature, in the
valuation of long term investments. Current Investments are stated at
lower of cost and fair value. Gains/ Losses on disposal of investments
are recognized as income /expenditure.
1.7 Foreign Currency Transactions
Transactions in foreign currencies are recognized at the rate existing
at the time of such transactions. Gain or Loss resulting from the
settlement of such transactions is recognized in the Profit and Loss.
At the Balance Sheet date, monetary items denominated in foreign
currency are translated at year-end rates or the forward cover rates as
applicable. The resultant translation differences, if any, are
recognized in the Profit and Loss.
1.8 Inventories
Inventories are valued as under: -
a) Stores and Spare Parts - At cost (on weighted average basis) or net
realizable value whichever is lower.
b) Raw Materials - At cost (on weighted average basis) or net
realizable value whichever is lower.
c) Stock in Process - Is valued with material at lower of weighted
average cost and market rate and estimated conversion cost.
d) Stock in Trade / Contract in Progress - Tea - At cost or net
realizable value whichever is lower.
- For long term contracts, contract in progress is valued at realizable
value and provision for losses, as may be estimated for completion
thereof.
- Others - At cost or net realizable value whichever is lower.
e) Waste / Scrap - Waste and Scrap are valued at estimated realizable
value.
1.9 Employee Benefits
a) Short Term Employee Benefits (i.e. benefits payable within one year)
are recognized in the period in which employee services are rendered.
b) Post-employment and other long term employee benefits are recognized
as an expense in the Statement of Profit and Loss for the year in which
the employee has rendered services. The expense is recognized at the
present value of the amounts payable determined using actuarial
valuation techniques.
c) Actuarial gains/losses arising under Defined Benefit Plans are
recognized immediately in the Statement of Profit and Loss as
income/expense for the year in which they occur.
1.10 Provisions, Contingent Liabilities and Contingent Assets
i) Provisions are recognized for liabilities that can be measured only
by using a substantial degree of estimation, if
a) the Company has a present obligation as a result of a past event,
b) a probable outflow of resources is expected to settle the
obligation, and
c) the amount of the obligation can be reasonably estimated.
ii) Reimbursement expected in respect of expenditure required to settle
a provision is recognized only when it is virtually certain that the
reimbursement will be received. Contingent liability is disclosed in
case of
a) present obligation arising from past events, when it is not probable
that an outflow of resources will be required to settle the obligation;
b) present obligation when no reliable estimate is possible, and
c) a possible obligation arising from past events where the probability
of outflow of resources is not remote.
iii) Contingent Assets are neither recognized, nor disclosed.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date.
1.11 Recognition of Income and Expenditure
Items of income and expenditure are recognized on accrual and prudent
basis. Revenue from Construction Contracts is recognized based on the
percentage completion method stated on the basis of physical
measurement of work actually completed at the Balance Sheet date taking
into account the contractual price and revision thereto. Dividends
income is recognized when right to receive is established. Interest
income is recognized on time proportion basis taking into account the
amount outstanding and rate applicable.
1.12 Taxes on Income
Income tax expense comprises current tax and deferred tax charge.
Current tax is determined as the amount of tax payable in respect of
taxable income for the year based on applicable tax rates and laws.
Deferred tax is recognized 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.
Deferred tax assets are recognized only if there is reasonable /
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets will be realized. Such
assets are reviewed as at each Balance Sheet date to reassess the
reliability thereof.
1.13 Leases
For assets acquired under Operating lease, rentals payable are charged
to Statement Profit and Loss. Assets acquired under Finance Lease are
capitalized at lower of the Fair Value and Present Value of Minimum
Lease Payments. Lease income from operating leases is recognized in the
Statement Profit and Loss over the period of Lease.
1.14 Government Grants
Government Grants related to specific Tangible Fixed Assets are
deducted from gross values of related assets in arriving at their book
value. Government Grants related to revenue are recognized in Statement
of Profit and Loss.
1.15 Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset are capitalized as part of cost of
such asset till such time the asset is ready for its intended use or
sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
Mar 31, 2011
(a) These Financial Statements are 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 (the 'Act') and the relevant provisions of the Act.
(b) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
cumulative Impairment losses, if any. Cost includes duties, taxes,
incidental expenses, erection/commissioning expenses and borrowing cost
attributable to qualifying assets up to the date, the asset is put to
use. The cost of extension planting on cultivable land including cost
of development is capitalised.
In respect of spares for specific machinery cost of such spare is
amortised over the useful lives of the related machinery as estimated
by the management.
(c) Intangible Assets
Costs incurred on intangible assets, resulting in future economic
benefits are capitalized as intangible assets.
(d) Depreciation & Amortisation
Depreciation is calculated in the manner and at applicable rates
specified in Schedule XIV of the Companies Act, 1956 under straight
line method except in respect of the following where written down value
method is followed:
a) In case of Company's Engineering (MICCO) Division.
b) In respect of Tea Division assets transferred/acquired from Kothari
Plantations and Industries Limited.
c) In respect of the assets acquired before April, 2001 of GIS Cotton
Mill Limited amalgamated with the Company. Lease hold land is
amortised over the lease period.
Computer software is amortised over a period of five years.
(e) Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine, if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of the fixed assets of a cash generating unit
exceeds its net selling price or value in use whichever is higher.
(f) Investments
Long Term Investments are stated at cost with an appropriate provision
for diminution in value, other than temporary in nature, in the
valuation of long term investments. Current Investments are stated at
lower of cost and fair value. Gains/Losses on disposal of investments
are recognised as income/expenditure.
(g) Foreign Currency Transactions
Transactions in foreign currencies are recognised at the rate existing
at the time of such transactions. Gain or Loss resulting from the
settlement of such transactions is recognised in the Profit and Loss
Account. At the Balance Sheet date, monetary items denominated in
foreign currency are translated at year-end rates or the forward cover
rates as applicable. The resultant translation differences, if any, are
recognised in the profit and loss account.
(h) Inventories
Inventories are valued as under: -
i) Stores and Spare Parts - At cost (on weighted average basis) or net
realisable value whichever is lower.
ii) Raw Materials - At cost (on weighted average basis) or net
realisable value whichever is lower.
iii) Stock-in-Process
Is valued with material at lower of weighted average cost and market
rate and estimated conversion cost.
iv) Stock-in-Trade/Contract-in- Progress
Tea à At cost or net realisable value whichever is lower.
For long term contracts, contract in progress is valued at realisable
value and provision for losses, as may be estimated for completion
thereof.
Others à At cost or net realisable value whichever is lower.
v) Waste / Scrap - Waste and Scrap are valued at estimated realisable
value.
(i) Employee Benefits
Short Term Employee Benefits (i.e. benefits payable within one year)
are recognized in the period in which employee services are rendered.
Contributions to Defined Contribution schemes such as Provident Fund,
etc. are charged to the Profit and Loss Account as incurred. In respect
of certain employees, Provident Fund contributions are made to Trust
Funds administered by the Company. The interest rate payable to the
members of the Fund shall not be lower than the statutory rate of
interest declared by the Central Government under the Employees
Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall,
if any, shall be made good by the Company. The remaining contributions
are made to a government administered Provident Fund towards which the
company has no further obligations beyond its monthly contribution.
Contribution under Employee's Pension Scheme is made as per statutory
requirements and charged as expenses for the year.
The Company provides for gratuity and leave encashment (Defined Benefit
plans) based on year end actuarial valuation.
Actuarial gains/losses arising under Defined Benefit Plans are
recognised immediately in the Profit and Loss Account as income/expense
for the year in which they occur.
(j) Provisions, Contingent Liabilities and Contingent Assets
i) Provisions are recognised for liabilities that can be measured only
by using a substantial degree of estimation, if
a) the Company has a present obligation as a result of a past event,
b) a probable outflow of resources is expected to settle the
obligation, and
c) the amount of the obligation can be reasonably estimated.
ii) Reimbursement expected in respect of expenditure required to settle
a provision is recognised only when it is virtually certain that the
reimbursement will be received. Contingent liability is disclosed in
case of
a) present obligation arising from past events, when it is not probable
that an outflow of resources will be required to settle the obligation;
b) present obligation when no reliable estimate is possible, and
c) a possible obligation arising from past events where the probability
of outflow of resources is not remote.
iii) Contingent Assets are neither recognised, nor disclosed.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date.
(k) Recognition of Income and Expenditure
Items of income and expenditure are recognised on accrual and prudent
basis. Revenue from Construction Contracts is recognised based on the
percentage completion method stated on the basis of physical
measurement of work actually completed at the Balance Sheet date taking
into account the contractual price and revision thereto. Dividends are
accounted for to the extent declared within the accounting year.
(l) Taxes on Income
Income tax expense comprises current tax and deferred tax charge.
Current tax is determined as the amount of tax payable in respect of
taxable income for the year based on applicable tax rates and laws.
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.
Deferred tax assets are recognised only if there is reasonable /
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets will be realised. Such
assets are reviewed as at each Balance Sheet date to reassess the
realisability thereof.
(m) Leases
For assets acquired under Operating lease, rentals payable are charged
to Profit and Loss Account. Assets acquired under Finance Lease are
capitalised at lower of the Fair Value and Present Value of Minimum
Lease Payments. Lease income from operating leases is recognised in the
Profit and Loss Account over the period of Lease.
(n) Government Grants
Government Grants related to specific fixed assets are deducted from
gross values of related assets in arriving at their book value.
Government Grants related to revenue are recognised in Profit and Loss
Account.
(o) Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset are capitalised as part of cost of
such asset till such time as the asset is ready for its intended use or
sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.
Mar 31, 2010
(a) These Financial Statements are 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 (the Act) and the relevant provisions of the Act.
(b) Fixed Assets
Fixed Assets are carried at cost of acquisition. Cost includes duties,
taxes, incidental expenses, erection/commissioning expenses and
borrowing cost attributable to qualifying assets up to the date, the
asset is put to use. The cost of extension planting on cultivable land
including cost of development is capitalised. An impairment loss is
recognised wherever the carrying amount of the fixed asset of a cash
generating unit exceeds its net selling price or value in use whichever
is higher.
(c) Depreciation
Depreciation is calculated in the manner and at applicable rates
specified in Schedule XIV of the Companies Act, 1956 under straight
line method except in respect of the following where written down value
method is followed:
a) In case of Companys Engineering (MICCO) Division.
b) In respect of Tea Division transferred/acquired from Kothari
Plantations and Industries Limited.
c) In respect of the assets acquired before April, 2001 of GIS Cotton
Mill Limited amalgamated with the Company. Lease hold land is
amortised over the lease period.
Computer software is amortised over a period of five years.
(d) Investments
Long Term Investments are stated at cost with an appropriate provision
for diminution in value, Other than temporary in nature, in the
valuation of Long Term Investments, Current Investment are stated at
lower of cost and fair value. Gains/Losses on disposal of investments
are recognised as income/expenditure. Dividends are accounted for to
the extent declared within the accounting year.
(e) Foreign Currency Transactions
Transactions in foreign currencies are recognised at the rate existing
at the time of such transactions. Gain or Loss resulting from the
settlement of such transactions are recognised in the Profit and Loss
Account. Year end balances of monetary items are translated at year-end
rates or the forward cover rates as applicable. The resultant
translation differences, if any, are recognised in the Profit and Loss
Account.
(f) Inventories
Inventories are valued as under: -
i) Stores and Spare Parts
- At cost (on weighted average basis) or net realisable value
whichever is lower. In respect of spares for specific machinery
cost of such spare is amortised over the useful lives of the
related machinery as estimated by the management.
ii) Raw Materials - At cost (on weighted average basis) or net
realisable value whichever is lower.
iii) Stock in Process - Is valued with material at lower of weighted
average cost and market rate and estimated conversion cost.
iv) Stock in Trade/Contract in Progress - Tea à At cost or net
realisable value whichever is lower.
- For long term contracts, contract in progress is valued at realisable
value and provision for losses, as may be estimated for completion
thereof.
- Others à At cost or net realisable value whichever is lower. v)
Waste / Scrap - Waste and Scrap are valued at estimated realisable
value.
(g) Employee Benefits
Short Term Employee Benefits (i.e. benefits payable within one year)
are recognized in the period in which employee services are rendered.
Contributions to Defined Contribution schemes such as Provident Fund,
etc. are charged to the Profit and Loss Account as incurred. In respect
of certain employees, Provident Fund contributions are made to Trust
Funds administered by the Company. The interest rate payable to the
members of the Fund shall not be lower than the statutory rate of
interest declared by the Central Government under the Employees
Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall,
if any, shall be made good by the Company. The remaining contributions
are made to a government administered Provident Fund towards which the
company has no further obligations beyond its monthly contribution.
Contribution under Employees Pension Scheme is made as per statutory
requirements and charged as expenses for the year.
The Company provides for gratuity and leave encashment (Defined Benefit
Plans) based on year end actuarial valuation.
Actuarial gains/losses arising under Defined Benefit Plans are
recognised immediately in the Profit and Loss Account as income/expense
for the year in which they occur.
(h) Provisions, Contingent Liabilities and Contingent Assets
i) Provisions are recognised for liabilities that can be measured only
by using a substantial degree of estimation, if
a) the Company has a present obligation as a result of a past event,
b) a probable outflow of resources is expected to settle the
obligation, and
c) the amount of the obligation can be reasonably estimated. ii)
Reimbursement expected in respect of expenditure required to settle a
provision is recognised only when it is
virtually certain that the reimbursement will be received. Contingent
liability is disclosed in case of
a) present obligation arising from past events, when it is not probable
that an outflow of resources will be required to settle the obligation,
b) present obligation when no reliable estimate is possible, and
c) a possible obligation arising from past events where the probability
of outflow of resources is not remote. iii) Contingent Assets are
neither recognised, nor disclosed. Provisions, Contingent Liabilities
and Contingent Assets are reviewed at each Balance Sheet date.
(i) Recognition of Income and Expenditure
Items of income and expenditure are recognised on accrual and prudent
basis. Revenue from Construction Contracts is recognised based on the
percentage completion method stated on the basis of physical
measurement of work actually completed at the Balance Sheet date taking
into account the contractual price and revision thereto.
(j) Taxes on Income
Income tax expense comprises current tax and deferred tax charge.
Current tax is determined as the amount of tax payable in respect of
taxable income for the year based on applicable tax rates and Laws.
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.
Deferred tax assets are recognised only if there is reasonable /
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets will be realised. Such
assets are reviewed as at each Balance Sheet date to reassess the
realisability thereof.
(k) Leases
For assets acquired under Operating Lease, rentals payable are charged
to Profit and Loss Account. Assets acquired under Finance Lease are
capitalised at lower of the Fair Value and Present Value of Minimum
Lease Payments. Lease income from operating leases is recognised in the
Profit and Loss Account over the period of Lease.
(l) Government Grants
Government Grants related to specific fixed assets are deducted from
gross values of related assets in arriving at their book value.
Government Grants related to revenue are recognised in Profit and Loss
Account.
(m) Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset are capitalised as part of cost of
such asset till such time as the asset is ready for its intended use or
sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in
which they are incurred.
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