Mar 31, 2023
1.1 COMPANY INFORMATION
Gujarat Ambuja Exports Limited (Company) is a Public Limited Company domiciled in India. The Company has its registered office at "Ambuja Tower", Opp. Sindhu Bhavan, Sindhu Bhavan Road, Bodakdev, PO Thaltej, Ahmedabad, Gujarat, 380059. The Company is an Agro Processing conglomerate with various manufacturing plants at different locations in States of Gujarat, Maharashtra, Madhya Pradesh, Uttarakhand, Karnataka and West Bengal. The Companyâs product profile includes Solvent Extraction comprising of all types of Oil Seed Processing, Edible Oil Refining, Spinning, Maize based Starch and its derivatives, Wheat Processing / Cattle Feed and Power Generation through Wind Mills, Bio gas, Thermal Power & Solar Plant mainly for internal consumption. The Companyâs shares are listed on BSE and NSE.
The Board of directors approved the standalone financials statements for the year ended March 31, 2023 and authorised for issue on May 06, 2023.
1.2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS(i) Compliance with Ind-AS
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) including the Companies (Indian Accounting Standards) Amendment Rules,2019.
The financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(ii) Current versus Non-Current Classification
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that
require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 1.3. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of the changes in circumstances surrounding the estimates.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
(iii) In addition the financial statements are prepared in INR and values are rounded to the nearest crores except when otherwise indicated.
1.3 CRITICAL ESTIMATES AND JUDGMENTS
The preparation of financial statements requires the use of accounting estimates which by definition will seldom equal the actual results. Management also need to exercise judgment in applying the Companyâs accounting policies.
This note provides an overview of the areas that involved a higher degree of judgment or complexity, and items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgment are: Government grant - refer note 1.6 Estimation of current tax expenses - refer note 1.7 Estimation of Defined benefit obligation - refer note 1.15
The Company measures financial instruments, such as, derivatives at fair value as per Ind AS 113 at each balance sheet date. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
? Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
? Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
? Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
The Company earns revenue primarily from sale of maize starch and derivatives, raw and refined soya oil, and soya de-oiled cake .The Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation.
The transaction price of goods sold is net of variable consideration on account of various discounts offered by the Company as the part of contract. Revenue (net of variable consideration) is recognised only to the extent that is highly probable that amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
GST is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognised.
Revenue from the sale of goods is recognised when control of the goods have passed to the buyer, usually on delivery of the goods. In determining the transaction price for the sale of goods, the Company considers the effects of variable consideration, the existence of significant financing components, non cash consideration, and consideration payable to the customer (if any).
Interest income on financial asset is recognised using the effective interest rate (EIR) method.
Dividends
Dividend income from investment is accounted for when the right to receive is established, which is generally when shareholders approve the dividend.
Other income is recognised when no significant uncertainty as to its determination or realisation exists.
Contract Balances:
Trade Receivables:
A receivable represents the Companyâs right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer note 1.16 Financial instruments - initial recognition and subsequent measurement.
Contract Liabilities:
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Revenue for the same is recognised when the Company performs under the contract.
a Government grants are recognised in accordance with the terms of the respective grant on accrual basis considering the status of compliance of prescribed conditions and ascertainment that the grant will be received.
b Government grants related to revenue are
recognised on a systematic and gross basis in the Statement of Profit and Loss over the period during which the related costs intended to be compensated are incurred.
c Government grants related to assets are
recognised as income in equal amounts over the expected useful life of the related asset.
d When the Company receives grants of nonmonetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual installments.
Tax expense comprises of current tax and deferred tax.
a Current tax is measured at the amount expected to be paid on the basis of reliefs and deductions available in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
b Current tax items are recognised in correlation to the underlying transaction either in Profit and Loss, Other Comprehensive Income or directly in equity.
a Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
b Deferred tax liabilities are recognised for all taxable temporary differences.
c Deferred tax assets are recognised for all deductible temporary differences, the carry forward of any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax losses can be utilised.
d The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
e Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates [and tax laws] that have been enacted or substantively enacted at the reporting date.
f Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
g Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
1.8 Property, Plant and Equipment (PPE)
Property, Plant and Equipment (PPE) (including Capital work in progress) are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price, borrowing costs, if capitalisation criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use.
Capital Work in progress included in PPE is stated at cost, net accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term constructions projects if the recognition criteria is met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
Borrowing cost relating to acquisition/construction of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013 except for the assets mentioned below for which useful lives estimated by the management. The identified component of fixed assets are depreciated over the useful lives and the remaining components are depreciated over the life of the principal assets.
I n respect of Power Plant, Biogas Engines and Solar Plants, the Company based on technical evaluation, identified the assets and components and reassessed the remaining useful lives of tangible fixed assets and depreciation is provided accordingly.
The following is the useful life of each category of assets in respect of Power Plant, Biogas Engines and solar plant:
Asset Description |
Life of Asset (Years) |
Plant and Machineries of Thermal Power Plant |
3 to 25 years |
Solar Plant |
25 years |
Biogas Engines |
10 years |
Further, the Company evaluated the useful life of certain components of Plant and Machinery, the impact of which is not material.
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Further, the Company evaluated the useful life of certain components of Plant and Machinery, the impact of which is not material. Assets costing '' 5,000 or less are fully depreciated in the year of purchase. Leasehold land is amortised over the period of lease. Leasehold improvements are amortised over the period of lease or estimated useful life, whichever is lower.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit and loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expenses on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of Profit or Loss when the asset is derecognised.
Useful lives of intangible assets |
|
Asset Description |
Life of Asset |
(Years) |
|
Trade Mark |
10 years |
Computer Software |
10 years |
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
General borrowing costs are capitalised at the weighted average of such borrowings outstanding during the year.
Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Companyâs operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Company as a lessee:
The Company recognises 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 remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct cost incurred and Lease payment 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 the lease term and the estimated useful lives of the assets is over the balance period of lease agreement. 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 Note No.2.2 )
a. At the commencement date of the lease, the Company recognises 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 recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
b. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date. 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 remeasured 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.
3. Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (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). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term. ( Refer Note No. 2.2 )"
Inventories are valued as under:
a RAW MATERIALS, PACKING MATERIALS AND STORES & SPARES :
Valued at lower of cost or net realisable value and for this purpose cost is determined on weighted average basis. Due provision for obsolescence is made.
b FINISHED GOODS & WORK IN PROGRESS :
At cost or net realisable value, whichever is lower. Cost is determined on absorption basis. Due provision for obsolescence is made.
At net realisable value
Valued at lower of cost or net realisable value and for this purpose cost is determined on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
1.13 IMPAIRMENT OF FINANCIAL ASSETS & NONFINANCIAL ASSETSa Financial Assets
The Company recognises loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or
loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECL (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in the Statement of Profit and Loss.
Intangible assets and Property, Plant and Equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.
I f such assets are considered to be impaired, the impairment to be recognised in the Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior year.
Impairment is determined for goodwill by assessing the recoverable amount of each Cash Generating Unit (i.e. CGU) (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at year end at the
CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
1.14PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
a Provisions are recognised when the Company has present obligation (legal or constructive) as a result of past events, for which 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 for the amount of the obligation.
Contingent Liabilities are disclosed by way of notes to Financial Statements. Contingent assets are not recognised in the financial statements but are disclosed in the notes to the financial statements where an inflow of economic benefits is probable. Provisions and contingent liabilities are reviewed at each Balance Sheet date.
b If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability.
1.15EMPLOYEE BENEFITSa Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences etc., and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related service.
i) Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans.
The contribution paid / payable under the schemes is recognised during the period in which the employees render the related services.
The Employee''s Gratuity Fund Scheme and compensated absences is Company''s defined benefit plans. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation
using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on Government Securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.
For defined benefit plans, the amount recognised as ''Employee benefit expensesâ in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognised immediately in rate to the net defined benefit liability or asset is charged or credited to ''Finance costsâ in the Statement of Profit and Loss. Any differences between the interest income on plan assets and the return actually achieved and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in ''Other comprehensive incomeâ and subsequently not reclassified to the Statement of Profit and Loss.
All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Companyâs net obligation into current and non-current is as per the actuarial valuation report.
In case of funded plans, the fair value of the plan assets is reduced from the gross obligations under the defined benefit plans, to recognise the obligation on net basis.
Gains or losses on the curtailment or settlement of any defined benefits plans are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested.
c Long Term Employee Benefits:
The employeesâ long term compensated absences are Companyâs defined benefit plans. The present value of the obligation is determined based on the actuarial valuation using the projected unit credit method as at the date of the balance sheet. In case of funded plans, the full value of plan assets is reduced from the gross obligation to recognise the obligation on the net basis.
1.16FINANCIAL INSTRUMENTSInitial Recognition and Measurement:
The Company recognises a financial asset in its balance sheet when it becomes party to the contractual provisions of the instrument. All financial assets are recognised initially at fair value, plus in the case of financial assets not recorded at fair value through profit or loss (FVTPL), transaction cost that are attributable to the acquisition of the financial asset.
Where the fair value of a financial asset at initial recognition is different from its transaction price, the difference between the fair value and the transaction price is recognised as a gain or loss in the Statement of Profit and Loss at initial recognition if the fair value is determined through a quoted market price in an active market for an identical asset (i.e. level 1 input) or through a valuation technique that users data from observable markets (i.e. level 2 input).
I n case the fair value in not determined using a level 1 or level 2 inputs as mentioned above, the difference between the fair value and transaction price is deferred appropriately and recognised as a gain in the Statement of Profit and Loss only to the extent the such gain or loss arises due to a change in factor that market participants take into account when pricing the financial asset.
However trade receivables that do not contain a significant financing component are measured at transaction price.
Investments and other financial assets (i) Classification
The Company classifies its financial assets in the following measurement categories:
(1) those to be measured subsequently at fair value (either through other comprehensive income or through the Statement of Profit and Loss), and
(2) those measured at amortised cost.
The classification depends on the Companyâs business model for managing the financial assets and the contractual terms of the cash flows.
At initial recognition, the Company measures a financial asset at its fair value. Transaction costs of financial assets carried at fair value through the Profit and Loss are expensed in the Statement of Profit and Loss.
Derivative Financial Instruments
Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as forward currency contracts its foreign currency risks. Such derivative financial instrument recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as Financial liabilities when the fair value is negative.
Any gain & losses arising from the change in Fair Value of Derivative are taken directly to Profit & Loss Account
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments into following categories:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in other income using the effective interest rate method.
(2) Fair value through other comprehensive Income:
Assets that do not meet the criteria for amortised cost are measured at fair value through Other Comprehensive Income. Interest income from these financial assets is included in other income.
The Company measures its equity investment other than in subsidiaries, joint ventures and associates at fair value through profit and loss. However where the Companyâs management makes an irrevocable choice on initial recognition to present fair value gains and losses on
specific equity investments in other comprehensive income (Currently no such choice made), there is no subsequent reclassification, on sale or otherwise, of fair value gains and losses to the Statement of Profit and Loss.
Equity Investments in subsidiary
Investments in subsidiaries are measured at cost as per Ind AS 27 - Separate Financial Statements. All equity investments in scope of Ind AS 109 are measured at fair value. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income or FVTPL 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 its irrevocable"
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised (i.e. removed from the Companyâs balance sheet) when any of the following occurs:
i. The contractual rights to cash flows from the financial asset expires;
ii. The Company transfers its contractual rights to received cash flows of the financial assets and has substantially transferred all the risk and rewards of ownership of the financial assets;
iii. The Company retains the contractual rights to receive cash flows but assumes a contractual obligations to pay the cash flows without material delay to one or more recipients under a ''passthroughâ arrangement (thereby substantially transferring all the risks and rewards of ownership of the financial asset);
iv. The Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain control over the financial asset.
I n cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but retains control of the financial assets, the Company continues to recognise such financial asset to the extent of its continuing involvement in the financial asset. In that case, the Company also recognises an associated liability. The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On De-recognition of a financial asset (except as mentioned in ii above for financial assets measured a
FVTOCI), the difference between the carrying amount and the consideration received is recognised in the Statement of Profit and Loss.
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit and loss. Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
1.17 CASH AND CASH EQUIVALENTS
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
Statement of Cash Flows is prepared segregating the cash flows into operating, investing and financing activities. Cash flow from operating activities is reported using indirect method adjusting the net profit for the effects of:
i. changes during the period in inventories and operating receivables and payables, transactions of a non-cash nature;
ii. non-cash items such as depreciation, provisions, and unrealised foreign currency gains and losses etc.; and
iii. all other items for which the cash effects are investing or financing cash flows
1.19 NON-CURRENT ASSETS CLASSIFED AS HELD FOR SALE
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one year from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell. Such Non-current assets which are classified as held for sale are not depreciated or amortised from the date when such assets are classified as held for sale.
1.20 KEY ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the Companyâs Financial Statements requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Critical Accounting Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
The Companyâs tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (Refer note 17).
B. Property, Plant and Equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Companyâs assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.
The costs of providing pensions and other postemployment benefits are charged to the Statement of Profit and Loss in accordance with IND AS 19 ''Employee benefitsâ over the period during which benefit is derived from the employeesâ services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 39, ''Employee benefitsâ.
D. 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, which involve various judgments and assumptions.
1.21 RECENT ACCOUNTING PRONOUNCEMENTS ISSUED BUT NOT YET EFFECTIVE
In March 2023, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards)
Amendment Rules, 2023 which amended certain Ind AS
as explained below:
a. Ind AS 1 - Presentation of Financial Statements
- the amendment prescribes disclosure of material accounting policies instead of significant accounting policies. The impact of the amendment on the Financial Statements is expected to be insignificant basis the preliminary evaluation.
b. Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - the
amendment added definition of accounting estimate and clarifies what is accounting estimate and treatment of change in the accounting estimate and accounting policy. There is no impact of the amendment on the Financial Statements basis the preliminary evaluation.
c. Ind AS 12 - Income taxes - the definition of deferred tax asset and deferred tax liability is amended to apply initial recognition exception on assets and liabilities that does not give rise to equal taxable and deductible temporary differences. There is no impact of the amendment on the Financial Statements basis the preliminary evaluation. The above amendments are effective from annual periods beginning on or after April 01,2023.
Mar 31, 2022
CT SIGNIFICANT ACCOUNTING POLICIES1.1 Company Information
Gujarat Ambuja Exports Limited (Company) is a Public Limited Company domiciled in India. The Company has its registered office at "Ambuja Towerâ, Opp. Sindhu Bhavan, Sindhu Bhavan Road, Bodakdev, PO Thaltej, Ahmedabad, Gujarat 380059.The Company is an Agro Processing conglomerate with various manufacturing plants at different locations in States of Gujarat, Maharashtra, Madhya Pradesh, Uttarakhand and Karnataka. The Company''s product profile includes Solvent Extraction comprising of all types of Oil Seed Processing, Edible Oil Refining, Cotton Yarn Spinning, Maize based Starch and its derivatives, Wheat Processing / Cattle Feed and Power Generation through Wind Mills, Bio gas, Thermal Power & Solar Plant mainly for internal consumption. The Company''s shares are listed on BSE and NSE.
The Board of directors approved the standalone financials statements for the year ended March 31,2022 and authorised for issue on May 28, 2022.
1.2 Basis of Preparation of Financial Statements
(i) Compliance with Ind-AS
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) including the Companies (Indian Accounting Standards) Amendment Rules,2019. The financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values. Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(ii) Current versus Non-Current Classification
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of
assumptions in these financial statements have been disclosed in Note 1.3. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of the changes in circumstances surrounding the estimates.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
(iii) In addition the financial statements are prepared in INR and values are rounded to the nearest crores except when otherwise indicated.
1.3 Critical Estimates and Judgments
The preparation of financial statements requires the use of accounting estimates which by definition will seldom equal the actual results. Management also need to exercise judgment in applying the Company''s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgment or complexity, and items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgment are: Government grant - refer note 1.6 Estimation of current tax expenses - refer note 1.7 Estimation of Defined benefit obligation - refer note 1.15
The Company measures financial instruments, such as, derivatives at fair value as per Ind AS 113 at each balance sheet date. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level 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 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
? Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
The Company earns revenue primarily from sale of raw and refined soya oil, soya de-oiled cake and maize starch and derivatives.The Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction Contracts. The Company has adopted Ind AS 115 using the cumulative effect method. The effect of initially applying this standard is recognised at the date of initial application (i.e. April 1, 2018). The standard is applied retrospectively only to contracts that are not completed as at the date of initial application and the comparative information in the statement of profit and loss is not restated - i.e. the comparative information continues to be reported under Ind AS 18 and Ind AS 11. The impact of adoption of the standard on the financial statements of the Company is insignificant.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
GST is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognised.
Sale of goods
Revenue from the sale of goods is recognised when control of the goods have passed to the buyer, usually on delivery of the goods. In determining the transaction price for the sale of goods, the Company considers the effects of variable consideration, the existence of significant financing components, non cash consideration, and consideration payable to the customer (if any).
Interest income on financial asset is recognised using the effective interest rate (EIR) method.
Dividend income from investment is accounted for when the right to receive is established, which is generally when shareholders approve the dividend.
Other income is recognised when no significant uncertainty as to its determination or realisation exists.
Contract Balances:Trade Receivables:
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer note 1.16 Financial instruments - initial recognition and subsequent measurement.''
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). recognised as revenue when the Company performs under the contract.
a Government grants are recognised in accordance with the terms of the respective grant on accrual basis considering the status of compliance of prescribed conditions and ascertainment that the grant will be received.
b Government grants related to revenue are
recognised on a systematic and gross basis in the Statement of Profit and Loss over the period during which the related costs intended to be compensated are incurred.
c Government grants related to assets are recognised as income in equal amounts over the expected useful life of the related asset. d When the Company receives grants of non
monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset
i.e. by equal annual installments.
Tax expenses comprise of current and deferred tax. Current income tax
a Current tax is measured at the amount expected to be paid on the basis of reliefs and deductions available in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
b Current tax items are recognised in correlation to the underlying transaction either in Profit and Loss, Other Comprehensive Income or directly in equity. Deferred Tax
a Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
b Deferred tax liabilities are recognised for all taxable temporary differences.
c Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilised.
d The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. e Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates [and tax laws] that have been enacted or substantively enacted at the reporting date.
f Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
g Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
1.8 Property, Plant and Equipment (PPE)
Under the previous GAAP (Indian GAAP), fixed assets (including Capital work in progress) are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price, borrowing costs, if capitalisation criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use. The Company has elected to regard previous GAAP carrying values of property as deemed cost at the date of transition to Ind AS.
Capital Work in progress included in PPE is stated at cost, net accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term constructions projects if the recognition criteria is met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
The net gain or loss on account of exchange rate differences either on settlement or on translation, of long term foreign currency monetary items recognised on or after April 1, 2016, is recognised as income or expense in the Statement of Profit and Loss in the year in which they arise, except in case of foreign currency loans taken for funding of Property, Plant and Equipment, where such difference is adjusted to the cost of respective Property, Plant and Equipment. This is as per the exemption given under Ind AS 101 to defer/ capitalise exchange differences arising on long-term foreign currency monetary items.
Borrowing cost relating to acquisition/construction of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013 except for the assets mentioned below for which useful lives estimated by the management. The identified component of fixed assets are depreciated over the useful lives and the remaining components are depreciated over the life of the principal assets.
In respect of Power Plant and Biogas Engines, the Company based on technical evaluation, identified the assets and components and reassessed the remaining useful lives of tangible fixed assets and depreciation is provided accordingly.
The following is the useful life of each category of assets in respect of Power Plant and Biogas Engines:
Asset Description |
Life of Asset (Years) |
Plant and Machineries of Thermal Power Plant |
3 to 25 years |
Biogas Engines |
10 years |
Further, the Company evaluated the useful life of certain components of Plant and Machinery, the impact of which is not material.
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used. Further, the Company evaluated the useful life of certain components of Plant and Machinery, the impact of which is not material. Assets costing '' 5,000 or less are fully depreciated in the year of purchase. Leasehold land is amortised over the period of lease. Leasehold improvements are amortised over the period of lease or estimated useful life, whichever is lower.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit and loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expenses on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of Profit or Loss when the asset is derecognised.
The Company has elected to regard previous GAAP carrying value of Intangible Assets as deemed cost at the date of transition to Ind AS.
Useful lives of intangible assets
Asset Description |
Life of Asset (Years) |
Trade Mark |
10 years |
Computer Software |
10 years |
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. General borrowing costs are capitalised at the weighted average of such borrowings outstanding during the year.
Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Company''s operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Company as a lessee:
The Company recognises 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 remeasurement of lease liabilities the cost of right-of-use assets includes the amount of lease liabilities recognised initial direct cost incurred and Lease payment 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 the lease term and the estimated useful lives of the assets is over the balance period of lease agreement 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 Note No.2.2 )
a. At the commencement date of the lease, the Company recognises 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 recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
b. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date . 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 remeasured 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.
3. Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (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). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term. ( Refer Note No. 2.2 )
Inventories are valued as under: a RAW MATERIALS, PACKING MATERIALS AND STORES & SPARES
Valued at lower of cost or net realisable value and for this purpose cost is determined on weighted average basis. Due provision for obsolescence is made.
b FINISHED GOODS & WORK IN PROGRESS :
At cost or net realisable value, whichever is lower. Cost is determined on absorption basis. Due provision for obsolescence is made.
At net realisable value d STOCK-IN-TRADE :
Valued at lower of cost or net realisable value and for this purpose cost is determined on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
1.13 Impairment of Financial Assets & Non-Financial Assetsa Financial Assets
The Company recognises loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECL (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in the Statement of Profit and Loss.
Intangible assets and Property, Plant and Equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognised in the Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior year.
Impairment is determined for goodwill by assessing the recoverable amount of each Cash Generating Unit (i.e. CGU) (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at year end at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
1.14 Provisions, Contingent Liabilities and Contingent
Assets
a Provisions are recognised when the Company has present obligation (legal or constructive) as a result of past events, for which 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 for the amount of the obligation.
Contingent Liabilities are disclosed by way of notes to Financial Statements. Contingent assets are not recognised in the financial statements but are disclosed in the notes to the financial statements where an inflow of economic benefits is probable. Provisions and contingent liabilities are reviewed at each Balance Sheet date.
b If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability.
a Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences etc., and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related service. b Post-Employment Benefits:
i) Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans.
The contribution paid / payable under the schemes is recognised during the period in which the employees render the related services.
ii) Defined Benefit Plans:
The Employee''s Gratuity Fund Scheme and compensated absences is Company''s defined benefit plans. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on Government Securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.
For defined benefit plans, the amount recognised as ''Employee benefit expenses'' in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognised immediately in rate to the net defined benefit liability or asset is charged or credited to ''Finance costs'' in the Statement
of Profit and Loss. Any differences between the interest income on plan assets and the return actually achieved and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in ''Other comprehensive income'' and subsequently not reclassified to the Statement of Profit and Loss.
All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company''s net obligation into current and non-current is as per the actuarial valuation report.
In case of funded plans, the fair value of the plan assets is reduced from the gross obligations under the defined benefit plans, to recognise the obligation on net basis.
Gains or losses on the curtailment or settlement of any defined benefits plans are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested.
c Long Term Employee Benefits:
The employees'' long term compensated absences are Company''s defined benefit plans. The present value of the obligation is determined based on the actuarial valuation using the projected unit credit method as at the date of the balance sheet. In case of funded plans, the full value of plan assets is reduced from the gross obligation to recognise the obligation on the net basis.
Initial Recognition and Measurement:
The Company recognises a financial asset in its balance sheet when it becomes party to the contractual provisions of the instrument. All financial assets are recognised initially at fair value, plus in the case of financial assets not recorded at fair value through profit or loss(FVTPL), transaction cost that are attributable to the acquisition of the financial asset.
In case the fair value in not determined using a level 1 or level 2 inputs as mentioned above, the difference between the fair value and transaction price is deferred appropriately and recognised as a gain in the Statement of Profit and Loss only to the extent the such gain or loss arises due to a change in factor that market participants take into account when pricing the financial asset.
However trade receivables that do not contain a significant financing component are measured at transaction price.
Investments and other financial assets
(i) Classification
The Company classifies its financial assets in the following measurement categories:
(1) those to be measured subsequently at fair value (either through other comprehensive income or through the Statement of Profit and Loss), and
(2) those measured at amortised cost.
The classification depends on the Company''s business model for managing the financial assets and the contractual terms of the cash flows.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value. Transaction costs of financial assets carried at fair value through the Profit and Loss are expensed in the Statement of Profit and Loss.
Derivative Financial Instruments
Initial recognition and subsequent measurement The Company uses derivative financial instruments, such as forward currency contracts its foreign currency risks. Such derivative financial instrument recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as Financial liabilities when the fair value is negative.
Any gain & losses arising from the change in Fair Value of Derivative are taken directly to Profit & Loss Account
Debt instruments:
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments into following categories:
(1) Amortised cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in other income using the effective interest rate method.
(2) Fair value through other comprehensive Income:
Assets that do not meet the criteria for amortised cost are measured at fair value through Other Comprehensive Income. Interest income from these financial assets is included in other income.
Equity Instruments:
The Company measures its equity investment other than in subsidiaries, joint ventures and associates at fair value through profit and loss. However where the Company''s management makes an irrevocable choice on initial recognition to present fair value gains and losses on specific equity investments in other comprehensive income (Currently no such choice made), there is no subsequent reclassification, on sale or otherwise, of fair value gains and losses to the Statement of Profit and Loss.
Equity Investments in subsidiary
Investments in subsidiaries are measured at cost as per Ind AS 27 - Separate Financial Statements. All equity investments in scope of Ind AS 109 are measured at fair value. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income or FVTPL 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 its irrevocable
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised(i.e. removed from the Company''s balance sheet) when any of the following occurs:
i. The contractual rights to cash flows from the financial asset expires;
ii. The Company transfers its contractual rights to received cash flows of the financial assets and has substantially transferred all the risk and rewards of ownership of the financial assets;
iii. The Company retains the contractual rights to receive cash flows but assumes a contractual obligations to pay the cash flows without material delay to one or more recipients under a ''pass-through'' arrangement (thereby substantially transferring all the risks and rewards of ownership of the financial asset);
iv. The Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain control over the financial asset.
In cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but retains control of the financial assets, the Company continues to recognise such financial asset to the extent of its continuing involvement in the financial asset. In that case, the Company also recognises an associated liability. The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On De-recognition of a financial asset (except as mentioned in ii above for financial assets measured a FVTOCI), the difference between the carrying amount and the consideration received is recognised in the Statement of Profit and Loss. Financial liabilities:
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit and loss. Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
1.17 Cash and Cash Equivalents
Statement of Cash Flows is prepared segregating the cash flows into operating, investing and financing activities. Cash flow from operating activities is reported using indirect method adjusting the net profit for the effects of:
i. changes during the period in inventories and operating receivables and payables, transactions of a non-cash nature;
ii. non-cash items such as depreciation, provisions, and unrealised foreign currency gains and losses etc.; and
iii. all other items for which the cash effects are investing or financing cash flows
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated
with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
1.19 Non-Current Assets Held for Sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one year from the date of classification. Non-current assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell. Non-current assets are not depreciated or amortised.
1.20 Standard Issued but not yet effective
As at the date of issue of financial statements, there are no new standards or amendments which have been notified by the MCA but not yet adopted by the Company. Hence, the disclosure is not applicable.
1.21 Key Accounting Estimates and Judgments
The preparation of the Company''s Financial Statements requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Critical Accounting Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
A. Income Taxes
The Company''s tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (Refer note 17).
B. Property, Plant and Equipment
Property, plant and equipment represent a significant proportion of the asset base of the
Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company''s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.
C. Defined Benefit Obligation
The costs of providing pensions and other postemployment benefits are charged to the Statement of Profit and Loss in accordance with IND AS 19 ''Employee benefits'' over the period during which benefit is derived from the employees'' services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 32, ''Employee benefits''.
D. 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, which involve various judgments and assumptions.
1.22 Amendment to Schedule III of Companies Act, 2013
Ministry of Corporate Affairs (MCA) issued notifications dated March 24, 2021 to amend Schedule III of the Companies Act, 2013 to enhance the disclosures required to be made by the Company in its financial statements. These amendments are applicable to the Company for the financial year starting April 1,2021 and applied to the standalone financial statements:
a. Lease liabilities separately disclosed under the head ''financial liabilities'', duly distinguished as current or non-current.
b. Certain additional disclosures in the standalone Statement of Changes in Equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period.
c. Additional disclosure for shareholding of promoters.
d. Additional disclosure for ageing schedule of trade receivables, trade payables, capital work-inprogress.
e. Specific disclosure such as compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in the name of the Company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties etc.
f. Additional disclosure regarding to Corporate Social Responsibility (CSR) and undisclosed income.
1.23 Recent Accounting Pronouncements Issued But Not Yet Effective
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2022 dated March 23, 2022 to amend the following Ind AS which are effective from April 1, 2022.
(i) Onerous Contracts - Costs of Fulfilling a Contract - Amendments to Ind AS 37
The amendments to Ind AS 37 specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a "directly related cost approachâ. The costs that relate directly to a contract to provide goods or services include both incremental costs for example direct labour and materials and an allocation of other costs directly related to contract activities for example an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling that contract. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.
The amendments are effective for annual reporting periods beginning on or after April 1, 2022. The amendments are not expected to have a material impact on the Company.
(ii) Reference to the Conceptual Framework -Amendments to Ind AS 103
The amendments replaced the reference to the ICAI''s "Framework for the Preparation and Presentation of Financial Statements under Indian Accounting Standardsâ with the reference to the
"Conceptual Framework for Financial Reporting under Indian Accounting Standardâ without significantly changing its requirements.
The amendments also added an exception to the recognition principle of Ind AS 103 Business Combinations to avoid the issue of potential ''day 2'' gains or losses arising for liabilities and contingent liabilities that would be within the scope of Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets or Appendix C, Levies, of Ind AS 37, if incurred separately.
It has also been clarified that the existing guidance in Ind AS 103 for contingent assets would not be affected by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements under Indian Accounting Standards.
The amendments are effective for annual reporting periods beginning on or after April 1, 2022. The amendments are not expected to have a material impact on the Company.
(iii) Property, Plant and Equipment: Proceeds before Intended Use - Amendments to Ind AS 16
The amendments modified paragraph 17(e) of Ind AS 16 to clarify that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment.
The amendments are effective for annual reporting periods beginning on or after April 1, 2022. The amendments are not expected to have a material impact on the Company.
(iv) Ind AS 109 Financial Instruments - Fees in the ''10 per cent'' test for derecognition of financial liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other''s behalf.
The amendments are effective for annual reporting periods beginning on or after April 1, 2022. The amendments are not expected to have a material impact on the Company
Mar 31, 2018
1.1 Company Information
Gujarat Ambuja Exports Limited (Company) is a Public Limited Company domiciled in India. The Company has its registered office at âAmbuja Towerâ, Opp. Sindhu Bhavan, Sindhu Bhavan Road, Bodakdev, P.O. Thaltej, Ahmedabad-380 059, Gujarat. The Company is an Agro Processing conglomerate with various manufacturing plants at different locations in States of Gujarat, Maharashtra, Madhya Pradesh, Uttarakhand and Karnataka. The Companyâs product profile includes Solvent Extraction comprising of all types of Oil Seed Processing, Edible Oil Refining, Cotton Yarn Spinning, Maize based Starch and its derivatives, Wheat Processing / Cattle Feed and Power Generation through Wind Mills, Bio gas, Thermal Power & Solar Plant mainly for internal consumption. The Companyâs shares are listed on BSE and NSE.
1.2 Basis of Preparation of Financial Statements:
(i) Compliance with Ind-AS
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (IND AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended).
The financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(ii) Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle (twelve months) and other criteria set out in the Schedule III to the Act.
1.3 Use of Estimates
The preparation of the financial statements in conformity with IND AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 1.4. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of the changes in circumstances surrounding the estimates.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
1.4 Critical estimates and judgments
The preparation of financial statements requires the use of accounting estimates which by definition will seldom equal the actual results. Management also need to exercise judgment in applying the Companyâs accounting policies.
This note provides an overview of the areas that involved a higher degree of judgment or complexity and items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgment are:
Estimation of Defined benefit obligation - refer Note 1.16 Estimation of current tax expenses - refer Note 1.8 Government grant - refer Note 1.7
1.5 Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value as per IND AS 113 at each balance sheet date. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level 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 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.6 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
As the recovery of excise duty flows to the Company on its own account, revenue includes excise duty.
However, Goods and Service Tax (GST)/ value added tax (VAT) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded
The specific recognition criteria described below must also be met before revenue is recognised.
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
Excise duty paid for captive consumption of goods, where CENVAT credit is not available, is shown as excise expense. Interest income
Interest income on financial asset is recognised using the effective interest rate (EIR) method.
Dividends
Dividend income from investment is accounted for when the right to receive is established, which is generally when shareholders approve the dividend.
Other Income
Other income is recognised when no significant uncertainty as to its determination or realisation exists.
1.7 Government grants
a Government grants are recognised in accordance with the terms of the respective grant on accrual basis considering the status of compliance of prescribed conditions and ascertainment that the grant will be received.
b Government grants related to revenue are recognised on a systematic and gross basis in the Statement of Profit and Loss over the period during which the related costs intended to be compensated are incurred.
c Government grants related to assets are recognised as income in equal amounts over the expected useful life of the related asset.
d When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.
1.8 Taxes
Tax expenses comprise of current and deferred tax.
Current income tax
a Current tax is measured at the amount expected to be paid on the basis of reliefs and deductions available in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. b Current tax items are recognised in correlation to the underlying transaction either in P&L, OCI or directly in equity. Deferred tax
a Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
b Deferred tax liabilities are recognised for all taxable temporary differences.
c Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilized.
d The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
e Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates [and tax laws] that have been enacted or substantively enacted at the reporting date.
f Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity,
g Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
h The Company recognizes tax credits in the nature of MAT credit as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which tax credit is allowed to be carried forward. In the year in which the Company recognizes tax credits as an asset, the said asset is created by way of tax credit to the Statement of Profit and Loss. The Company reviews such tax credit asset at each reporting date and writes down the asset to the extent, the Company does not have convincing evidence that it will pay normal tax during the specified period. Deferred tax includes MAT credit.
1.9 Property, Plant and Equipment
Under the previous GAAP (Indian GAAP), fixed assets (including Capital work in progress) are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price, borrowing costs, if capitalisation criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use. The Company has elected to regard previous GAAP carrying values of property as deemed cost at the date of transition to IND AS.
Capital Work in progress included in PPE is stated at cost, net accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term constructions projects if the recognition criteria is met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
The net gain or loss on account of exchange rate differences either on settlement or on translation, of long term foreign currency monetary items recognised on or after 1st April, 2016, is recognised as income or expense in the Statement of Profit and Loss in the year in which they arise, except in case of foreign currency loans taken for funding of Property, Plant and Equipment, where such difference is adjusted to the cost of respective Property, Plant and Equipment. This is as per the exemption given under IND AS 101 to defer/ capitalize exchange differences arising on long-term foreign currency monetary items.
Borrowing cost relating to acquisition/construction of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013 except for the assets mentioned below for which useful lives estimated by the management. The identified component of fixed assets are depreciated over the useful lives and the remaining components are depreciated over the life of the principal assets.
In respect of Power Plant and Biogas Engines, the Company based on technical evaluation, identified the assets and components and reassessed the remaining useful lives of tangible fixed assets and depreciation is provided accordingly. The following is the useful life of each category of assets in respect of Power Plant and Biogas Engines:
Further, the Company evaluated the useful life of certain components of Plant and Machinery, the impact of which is not
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Further, the Company evaluated the useful life of certain components of Plant and Machinery, the impact of which is not material. Assets costing Rs.5,000 or less are fully depreciated in the year of purchase. Leasehold land is amortised over the period of lease. Leasehold improvements are amortized over the period of lease or estimated useful life, whichever
1.10 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit and loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expenses on intangible assets with finite lives is recognised in the Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
The Company has elected to regard previous GAAP carrying value of Intangible Assets as deemed cost at the date of transition to IND AS.
Useful lives of intangible assets
1.11 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
General borrowing costs are capitalised at the weighted average of such borrowings outstanding during the year.
1.12 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to 1st April, 2015, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
Company as a Lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except the case where incremental lease reflects inflationary effect and lease expense is accounted in such case by actual rent for the period.
1.13 Inventories
Inventories are valued as under:
a RAW MATERIALS, PACKING MATERIALS AND STORES & SPARES:
Valued at lower of cost or net realizable value and for this purpose cost is determined on weighted average basis. Due provision for obsolescence is made. b FINISHED GOODS & WORK IN PROGRESS:
At cost or net realizable value, whichever is lower. Cost is determined on absorption basis. Due provision for obsolescence is made. c BY- PRODUCTS:
At net realizable value d STOCK-IN-TRADE:
Valued at lower of cost or net realizable value and for this purpose cost is determined on weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
1.14 Impairment of financial assets & non-financial assets
a Financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECL (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in the Statement of Profit and Loss. b Non-financial assets
Intangible assets and Property, Plant and Equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs. If such assets are considered to be impaired, the impairment to be recognized in the Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior year. Impairment is determined for goodwill by assessing the recoverable amount of each Cash Generating Unit (i.e. CGU) (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at year end at the CGU level, as appropriate and when circumstances indicate that the carrying value may be impaired.
1.15 Provisions, Contingent Liabilities and Contingent Assets
a Provisions are recognised when the Company has present obligation (legal or constructive) as a result of past events, for which 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 for the amount of the obligation.
Contingent Liabilities are disclosed by way of notes to Financial Statements. Contingent assets are not recognised in the financial statements but are disclosed in the notes to the financial statements where an inflow of economic benefits is probable. Provisions and contingent liabilities are reviewed at each Balance Sheet date. b If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
1.16 Employee benefits
a Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences etc., and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related service. b Post-Employment Benefits:
i) Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans.
The contribution paid / payable under the schemes is recognised during the period in which the employees render the related services.
ii) Defined Benefit Plans:
The Employeeâs Gratuity Fund Scheme and compensated absences is Companyâs defined benefit plans. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on Government Securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.
For defined benefit plans, the amount recognised as âEmployee benefit expensesâ in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/future service benefit changes and settlements such events are recognised immediately in rate to the net defined benefit liability or asset is charged or credited to âFinance costsâ in the Statement of Profit and Loss. Any differences between the interest income on plan assets and the return actually achieved and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in âOther Comprehensive Incomeâ and subsequently not reclassified to the Statement of Profit and Loss.
All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Companyâs net obligation into current and non-current is as per the actuarial valuation report.
In case of funded plans, the fair value of the plan assets is reduced from the gross obligations under the defined benefit plans, to recognise the obligation on net basis.
Gains or losses on the curtailment or settlement of any defined benefits plans are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested. c Long Term Employee Benefits:
The employeesâ long term compensated absences are Companyâs defined benefit plans. The present value of the obligation is determined based on the actuarial valuation using the projected unit credit method as at the date of the balance sheet. In case of funded plans, the full value of plan assets is reduced from the gross obligation to recognise the obligation on the net basis.
1.17 Financial instruments
Initial recognition and measurement:
The Company recognizes a financial asset in its balance sheet when it becomes party to the contractual provisions of the instrument. All financial assets are recognized initially at fair value, plus in the case of financial assets not recorded at fair value through profit or loss (FVTPL), transaction cost that are attributable to the acquisition of the financial asset.
Where the fair value of a financial asset at initial recognition is different from its transaction price, the difference between the fair value and the transaction price is recognized as a gain or loss in the Statement of Profit and Loss at initial recognition if the fair value is determined through a quoted market price in an active market for an identical asset (i.e. level 1 input) or through a valuation technique that users data from observable markets (i.e. level 2 input).
In case the fair value in not determined using a level 1 or level 2 inputs as mentioned above, the difference between the fair value and transaction price is deferred appropriately and recognized as a gain in the Statement of Profit and Loss only to the extent the such gain or loss arises due to a change in factor that market participants take into account when pricing the financial asset.
However trade receivables that do not contain a significant financing component are measured at transaction price. Investments and other financial assets
(i) Classification
The Company classifies its financial assets in the following measurement categories:
(1) those to be measured subsequently at fair value (either through other comprehensive income or through the Statement of Profit and Loss); and
(2) those measured at amortised cost.
The classification depends on the Companyâs business model for managing the financial assets and the contractual terms of the cash flows.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value. Transaction costs of financial assets carried at fair value through the Profit and Loss are expensed in the Statement of Profit and Loss.
Debt instruments:
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments into following categories:
(1) Amortised cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in other income using the effective interest rate method.
(2) Fair value through other comprehensive Income:
Assets that do not meet the criteria for amortised cost are measured at fair value through Other Comprehensive Income. Interest income from these financial assets is included in other income.
Equity instruments:
The Company measures its equity investment other than in subsidiaries, joint ventures and associates at fair value through profit and loss. However where the Companyâs management makes an irrevocable choice on initial recognition to present fair value gains and losses on specific equity investments in other comprehensive income (Currently no such choice made), there is no subsequent reclassification, on sale or otherwise, of fair value gains and losses to the Statement of Profit and Loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized (i.e. removed from the Companyâs balance sheet) when any of the following occurs:
i. The contractual rights to cash flows from the financial asset expires;
ii. The Company transfers its contractual rights to received cash flows of the financial assets and has substantially transferred all the risk and rewards of ownership of the financial assets;
iii. The Company retains the contractual rights to receive cash flows but assumes a contractual obligations to pay the cash flows without material delay to one or more recipients under a âpass-throughâ arrangement (thereby substantially transferring all the risks and rewards of ownership of the financial asset);
iv. The Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain control over the financial asset.
In cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but retains control of the financial assets, the Company continues to recognize such financial asset to the extent of its continuing involvement in the financial asset. In that case, the Company also recognizes an associated liability. The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On De-recognition of a financial asset (except as mentioned in ii above for financial assets measured a FVTOCI), the difference between the carrying amount and the consideration received is recognized in the Statement of Profit and Loss.
Financial liabilities:
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit and loss. Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
1.18 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
1.19 Cash flow statement
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
1.20 Standard Issued but not yet effective
In March, 2018, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying IND AS 115, Revenue from contracts with Customers, Appendix B to IND AS 21, Foreign currency transactions and advance consideration and amendments to certain other standards. These amendments are in line with recent amendments made by International Accounting Standard Boards (IASB). These amendments are applicable to the Company from 1st April, 2018. The Company will be adopting the amendments from their effective dates.
IND AS 115, Revenue from Contract with Customers
IND AS 115 supersedes IND AS 11, Construction Contracts and IND AS 18, Revenue. IND AS 115 requires an entity to report information regarding nature, amount, timing and uncertainity of revenue and cashflows arising from a contract with customers. The principle of IND AS 115 is that an entity should recognise revenue that demonstrates the transfer of promised goods and service to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The retrospectively with recognition of cumulative effect of contracts that are not completed contracts at the date of intial application of standard.
Based on the preliminary assessment performed by the Company, the impact of application of the standard is not expected to be material.
Appendix B to IND AS 21, Foreign Currency transactions and advance consideration
The Appendix clarifies that the date of the transactions for the purpose of determining the exchange rate to use on initial recognition of the asset, expense or income (or part of it) is the date on which an entity initially recognises the non monetary liability arising from the payment or receipt of advance consideration towardrs such assets, expenses or income. If there are multiple payments or receipts in advance, then an entity must determine transaction date for each payment or receipts of advance consideration.
The impact of the Appendix on the financial statements, as assessed by the Company, is expected to be not material.
1.21 Proposed Dividend and authorisation of financial statements
Dividend recommended by the Board of Directors is not provided for in the accounts and is subject to shareholderâs approval at the ensuing Annual General Meeting. The financial statements were authorised for issue by Directors on 19th May, 2018.
Mar 31, 2017
1.1 Company Information:
Gujarat Ambuja Exports Limited (Company) is a Public Limited Company domiciled in India. The Company has its registered office at ''''Ambuja Tower'''', Opp. Sindhu Bhavan, Sindhu Bhavan Road, Bodakdev, P.O. Thaltej, Ahmedabad, Gujarat 380 059. The Company is an Agro Processing conglomerate with various manufacturing plants at different locations in States of Gujarat, Maharashtra, Madhya Pradesh, Uttarakhand and Karnataka. The Company''s product profile includes Solvent Extraction comprising of all types of Oil Seed Processing, Edible Oil Refining, Cotton Yarn Spinning, Maize based Starch and its derivatives, Wheat Processing / Cattle Feed and Power Generation through Wind Mills, Bio gas, Thermal Power & Solar Plant mainly for internal consumption. The Company''s shares are listed on BSE and NSE.
1.2 Basis of Preparation of Financial Statements:
(i) Compliance with Ind-AS
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended).
For all periods up to and including the year ended 31st March, 2016, the Company prepared its financial statements in accordance with accounting standards notified under the Section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014 (Indian GAAP). These financial statements for the year ended 31st March, 2017 are the first the Company has prepared in accordance with Ind AS. Refer Note No. 1.22 for information on how the Company has adopted Ind AS.
The financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(ii) Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle (twelve months) and other criteria set out in the Schedule III to the Act.
(iii) Rounding of amounts
The financial statements are presented in INR and all values are rounded to the nearest crore (INR 00,00,000) as per the requirement of Schedule III, unless otherwise stated.
1.3 Use of Estimates:
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note No. 1.4. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of the changes in circumstances surrounding the estimates.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
1.4 Critical estimates and judgments:
The preparation of financial statements requires the use of accounting estimates which by definition will seldom equal the actual results. Management also need to exercise judgment in applying the Company''s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgment or complexity, and items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgment are:
Estimation of Defined benefit obligation - refer Note No. 1.16
Estimation of current tax expenses - refer Note No. 1.8
Government grant - refer Note No. 1.7
1.5 Fair value measurement:
The Company measures financial instruments, such as, derivatives at fair value as per Ind AS 113 at each balance sheet date. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level 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 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.6 Revenue recognition:
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. As the recovery of excise duty flows to the Company on its own account, revenue includes excise duty.
However, sales tax/ value added tax (VAT) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognized.
Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
Excise duty paid for captive consumption of goods, where CENVAT credit is not available, is shown as excise expense.
Interest income
Interest income on financial asset is recognized using the effective interest rate (EIR) method.
Dividends
Dividend income from investment is accounted for when the right to receive is established, which is generally when shareholders approve the dividend.
Other Income
Other income is recognized when no significant uncertainty as to its determination or realization exists.
1.7 Government grants:
a Government grants are recognized in accordance with the terms of the respective grant on accrual basis considering the status of compliance of prescribed conditions and ascertainment that the grant will be received.
b Government grants related to revenue are recognized on a systematic and gross basis in the Statement of Profit and Loss over the period during which the related costs intended to be compensated are incurred.
c Government grants related to assets are recognized as income in equal amounts over the expected useful life of the related asset.
d When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual installments.
1.8 Taxes:
Tax expenses comprise of current and deferred tax.
Current income tax
a Current tax is measured at the amount expected to be paid on the basis of reliefs and deductions available in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
b Current tax items are recognized in correlation to the underlying transaction either in P&L, OCI or directly in equity.
Deferred tax
a Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
b Deferred tax liabilities are recognized for all taxable temporary differences.
c Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilized.
d The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
e Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is the reporting date.
f Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
g Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
h The Company recognizes tax credits in the nature of MAT credit as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which tax credit is allowed to be carried forward. In the year in which the Company recognizes tax credits as an asset, the said asset is created by way of tax credit to the Statement of Profit and Loss. The Company reviews such tax credit asset at each reporting date and writes down the asset to the extent, the Company does not have convincing evidence that it will pay normal tax during the specified period. Deferred tax includes MAT credit.
1.9 Property, Plant and Equipment:
Under the previous GAAP (Indian GAAP), fixed assets (including Capital work in progress) are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price, borrowing costs, if capitalization criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use. The Company has elected to regard previous GAAP carrying values of property as deemed cost at the date of transition to Ind AS.
Capital Work in progress included in PPE is stated at cost, net accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term constructions projects if the recognition criteria is met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
The Company adjusts exchange differences arising on translation difference/settlement of long term foreign currency monetary items outstanding as at 31st March, 2016 and pertaining to the acquisition of a depreciable asset to the cost of asset and depreciates the same over the remaining life of the asset. The depreciation on such foreign exchange difference is recognized from first day of its financial year.
Borrowing cost relating to acquisition/construction of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013 except for the assets mentioned below for which useful lives estimated by the management. The identified component of fixed assets are depreciated over the useful lives and the remaining components are depreciated over the life of the principal assets.
In respect of Power Plant and Biogas Engines, the Company based on technical evaluation, identified the assets and components and reassessed the remaining useful lives of tangible fixed assets and depreciation is provided accordingly.
The following is the useful life of each category of assets in respect of Power Plant and Biogas Engines:
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Further, the Company evaluated the useful life of certain components of Plant and Machinery, the impact of which is not material. Assets costing Rs.5,000 or less are fully depreciated in the year of purchase. Leasehold land is amortized over the period of lease. Leasehold improvements are amortized over the period of lease or estimated useful life, whichever is lower.
1.10 Intangible assets:
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit and loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expenses on intangible assets with finite lives is recognized in the Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash generating unit level. The assessment of indefinite life Is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
The Company has elected to regard previous GAAP carrying value of Intangible Assets as deemed cost at the date of transition to Ind AS
1.11 Borrowing costs:
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. General borrowing costs are capitalized at the weighted average of such borrowings outstanding during the year.
1.12 Leases:
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to 1st April, 2015 the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs. Contingent rentals are recognized as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except the case where incremental lease reflects inflationary effect and lease expense is accounted in such case by actual rent for the period.
1.13 Inventories:
Inventories are valued as under:
a RAW MATERIALS, PACKING MATERIALS AND STORES & SPARES :
Valued at lower of cost or net realizable value and for this purpose cost is determined on weighted average basis. Due provision for obsolescence is made.
b FINISHED GOODS & WORK IN PROGRESS :
At cost or net realizable value, whichever is lower. Cost is determined on absorption basis. Due provision for obsolescence is made.
c BY- PRODUCTS :
At net realizable value
d STOCK-IN-TRADE :
Valued at lower of cost or net realizable value and for this purpose cost is determined on weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
1.14 Impairment of financial assets & non-financial assets:
a Financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECL (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in the Statement of Profit and Loss.
b Non-financial assets
Intangible assets and Property, Plant and Equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior year.
Goodwill is tested for impairment annually as at every year end and when circumstances indicates that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each Cash Generating Unit (i.e. CGU) (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at year end at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
1.15 Provisions, Contingent Liabilities and Contingent Assets:
a Provisions are recognized when the Company has present obligation (legal or constructive) as a result of past events, for which 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 for the amount of the obligation. Contingent Liabilities are disclosed by way of notes to Financial Statements. Contingent assets are not recognized in the financial statements but are disclosed in the notes to the financial statements where an inflow of economic benefits is probable. Provisions and contingent liabilities are reviewed at each Balance Sheet date.
b If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
1.16 Employee benefits:
a Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences etc., and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.
b Post-Employment Benefits:
i) Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans. The contribution paid / payable under the schemes is recognized during the period in which the employees render the related services.
ii) Defined Benefit Plans:
The Employee''s Gratuity Fund Scheme and compensated absences is Company''s defined benefit plans. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on Government Securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.
For defined benefit plans, the amount recognized as ''Employee benefit expenses'' in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/ future service benefit changes and settlements (such events are recognized immediately in the Statement of Profit and Loss). The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to ''Finance costs'' in the Statement of Profit and Loss. Any differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognized immediately in ''Other comprehensive income'' and subsequently not reclassified to the Statement of Profit and Loss.
All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company''s net obligation into current and noncurrent is as per the actuarial valuation report.
In case of funded plans, the fair value of the plan assets is reduced from the gross obligations under the defined benefit plans, to recognize the obligation on net basis. Gains or losses on the curtailment or settlement of any defined benefits plans are recognized when the curtailment or settlement occurs. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.
c Long Term Employee Benefits:
The employees'' long term compensated absences are Company''s defined benefit plans. The present value of the obligation is determined based on the actuarial valuation using the projected unit credit method as at the date of the balance sheet. In case of funded plans, the full value of plan assets is reduced from the gross obligation to recognize the obligation on the net basis.
1.17 Financial instruments: Investments and other financial assets
(i) Classification
The Company classifies its financial assets in the following measurement categories:
(1) those to be measured subsequently at fair value (either through other comprehensive income, or through the Statement of Profit and Loss), and
(2) those measured at amortized cost.
The classification depends on the Company''s business model for managing the financial assets and the contractual terms of the cash flows.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value. Transaction costs of financial assets carried at fair value through the Profit and Loss are expensed in the Statement of Profit and Loss.
Debt instruments:
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments into following categories:
(1) Amortized cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in other income using the effective interest rate method.
(2) Fair value through other comprehensive Income
Assets that do not meet the criteria for amortized cost are measured at fair value through Other Comprehensive Income. Interest income from these financial assets is included in other income.
Equity instruments
The Company measures its equity investment other than in subsidiaries, joint ventures and associates at fair value through profit and loss. However where the Company''s management makes an irrevocable choice on initial recognition to present fair value gains and losses on specific equity investments in other comprehensive income (Currently no such choice made), there is no subsequent reclassification, on sale or otherwise, of fair value gains and losses to the Statement of Profit and Loss.
Financial liabilities
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortized cost unless at initial recognition, they are classified as fair value through profit and loss. Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using the effective interest method.
1.18 Cash and cash equivalents:
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
1.19 Cash flow statement:
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a noncash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
1.20 Standard Issued but not yet effective:
In March 2017, the Ministry of Corporate Affairs has issued the Companies (Indian Accounting Standards) (Amendment) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of Cash Flows'' and Ind AS 102, ''Share-based Payments''. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of Cash Flows'' and IFRS 2, ''Share-based Payment'', respectively. The amendments are applicable to the Company from 1st April, 2017.
Amendment to Ind AS 7
The amendment to Ind AS 7 required the entities to provide disclosures that enables users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The Company has evaluated the disclosure requirements of the amendment and the effect on the financial statements is not expected to be material.
Amendment to Ind AS 102
The amendment to Ind AS 102 provides specific guidance for the measurement of cash settled awards, modification of cash settled awards and awards that include a net settlement features in respect of withholding taxes. As the Company does not have such nature of transaction, this amendment does not have any effect on the financial statements of the Company.
1.21 Proposed Dividend and authorization of financial statements:
Dividend recommended by the Board of Directors is not provided for in the accounts, and is pending approval at the Annual General Meeting. The financial statements were authorized for issue by directors on 13th May, 2017.
1.22 Note on First Time Adoption of Ind AS:
The accounting policies set out in the note here have been applied in preparing the financial statements for the year ended 31st March, 2017, the comparative information presented in these financial statements for the year ended 31st March, 2016 and in the preparation of an opening Ind AS balance sheet at 1st April, 2015 [the Company''s date of transition].
In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies [Accounting Standards] Rules, 2006 [as amended] and other relevant provisions of the Act [Indian GAAP]. An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following notes.
Exemptions and exceptions availed:
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from Indian GAAP to Ind AS.
Optional exemptions
a Deemed cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the Indian GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their Indian GAAP carrying values.
b Leases
Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The Company has elected to apply this exemption for such contracts/arrangements.
Mandatory exceptions
c Estimates
An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Indian GAAP [after adjustments to reflect any difference in accounting policies], unless there is objective evidence that those estimates were in error.
Ind AS estimates as at 1st April, 2015 and 31st March, 2016 are consistent with the estimates as at the same date made in conformity with Indian GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under Indian GAAP:
a Investment in equity instruments carried at FVTPL.
b Investment in debt instruments carried at Amortized Cost.
c Impairment of financial assets based on expected credit loss model.
d Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
e De-recognition of financial assets and liabilities
Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the time of initially accounting for those transactions.
The Company''s management had previously issued its audited financial results for the year ended 31st March, 2016 on 30th April, 2016, that were all prepared in accordance with the recognition and measurement principles of the Companies (Accounting Standards) Rules, 2006 prescribed under Section 133 of the Companies Act, 2013, read with the relevant rules issued there under and other accounting principles generally accepted in India. The Company''s management has now prepared the Ind AS Financial Statements for the year ended 31st March, 2017 in accordance with the recognition and measurement principles laid down by the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013 read with relevant Rules issued thereunder and other accounting principles generally accepted in India.
The Company has prepared a reconciliation of the amounts of net profit as reported under the Indian GAAP to those computed as per Ind AS and the same is given in note below. The Company has also prepared a reconciliation of the amounts of total equity as reported under the Indian GAAP to those computed as per lnd AS and the same is given in note below.
1.23 Note on Transition to Ind AS - Reconciliations:
The following reconciliations provide the explanations and quantification of the differences arising from the transition from Indian GAAP to Ind AS in accordance with Ind AS 101:
I. Reconciliation of Equity as at 1st April, 2015
II. A. Reconciliation of Equity as at 31st March, 2016
B. Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2016
III. Adjustments to Statement of Cash Flows for the year ended 31st March, 2016
Mar 31, 2016
A. BASIS OF ACCOUNTING:
The Financial Statements of Company have been prepared in accordance with the Generally Accepted Accounting Principles in
India (Indian GAAP). The Company has prepared these Financial Statements to comply in all material respects with the Accounting
Standards notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules,
2014. The Financial Statements have been prepared on an accrual basis and under the historical cost convention. The accounting
policies adopted in the preparation of Financial Statements are consistent with those of previous year except for the change in
accounting policy explained below.
B. USE OF ESTIMATES:
Preparation of Financial Statements are in conformity with the Generally Accepted Accounting Principles which require
management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the
Financial Statements and the reported amount of revenues and expenses during the reporting period.
Difference between the actual result and estimates, are recognized in the period in which the results are known/materialized.
C. CURRENT /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. Based on the nature of the products and the time between the
acquisition of assets or inventories for processing and their realization in cash and cash equivalents, the Company has ascertained
its normal operating cycle as twelve months for the purpose of current / non-current classification of assets and liabilities.
D. TANGIBLE AND INTANGIBLE FIXED ASSETS & DEPRECIATION:
i) Fixed Assets are stated at cost of acquisition & installation, net of CENVAT and VAT credits availed if any, less accumulated
depreciation and impairment loss, if any. The cost of fixed assets comprises of its purchase price, import duties and any
directly attributable cost of bringing the asset to its working condition for its intended use. Expenses directly attributable
to new manufacturing facilities during its construction period are capitalized. Profit or loss on disposal of tangible assets is
recognized in the Statement of Profit & Loss.
Tangible assets not ready for the intended use on the date of Balance Sheet are disclosed as Capital Work-in-Progress.
Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Capital Advances
under Non-Current Loans and Advances,
ii) Borrowing costs incurred during the period of construction/acquisition of assets is added to the cost of Fixed Assets,
iii) Major expenses on modification /alterations increasing efficiency/capacity of the fixed assets are also capitalized,
iv) Leasehold land is depreciated over the life of the lease.
v) a) The Company provides depreciation with reference to the estimated useful lives of Fixed Assets as prescribed by
Schedule II of the Companies Act, 2013.
In respect of Power Plant and Biogas Engines, the Company based on technical evaluation, identified the assets and
components and reassessed the remaining useful lives of tangible fixed assets and depreciation is provided. The
following is the useful life of each category of assets in respect of Power Plant and Biogas Engines:
Further, the Company evaluated the useful life of certain components of Plant and Machinery, the impact of which is not material.
Assets costing Rs, 5,000 or less are fully depreciated in the year of purchase. Leasehold land and Leasehold improvements are amortized over a period of lease,
b) In respect of major alterations/modifications forming an integral part of existing assets, depreciation is provided at the rate arrived on the basis of useful life of such assets after such alterations/modifications as prescribed under Schedule II. Useful life of components of Plant and Machinery are identified and evaluated for providing depreciation,
vi) IMPAIRMENT OF ASSETS:
The carrying amount of assets is reviewed at each Balance Sheet date for any indication of impairment based on internal/
external factors. An impairment loss is recognized wherever the carrying amount of fixed assets exceeds its recoverable
amount. The recoverable amount is measured as the higher of the net selling price and the value in use determined by the
present value of estimated future cash flows.
vii) INTANGIBLE FIXED ASSETS:
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition intangible
assets are carried at cost less accumulated amortization and accumulated impairment loss, if any. Intangible assets are
amortized on straight line basis over the useful life of the asset not exceeding ten years.
E. INVESTMENTS:
Investments are classified into current and non-current investments. Non-current investments are carried at cost. A provision for
diminution in value of non-current investments is made for each investment individually, if such decline is other than temporary.
Current investments are stated at the lower of cost and fair value, computed category-wise.
F. INVENTORIES:
Inventories are valued as under:
i) RAW MATERIALS, PACKING MATERIALS AND Valued at lower of cost or net realizable value and for this purpose
STORES & SPARES : cost is determined on weighted average basis. Due provision for obsolescence is made,
ii) FINISHED GOODS & WORK IN PROGRESS : At cost or net realizable value, whichever is lower. Cost is determined on absorption basis. Due provision for obsolescence is made,
iii) BY-PRODUCTS: At net realizable value,
iv) TRADED GOODS : Valued at lower of cost or net realizable value and for this purpose cost is determined on weighted average basis.
G. TRADE RECEIVABLES AND LOANS & ADVANCES:
Trade Receivables and Loans & Advances are stated after making adequate provisions for doubtful balances.
H. REVENUE RECOGNITION:
i) SALES:
a) Revenue from sale of goods is recognized, when all significant contractual obligations have been satisfied, the property
in the goods is transferred for a price, significant risks and rewards of ownership are transferred to the customers, no
effective ownership is retained and no significant uncertainty exists as to its realization or collection.
b) Sales (net off trade and cash discounts) is inclusive of excise, but excludes export incentives/licenses, VAT/sales tax.
c) Excise duty paid for captive consumption of goods, where CENVAT credit is not available, is shown as excise expense,
ii) EXPORT BENEFITS/INCENTIVES:
The benefits are accounted on the accrual basis,
iii) DIVIDEND INCOME:
Dividend income from investment is accounted for when the right to receive is established,
iv) INTEREST INCOME:
Interest income is recognized on the time proportion basis.
I. EMPLOYEE BENEFITS:
i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences etc., and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service,
ii) Post-Employment Benefits:
a) Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans. The
contribution paid / payable under the schemes is recognized during the period in which the employees render the
related services.
b) Defined Benefit Plans:
The Employee''s Gratuity Fund Scheme and compensated absences is Company''s defined benefit plans.
The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on Government Securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.
Actuarial gains and losses are recognized immediately in the Statement of Profit & Loss.
In case of funded plans, the fair value of the plan assets is reduced from the gross obligations under the defined benefit plans, to recognize the obligation on net basis.
Gains or losses on the curtailment or settlement of any defined benefits plans are recognized when the curtailment or settlement occurs. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.
iii) Long Term Employee Benefits:
The obligation for long term employee benefits such as long term compensated absences, is recognized in the same manner
as in case of defined benefit plans as mentioned in ii (b) above.
J. BORROWING COSTS:
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with arrangements of borrowing. Borrowing
costs whether specific or general, utilized for acquisition, construction or production of qualifying assets are capitalized as part
of cost of such assets till the activities necessary for its intended use are complete. General borrowing costs are capitalized at the
weighted average of such borrowings outstanding during the year. All other borrowing costs are charged in Statement of Profit &
Loss of the year in which incurred.
K. TAXES ON INCOME:
Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized,
on timing difference, 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. Where there is unabsorbed depreciation or carry forward losses, deferred
tax assets are recognized only if there is virtual certainty that sufficient future taxable income will be available against which such
assets can be realized. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in
future. Such assets are reviewed at each Balance Sheet date to reassess realization.
Deferred tax in respect of timing differences which reverse during the tax holiday period are not recognized. However, Deferred
tax in respect of timing differences which reverse after the tax holiday period are recognized in the year in which the timing
differences originate.
Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit & Loss as current tax. The Company recognizes
MAT credit available as an asset only for the extent that there is convincing evidence that the Company will pay normal income
tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the
Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of
Minimum Alternative Tax under the Income-Tax Act, 1961, the said asset is created by way of credit to the Statement of Profit &
Loss and shown as "MAT Credit Entitlement". The Company reviews the "MAT credit entitlement" asset at each reporting date and
writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified
period.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts
and there is an intention to settle the asset and liability on a net basis.
L. FOREIGN CURRENCY TRANSACTIONS:
i) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction,
ii) Monetary items denominated in foreign currency at the yearend are translated at the exchange rates prevailing at the Balance Sheet date.
iii) Premium or discount arising at the inception of the forward exchange contract is amortized as income or expense over the
period of the contract. Any profit or loss arising in renewal or cancellation of forward exchange contracts is recognized as
income or expense during the year.
iv) The Company accounts for exchange differences arising on translation/ settlement of foreign currency monetary items as
below:
a) Exchange differences arising on long term foreign currency monetary items related to acquisition of fixed assets are
capitalized or recapitalized from the cost of assets and are depreciated over the remaining useful life of the assets.
b) Exchange differences arising on other long term foreign currency items are accumulated in the "Foreign Currency
Monetary Item Translation Difference Account" and amortized over the remaining life of the concerned monetary item.
c) All other exchange differences are recognized as income or expenses in the period in which they arise.
For the purpose of (a) and (b) referred above, the Company treats a foreign monetary item as "Long term Foreign Currency
Monetary Item", if it has a term of 12 months or more at the date of origination.
M. DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING:
The Company uses foreign currency contracts and currency options to hedge its risks associated with foreign currency fluctuations
relating to certain firm commitments and highly probable forecast transactions. The Company does not hold derivative financial
instruments for speculative purposes. The Company has applied to such contracts the principles of recognition set out in the
Accounting Standard (AS 30) on ''Financial Instruments - Recognition and Measurement''. Changes in the fair value of the contracts
that are designated and effective as cash flow hedge is directly recorded in the Hedge Reserve Account and is recognized in the
Statement of Profit & Loss in the same period or periods during which the hedged transaction affects profit and loss. Gains or losses
on the ineffective transactions are recognized immediately in the Statement of Profit & Loss. The premium or discount arising at
the inception of forward exchange contract is amortized and recognized as an expense/income over the life of the contract.
N. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions are recognized when the Company has present obligation as a result of past events, for which 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
for the amount of the obligation.
Contingent Liabilities are disclosed by way of notes to Financial Statements. Contingent Assets are neither recognized nor disclosed
in the Financial Statements. Provisions and contingent liabilities are reviewed at each Balance Sheet date.
O. CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE:
All contingencies and events occurring after the Balance Sheet date which have a material effect on the financial position of the
Company are considered for preparing the Financial Statements.
P. RESEARCH AND DEVELOPMENT EXPENSES:
Expenditure relating to capital items is debited to Fixed Assets and depreciated at applicable rates. Revenue expenditure is charged
to the Statement of Profit & Loss of the period in which they are incurred.
Q. GOVERNMENT GRANTS:
i) The grants/subsidies received in the nature of promoters'' contribution are treated as capital receipts and credited to Capital Reserve,
ii) The grants /subsidies relating to specific fixed assets are shown as deduction from the cost of the respective assets concerned in arriving at its book value,
iii) Grant in the form of revenue subsidy is treated as revenue receipt and credited to ''Other Income'' in the Statement of Profit & Loss.
R. EXCISE DUTY:
Finished Goods lying at factories have been valued at inclusive of Excise Duty. The claim of Cenvat for Excise Duty paid on inputs is accounted on the basis of claim.
S. SEGMENT REPORTING:
i) Identification of segments
The Company''s operating businesses are organized and managed separately according to the nature of products and services
provided, with each segment representing a strategic business unit that offers different products and serves different
markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company
operate.
ii) Inter-segment transfers
The Company generally accounts for intersegment sales and transfers at cost plus appropriate margins,
iii) Allocation of common costs
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs,
iv) Unallocated items
Unallocated items include general corporate income and expense items which are not allocated to any business segment,
v) Segment accounting policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and
presenting the Financial Statements of the Company as a whole.
T. EARNINGS PER SHARE:
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes, if any) by the weighted average number of equity shares outstanding
during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as
bonus issue, bonus element in a rights issue, share split and reverse share split (consolidation of shares) that have changed the
number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders
and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential
equity shares.
U. CASH AN D CASH EQUIVALENTS:
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments
with an original maturity of three months or less.
V. MEASUREMENT OF EBIDTA:
As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the Company has elected to present
earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the Statement of Profit
& Loss. The Company measures EBITDA on the basis of profit/(loss) from continuing operations. In its measurement, the Company
does not include depreciation and amortization expenses, finance costs and tax expenses.
W. OPERATING LEASES:
Payment and receipts of lease rentals are charged or credited to the Statement of Profit & Loss on straight line basis over the
period of lease.
X. PROPOSED DIVIDEND:
Dividend recommended by the Board of Directors is provided for in the accounts, pending approval at the Annual General Meeting.
Mar 31, 2015
1. Significant Accounting Policies:
A. BASIS OF ACCOUNTING:
The financial statements of Company have been prepared in accordance
with the generally accepted accounting principles in India (Indian
GAAP). The Company has prepared these financial statements to comply
in all material respects with the Accounting Standards notified under
section 133 of Companies Act 2013, read together with Rule 7 of the
Companies (Accounts) Rules 2014. The financial statements have been
prepared on an accrual basis and under the historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
B. USE OF ESTIMATES:
Preparation of financial statements are in conformity with the
generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities on the date of the financial statements and the
reported amount of revenues and expenses during the reporting period.
Difference between the actual result and estimates, are recognized in
the period in which the results are known/materialized.
C. CURRENT / 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. Based
on the nature of the products and the time between the acquisition of
assets or inventories for processing and their realization in cash and
cash equivalents, the company has ascertained its normal operating
cycle as twelve months for the purpose of current / non-current
classification of assets and liabilities.
D. NON CURRENT ASSETS
D1.TANGIBLE AND INTANGIBLE FIXED ASSETS & DEPRECIATION:
i) Fixed assets except Freehold Land are stated at cost of acquisition
& installation, net of CENVAT and VAT credits availed if any, less
accumulated depreciation and impairment loss, if any. The cost of fixed
assets comprises of its purchase price, import duties and any directly
attributable cost of bringing the asset to its working condition for
its intended use. Expenses directly attributable to new manufacturing
facilities during its construction period are capitalized. Profit or
Loss on disposal of tangible assets is recognized in the Statement of
Profit and Loss.
Tangible assets not ready for the intended use on the date of Balance
Sheet are disclosed as Capital Work in Progress. Advances given towards
acquisition of fixed assets outstanding at each Balance Sheet date are
disclosed as Capital Advances under Non-Current Loans and Advances.
ii) Borrowing costs incurred during the period of
construction/acquisition of assets is added to the cost of Fixed
Assets. Major expenses on modification /alterations increasing
efficiency/capacity of the qualifying fixed assets are also
capitalized.
iii) a) Hitherto depreciation on fixed assets was provided on Straight
Line Method at the rates and in the manner prescribed in Schedule XIV of
the Companies Act 1956, (as amended). Consequent to the enactment of the
Companies Act, 2013 (The Act) and its applicability for accounting
periods commencing after 01-04-2014, the company reviewed its policy of
providing depreciation with reference to the estimated useful lives of
Fixed Assets as prescribed by Schedule II of the Act.
In respect of Power Plant, the Company based on technical evaluation,
identified the assets and components and reassessed the remaining
useful lives of tangible fixed assets and reworked the depreciation
accordingly. Further, the company evaluated the useful life of certain
components of Plant and Machinery, the impact of which is not material.
Assets costing ' 5,000 or less are fully depreciated in the year of
purchase.
Leasehold land and Leasehold improvements are amortized over a period
of lease.
b) In respect of major alterations/modifications forming an integral
part of existing assets, depreciation is provided at the rate arrived
on the basis of useful life of such assets after such
alterations/modifications as prescribed under Schedule II. Useful life
of components of Plant and Machinery are identified and evaluated for
providing depreciation.
iv) IMPAIRMENT OF ASSETS
The carrying amount of assets is reviewed at each Balance Sheet date
for any indication of impairment based on internal/external factors. An
impairment loss is recognized wherever the carrying amount of fixed
assets exceeds its recoverable amount. The recoverable amount is
measured as the higher of the net selling price and the value in use
determined by the present value of estimated future cash flows.
v) INTANGIBLE FIXED ASSETS
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition intangible assets
are carried at cost less accumulated amortization and accumulated
impairment loss, if any. Intangible assets are amortized on straight
line basis over the useful life of the asset not exceeding ten years.
D2. INVESTMENTS:
Investments are classified into current and non-current investments.
Non-current investments are carried at cost. A provision for diminution
in value of non-current investments is made for each investment
individually, if such decline is other than temporary. Current
investments are stated at the lower of cost and fair value, computed
category-wise.
E. INVENTORIES:
Inventories are valued as under:
i) RAW MATERIALS, PACKING Valued at lower of cost or net
realizable value and for this
purpose cost is determined
MATERIALS AND STORES & SPARES on weighted average basis. Due
provision for obsolescence is made.
ii) FINISHED GOODS & At cost or net realizable value,
whichever is lower. Cost is
determined on absorption
WORK IN PROGRESS basis. Due provision for
obsolescence is made.
iii) BY- PRODUCTS At net realizable value
F. TRADE RECEIVABLES AND LOANS AND ADVANCES
Trade Receivables and Loans and Advances are stated after making
adequate provisions for doubtful balances.
G. REVENUE RECOGNITION:
i) SALES:
a) Revenue is recognized when it is reliably measured and no
significant uncertainty exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied , the
property in the goods is transferred for a price , significant risks
and rewards of ownership are transferred to the customers and no
effective ownership is retained.
b) Sales (net off trade and cash discounts) is inclusive of excise, but
excludes export incentives/licenses, VAT/sales tax.
c) Excise duty paid for captive consumption of goods, where CENVAT
credit is not available, is shown as excise expense.
ii) EXPORT BENEFITS/INCENTIVES:
The benefits are accounted on the accrual basis.
iii) DIVIDEND INCOME:
Dividend income from Investment is accounted for when the right to
receive is established.
iv) INTEREST INCOME:
Interest income is recognized on the time proportion basis.
H. EMPLOYEE BENEFITS:
i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, short term compensated absences etc., and the
expected cost of bonus, ex-gratia are recognised in the period in which
the employee renders the related service.
ii) Post-Employment Benefits:
a) Defined Contribution Plans:
State governed provident fund scheme and employees state insurance
scheme are defined contribution plans. The contribution paid / payable
under the schemes is recognised during the period in which the
employees renders the related services.
b) Defined Benefit Plans:
The employee's gratuity fund scheme and compensated absences is
Company's defined benefit plans.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to
additional unit of employee benefits entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, is based on the market
yields on Government Securities as at the Balance Sheet date, having
maturity periods approximating to the terms of related obligations.
Actuarial gains and losses are recognised immediately in the Profit and
Loss account.
In case of funded plans, the fair value of the plan assets is reduced
from the gross obligations under the defined benefit plans, to
recognise the obligation on net basis.
Gains or losses on the curtailment or settlement of any defined
benefits plans are recognised when the curtailment or settlement
occurs. Past service cost is recognised as expense on a straight-line
basis over the average period until the benefits become vested.
iii) Long term employee benefits:
The obligation for long term employee benefits such as long term
compensated absences, is recognised in the same manner as in case of
defined benefit plans as mentioned in b) (ii) above.
I. BORROWING COSTS:
Borrowing cost includes interest, bank charges, amortization of
ancillary costs incurred in connection with arrangements of borrowing.
Borrowing costs whether specific or general, utilized for acquisition,
construction or production of qualifying assets are capitalised as part
of cost of such assets till the activities necessary for its intended
use are complete. General borrowing costs are capitalised at the
weighted average of such borrowings outstanding during the year. All
other borrowing costs are charged in statement of Profit & Loss of the
year in which incurred.
J. TAXES ON INCOME:
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred tax is recognised, on timing
difference, 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. Where there is unabsorbed depreciation or
carry forward losses, deferred tax assets are recognised only if there
is virtual certainty that sufficient future taxable income will be
available against which such assets can be realised. Other deferred tax
assets are recognised only to the extent there is reasonable certainty
of realisation in future. Such assets are reviewed at each Balance
Sheet date to reassess realisation.
Deferred tax in respect of timing differences which reverse during the
tax holiday period are not recognised. However, Deferred tax in respect
of timing differences which reverse after the tax holiday period are
recognised in the year in which the timing differences originate.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only for the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement". The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognized amounts and there
is an intention to settle the asset and liability on a net basis.
K. FOREIGN CURRENCY TRANSACTIONS:
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing at the time of the transaction.
ii) Monetary items denominated in foreign currency at the year end are
translated at the exchange rates prevailing at the Balance Sheet date.
iii) Premium or discount arising at the inception of the forward
exchange contract is amortised as income or expense over the period of
the contract. Any profit or loss arising in renewal or cancellation of
forward exchange contracts is recognised as income or expense during
the year.
iv) The Company accounts for exchange differences arising on
translation/ settlement of foreign currency monetary items as below.
a) Exchange differences arising on long term foreign currency monetary
items related to acquisition of fixed assets are capitalized or
decapitalized from the cost of assets and are depreciated over the
remaining useful life of the assets.
b) Exchange differences arising on other long term foreign currency
items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
c) All other exchange differences are recognized as income or expenses
in the period in which they arise.
For the purpose of (a) and (b) referred above , the Company treats a
foreign monetary item as " Long term Foreign Currency Monetary Item",
if it has a term of 12 months or more at the date of origination.
L. DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING:
The Company uses foreign currency contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating
to certain firm commitments and highly probable forecast transactions.
The Company does not hold derivative financial instruments for
speculative purposes. The Company has applied to such contracts the
principles of recognition set out in the Accounting Standard (AS 30) on
'Financial Instruments - Recognition and Measurement'. Changes in the
fair value of the contracts that are designated and effective as cash
flow hedge is directly recorded in the Hedge Reserve Account and is
recognized in the Statement of Profit and Loss in the same period or
periods during which the hedged transaction affects profit and loss.
Gains or losses on the ineffective transactions are recognized
immediately in the Profit and Loss Account. The premium or discount
arising at the inception of forward exchange contract is amortized and
recognized as an expense / income over the life of the contract.
M. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions are recognised when the company has present obligation as a
result of past events, for which 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 for the amount of the
obligation.
Contingent Liabilities are disclosed by way of notes to financial
statements. Contingent Assets are neither recognised nor disclosed in
the financial statements. Provisions and contingent liabilities are
reviewed at each Balance Sheet date.
N. CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE:
All contingencies and events occurring after the Balance Sheet date
which have a material effect on the financial position of the Company
are considered for preparing the financial statements.
O. RESEARCH AND DEVELOPMENT EXPENSES:
Expenditure relating to capital items is debited to Fixed Assets and
depreciated at applicable rates. Revenue expenditure is charged to
Profit and Loss Account of the period in which they are incurred.
P. GOVERNMENT GRANTS:-
i) The grants/subsidies received in the nature of promoters'
contribution are treated as capital receipts and credited to Capital
Reserve.
ii) The grants /subsidies relating to specific fixed assets are shown
as deduction from the cost of the respective assets concerned in
arriving at its book value.
iii) Grant in the form of revenue subsidy is treated as revenue receipt
and credited to 'Other Income' in Profit and Loss Account.
Q. EXCISE DUTY:
Finished Goods lying at factories have been valued at inclusive of
Excise Duty. The claim of Cenvat for Excise Duty paid on inputs is
accounted on the basis of claim. The Cenvat claim for Excise paid on
capital goods is accounted when the claim is allowed.
R. SEGMENT REPORTING:
i) Identification of segments
The company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the company operate.
ii) Inter-segment transfers
The company generally accounts for intersegment sales and transfers at
cost plus appropriate margins.
iii) Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
iv) Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
v) Segment accounting policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
S. EARNINGS PER SHARE:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes, if any) by the
weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the
period is adjusted for events such as bonus issue, bonus element in a
rights issue, share spilt, and reverse share split (consolidation of
shares) that have changed the number of equity shares outstanding,
without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
T. CASH AND CASH EQUIVALENTS:
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
U. MEASUREMENT OF EBIDTA:
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures EBITDA on the basis of profit/(loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expenses, finance costs and tax expenses.
V. OPERATING LEASES:
Payment and receipts of lease rentals are charged or credited to the
Statement of Profit and Loss on straight line basis over the period of
lease.
W. PROPOSED DIVIDEND:
Dividend recommended by the Board of Directors is provided for in the
accounts, pending approval at the Annual General Meeting.
Mar 31, 2014
A) BASIS OF ACCOUNTING:
The finnrcul atalamema have been prepared In accordance with the
aecountstg pnntdptas generally stcapiao n India (Indian GAAP) and
comply with the Companies (Accounting Standards) Rules. 2306 issued by
1ha GentrtJ Government and relevant pravisjona Of COmpaniaS Act, ] 356
and era baaed On the hislG- ca I coal convention.
B) USE ESTIMATES:
Preperation gl flrandal statements m oontormlty with ihe generally
accapted aocounting pnndpias require management In make ealmatm sod
assumptions that sited the reported imexrot* of tt«els end llabtfll**
on th* dab* otthotinsnoisl slstemenl* and the roportod amount of
revenues end oipense* during the reporting period Dtiferance between
the actual result end estimstoe. are recongnised in the period In Which
the results are knowimateriallsed..
C) FIXED ASSETS, DEFUECIATIONANDEXPENDITURE DURINGCONSTRUCTIONPERIOD:
TANGIBLE FIXED ASSETS
i) Fixed assets Lend ere stated the cost or acquisition imswoljon, net
oTeenvat and VAT credits avtUedlfiny, lets «ojmui.med depredation end
impairment lose, rf any
ii) Borrowing cost incurred during the period of
constuction acquired of assets is added to the nasi of Fixed
Assets. Major empansaa cm modification feltarationB increasing
elfidency,fespMilyorf1he qualifying fixed Besets are also capitalised.
Depreciation on fixed assets is provided on Street Line Method
at the rales and fn the manner preecritjad in Schedule XIV of Ihe
Compenies Act 1956.
b) In respect of major altoratiOnsImOdificStjofls forming an integral
part of existing assets, depredation is provided at the rale arrived Oh
the basis d useful hfe of such assets alter such
olterationsrmodiikelions or at (he rsle prescribed under Schedule XPV,
whichever is hgheron the total value ofauch assets
IMPAIRMENT OF ASSETS
The carrying amount of assets is reviewed at ear* Balance Sheeldaia 'nr
any ingestion of impairment based on in! emci.'extamc factors An
impenitent loss ig recognised wherever Ihe carrying amount of feed
assets euncaeds its recoverable amoenLTha recoverable amount is
measured as the higher of the net sailing price and iho value in use
deiermined by the prosenl value pi estimated future cash flows
INTANGIBLE FIXED ASSETS
Intangible assets acquired separately ere measured on miuel recognition
ai cost. Fqllowmg Initial recognition Intsng Me assets are carried at
cast less accumulated amortization and Bccumulalad Impairment loes,
iFany. Intangible assets are amtxlKBd on straight! basis over It*
usafal life of Ihe asaal not exceeding ten years.
E) INVESTMENTS:
Investments are classified into current and long term investments. Long
torm Investments ore canted el. cost. A provision lor dtinnution
value of long norm Investments Is mode far each mveglmenl Individually,
If such rjedlne is Other than lemponav. Current Investments
the lower of COM end fOr value, com puled categmy-wlee
E) INVENTORIES:
Inventdrioa are valued ae under
l) RAW MATERIALS, PACKING
valued at lower of Cost or nor realized value and for this purpose
MATERIALS AND STORES & SPARES.
cost fo determined on welflhied average Weis Due provision for
obsolescence is made.
It) FINISHED GOODS & WORK IN PROGRESS
At cost or net realisable value , whichever Is lower Cost is
determined on absorption basis. Due prevision for obsoiescene is made,
iii) BY-PRODUCTS
At net reahsabie value
F) REVENUE RECOGNITION:
I) SALES
o) Revenue N recogmod when H is roimbty measured no signlfitnnl
uncertainty exlsto as to its roiHiflten or collection.
Ravened from sale of goods H recognized on delivery of Ihe pod nets,
when ai significant contractual obligations haw been satisfied. Ihe
property In Die goods is transferred lora price, sijpilficarit risks
and rewards of ownership ere transferred In the customers end no
effective ownership is retained, b) Salas ffret off trade and Cash
discounts) Is i ndusive of excise. butlxdirdas errort
incenliveai'icenses, VAT/salos Lar
e) Excise duty pa id far captive consumption ol goods, where estival
credit is not available, is shown as excise axpans*.
II) DIVIDEND INCOME:
Dividend Income from Investment Is acwunled far when Ihe right to
recede Is established Hi) EXPORT BENEFITS!INCENTIVES:
The benefits Me accounted on the accrual basis.
G) EMPLOYEE BENEFITS:
a) Short term Employee Benefits:
All emplane benefits peyabla wholly with i twelve months Of rendering
the service era classified ea short term employee benefits. .Benefits
autih as salaries, wages, short tarm compensated absences etc,. and the
avpeded COM of bonus, e xgrata are jecogateed in the period In which me
am ptoyee renders the rata ted service
b) Post-Emptoymen Benefits:
(i) Defined Contribution Plana:
Stole governed provident fund scheme and employees state insurance
sdwrna era defied contiibubon plana The contributor, paid I payable
under 1he schemee is recoffiised thxing Ihe period ii which the
employeea cendeia Ihe celaladeervioes.
(i) Defined BofientFiflfls:
The employee's gratuity fand sefteme and oompertsaied awencei is
Company's daitned benolri plans.
The present value of the oMgation isvder such defined benefit plan is
detiarmlnsd based on actuarial valuation use the Projatitod Unit
Cred-1 MalixxJ, which raoogniws each pertodof service m giving nse to
add rionsi unit of employee benefits entitle mem and meesuras esch tail
separately to build up me firm oOHgmion. The obligation la measured at
the present value of tile estimated ftAan cash flows. The dfcoourit
ratos used far datormlnbtg ihe present value af the oHigaliOn under
defined benefit plans, is based on ihe market yields on Government
Securities ea at the Balance Shea! data, having maturity periode
approximating bothotanr* of related Dbfigabiona.
Actuenei gains and teases are recognised toanedlalely m ihe Profit and
Loss account.
In case rffundedpfera.ihe tor veXieoMhe plan assea isrediicad tram die
grass otigslionB under the defined Penefii plane, to mooguBa Via
obigelkm on net bams. Gains of tosses on the curtailment« seLtlmikKiL
of any defined, benefits plans are recognised when Ihe curtaiunem of
seitiemenl occurs Past service cost is recognised as expense on a
straight-lire basts over the average period until *e benefits become
veiled, ri) Long men employee benefits:
(c) Long term nmpioyoo benefits such as long tomt
ttomperiMted absences, is recipent In thasaron manner as m Case of
defend benefit plans aamentioned Inb)(l)above.
H) BORROWING COSTS-
Borrowing coat mdudes mtaresl, bank chargas, eiHntization of andBary
coals incurred in corviacbon with anangamartls of bomwlng. Borrowing
coats whether tpecific or general, uhfiznd far acquisition, construction
nr production of qualifying assets arocapriaesedaspartof ooetof auch
assets till the actnritiea necessary tor its Intendad use bib nomplala.
General oo mowing costa arecapital aed be Bib weyited average af such
bcrran- .a outstanding during [he year. A3 uthar banmdng amis are
charged in statement o' Pro'll S Loss 01 1to veer in Which incurred
I) TAXES ON INCOME:
Current tax la delenmiriad aa the emosnt of tin payatie m reaped of
taxable income ft* the year. Deferred reoogniaed. on iming
difference, being tho difference between taxable income and mounting
income lhel originate in one period end are capable of reutreal hone or
mors subsequent periods Where there ie unebeoitted depredation « cany
forward losses, deferreo tax awala wo recognised only If there »
virtual certainty that sufficient future tumble Income wit be Hvgitatie
against Whtit wto weetecen be realised Other deferred IB aseeh are
recognised only to thB extent them is reasonable certainty of
realisation El future. Sudi asaaia are reviewed at each Balance Sheet
dale Id reassoES realisation.
Deferred Tax m reaped of tiling d iterances wittil mnae dining hfl to
iriday panod are not rrogniisd. However Mb rad tax m imped of tiling
dilirei when rave ms after he to hn'day period ere recognised h he
year n wnkh Ihe It irjngdiffEtitnces cremate
Mnimum Tax(MAT] paid m a year ia charged in lbs Sslemenl of
proti and bes as nnren: lax The rampan) reccgimaa HAT mdf atarahla as
an asset only for Bva Extent 1/al there is convincing ovdercs dial the
nxryiery w pay noimal heema to during tie ipedSad perioc le., the
period hr wfiidi MAT erect is slnmri 6 be earned toward In Ihs yes: in
toidi the company recap MAT aedt m to asnf n secontanoe wdh the
Guidance ftots on Aapunhng far CtoS Avariahle si imped of UrtlmtEii
AJOsmalrre Tax inter tie Income-tax Ad, 1551, He said asset I) imati by
wvtff fledft the of pnjfirindkss J shown as HIXT Quit Eltdeme if
The oynpany rwrisws Ihe *MAT tm* BiiBttonerr user d be reponhg dale
end mtto down mael tope Eden the rarpany doss nd haw (mine ng evtOanos
Jidltwilpsyromisl taxdL-ing theapedled ptooO.
J) F0REIGH CURRENCY TRANSACTIONS :
i) Transactions danominihd hregn os nances araitomtally reavdecat Its
exchange rati prevailng stthe tree on the transaction.
ii) Moneastytanti denominated In nmneyai the year end erotenslatid gt
The embargo rates nevai.rg at the Balance Stwetcati
iii) Pteitipn or dseotitl artsngat the timUgn of thetonmd etdtange
contred a area rased as rtocme or expense Oto the period of the retold.
Any pgflt or b«S tiTing h rat or csitotocn of IrwaicmuStango
conIreels a reoog^sed as inane oratpensa Biting he tear
iv) The Company accounts lor Euhangedirerircm anungootoiutoif
Htllwre-il fcmiiri niitooy itvebry tons m Oetor.
a) Ex rfrangaddietwiM anting on long tom bmi tijptoCyiitinMjy law
ratted to icqu When of food Eateti ciodie(l or ttoaeiU ati ton ho
nx t/ assHs and nre eoDmcalad over ha lEitttoiing utori Hi ot feasants
b) Extfiftngd ditTcfweos Wittog or. oditr tog tout tuTtoSy l»m are
aKuiratelod In the 'Ecmlgr ditoiey MOnobtry l»tn TrwiSWxVi D B6w.fi)
ACtcurl" and amonllod iwneewy lie of ho co neared mtiiyrtto
Mar 31, 2013
A) BASIS OF ACCOUNTING:
The financial statements have been prepared in accordance with the
accounting principles generally accepted in India (Indian GAAP) and
comply with the Companies (Accounting Standards) Rules, 2006 issued by
the Central Government and relevant provisions of Companies Act,1956
and are based on the historical cost convention.
B) USE OF ESTIMATES:
Preparation of financial statements in conformity with the generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
on the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Difference between
the actual result and estimates, are recognised in the period in which
the results are known/materialised. C ) FIXED ASSETS, DEPRECIATION AND
EXPENDITURE DURING CONSTRUCTION PERIOD: TANGIBLE FIXED ASSETS i) Fixed
assets except Freehold Land are stated at cost of acquisition &
installation, net of cenvat and VAT credits availed , if any, less
accumulated depreciation and impairment loss, if any.
ii) Borrowing costs incurred during the period of
Construction/acquisition of assets is added to the cost of Fixed
Assets. Major expenses on modification /alterations increasing
efficiency/capacity of the qualifying fixed assets are also
capitalised. iii) a) Depreciation on fixed assets is provided on
Straight Line Method at the rates and in the manner prescribed
inSchedule XIV of the Companies Act 1956, (as amended). b) In respect
of major alterations/modifications forming an integral part of existing
assets, depreciation is provided at the rate arrived on the basis of
useful life of such assets after such alterations/modifications or at
the rate prescribed under Schedule
XIV, whichever is higher on the total value of such assets.
iv)IMPAIRMENT OF ASSETS The carrying amount of assets is reviewed at
each Balance Sheet date for any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of fixed assets exceeds its recoverable amount. The
recoverable amount is measured as the higher of the net selling price
and the value in use determined by the present value of estimated
future cash flows.
INTANGIBLE FIXED ASSETS
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition intangible assets
are carried at cost less accumulated amortization and accumulated
impairment loss, if any. Intangible assets are amortized on
straightline basis over the useful life of the asset not exceeding ten
years.
D) INVESTMENTS:
Investments are classified into current and long term investments. Long
term investments are carried at cost. A provision for diminution in
value of long term investments is made for each investment
individually, if such decline is other than temporary. Current
investments are stated at the lower of cost and fair value, computed
category-wise.
E) INVENTORIES: Inventories are valued as under:
i) RAW MATERIALS, PACKING Valued at lower of cost or net realizable
value and for this purpose
MATERIALS AND STORES& SPARES. cost is determined on weighted average
basis. Due provision for obsolescence is made.
ii) FINISHED GOODS & WORK IN At cost or net realisable value, whichever
is lower. Cost is
PROGRESS determined on absorption basis. Due provision for obsolescence
is made.
iii) BY-PRODUCTS At net realisable value
F) REVENUE RECOGNITION: i) SALES:
a) Revenue is recognized when it is reliably measured and no
significant uncertainty exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied , the
property in the goods is transferred for a price , significant risks
and rewards of ownership are transferred to the customers and no
effective ownership is retained.
b) Sales (net off trade and cash discounts) is inclusive of excise, but
excludes export incentives/licenses, VAT/sales tax.
c) Excise duty paid for captive consumption of goods, where cenvat
credit is not available, is shown as excise expense. ii) DIVIDEND
INCOME:
Dividend income from Investment is accounted for when the right to
receive is established. iii) EXPORT BENEFITS/INCENTIVES:
The benefits are accounted on the accrual basis.
G) EMPLOYEE BENEFITS:
a) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, short term compensated absences etc., and the
expected cost of bonus, ex-gratia are recognised in the period in which
the employee renders the related service.
b) Post-Employment Benefits: (i) Defined Contribution Plans:
State governed provident fund scheme and employees state insurance
scheme are defined contribution plans. The contribution paid / payable
under the schemes is recognised during the period in which the
employees renders the related services. (ii) Defined Benefit Plans:
The employeeÂs gratuity fund scheme and compensated absences is
CompanyÂs defined benefit plans.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to
additional unit of employee benefits entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, is based on the market
yields on Government Securities as at the Balance Sheet date, having
maturity periods approximating to the terms of related obligations.
Actuarial gains and losses are recognised immediately in the Profit and
Loss account. In case of funded plans, the fair value of the plan
assets is reduced from the gross obligations under the defined benefit
plans, to recognise the obligation on net basis. Gains or losses on
the curtailment or settlement of any defined benefits plans are
recognised when the curtailment or settlement occurs. Past service cost
is recognised as expense on a straight-line basis over the average
period until the benefits become vested.
c) Long term employee benefits:
The obligation for long term employee benefits such as long term
compensated absences, is recognised in the same manner as in case of
defined benefit plans as mentioned
in b) (ii) above. H) BORROWING COSTS:
Borrowing cost includes interest, bank charges, amortization of
ancillary costs incurred in connection with arrangements of borrowing.
Borrowing costs whether specific or general, utilized for acquisition,
construction or production of qualifying assets are capitalised as part
of cost of such assets till the activities necessary for its intended
use are complete. General borrowing
costs are capitalised at the weighted average of such borrowings
outstanding during the year. All other borrowing costs are charged in
statement of Profit & Loss of the year in which incurred.
I) TAXES ON INCOME:
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred tax is recognised, on timing
difference, 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. Where there is unabsorbed depreciation or
carry forward losses, deferred tax assets are recognised only if there
is virtual certainty that sufficient future taxable income will be
available against which such assets can be realised. Other deferred tax
assets are recognised only to the extent there is reasonable certainty
of realisation in future. Such assets are reviewed at each Balance
Sheet date to reassess realisation. Deferred tax in respect of timing
differences which reverse during the tax holiday period are not
recognised. However Deferred tax in respect of timing differences which
reverse after the tax holiday period are recognised in the year in
which the timing differences originate.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only for the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement". The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
J) FOREIGN CURRENCY TRANSACTIONS:
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing at the time of the transaction.
ii) Monetary items denominated in foreign currency at the year end are
translated at the exchange rates prevailing at the Balance Sheet date.
iii) Premium or discount arising at the inception of the forward
exchange contract is amortised as income or expense over the period of
the contract. Any profit or loss arising in renewal
or cancellation of forward exchange contracts is recognised as income
or expense during the year. iv) The Company accounts for exchange
differences arising on translation/ settlement of foreign currency
monetary items as below.
a) Exchange differences arising on long term foreign currency monetary
items related to acquisition of fixed assets are capitalized or
decapitalized from the cost of assets and are depreciated over the
remaining useful life of the assets.
b) Exchange differences arising on other long term foreign currency
items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
c) All other exchange differences are recognized as income or expenses
in the period in which they arise.
For the purpose of (a) and (b) referred above , the Company treats a
foreign monetary item as " Long term Foreign Currency Monetary Item",
if it has a term of 12 months or more at the date of origination.
K) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING:
The Company uses foreign currency contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating
to certain firm commitments and highly probable forecast transactions.
The Company does not hold derivative financial instruments for
speculative purposes. The Company has applied to such contracts the
principles of recognition set out in the Accounting Standard (AS 30) on
ÂFinancial Instruments  Recognition and MeasurementÂ. Changes in the
fair value of the contracts that are designated and effective as cash
flow hedge is directly recorded in the Hedge Reserve Account and is
recognized in the Statement of Profit and Loss in the same period or
periods during which the hedged transaction affects profit and loss.
Gains or losses on the ineffective transactions are recognized
immediately in the Profit and Loss Account.
L) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions are recognised when the company has present obligation as a
result of past events, for which it is probable that an outflow of
resources embodying economic benefits will
be required to settle the obligation and a reliable estimate can be ade
for the amount of the obligation. Contingent Liabilities are disclosed
by way of notes to financial statements. Contingent Assets are neither
recognised nor disclosed in the financial statements. Provisions and
contingent liabilities are reviewed at each Balance Sheet date. M)
CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE:
All contingencies and events occurring after the Balance Sheet date
which have a material effect on the financial position of the Company
are considered for preparing the financial
statements. N) RESEARCH AND DEVELOPMENT EXPENSES:
Expenditure relating to capital items is debited to Fixed Assets and
depreciated at applicable rates. Revenue expenditure is charged to
Profit and Loss Account of the period in which
they are incurred. O) GOVERNMENT GRANTS:- i) The grants/subsidies
received in the nature of promoters contribution are treated as
capital receipts and credited to Capital Reserve.
ii) The grants /subsidies relating to specific fixed assets are shown
as deduction from the cost of the respective assets concerned in
arriving at its book value.
iii) Grant in the form of revenue subsidy is treated as revenue receipt
and credited to ÂOther Income in Profit and Loss Account. P) EXCISE
DUTY:
Finished Goods lying at factories have been valued at inclusive of
Excise Duty. The claim of Cenvat for Excise Duty paid on inputs is
accounted on the basis of claim. The Cenvat claim
for Excise paid on capital goods is accounted when the claim is
allowed. Q) SEGMENT REPORTING:
i) Identification of segments
The companyÂs operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the company operate.
ii) Inter-segment transfers
The company generally accounts for intersegment sales and transfers at
cost plus appropriate margins.
iii) Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
iv) Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
v) Segment accounting policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole. R) EARNINGS PER SHARE:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes, if any) by the
weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the
period is adjusted for events such as bonus issue, bonus element in a
rights issue, share spilt, and reverse share split (consolidation of
shares) that have changed the number of equity shares outstanding,
without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares. S)
CASH AND CASH EQUIVALENTS: Cash and cash equivalents for the purposes
of cash flow statement comprise cash at bank and in hand and short-term
investments with an original maturity of three months or less.
T) MEASUREMENT OF EBIDTA:
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization
(EBITDA) as a separate line item on the face of the statement of profit
and loss. The company measures EBITDA on the basis of profit/(loss)
from continuing operations. In its measurement, the company does not
include depreciation and amortization expenses, finance costs and tax
expenses.
Mar 31, 2012
A) ACCOUNTING CONVENTION:
The financial statements have been prepared in accordance with the
accounting principles generally accepted in India (Indian GAAP) and
comply with the Companies (Accounting Standards) Rules,2006 issued by
the Central Government and relevant provisions of Companies Act, 1956
and are based on the historical cost convention.
B) USE OF ESTIMATES:
Preparation of financial statements in conformity with the generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
on the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Difference between
the actual result and estimates, are recognised in the period in which
the results are known/materialised.
C) REVENUE RECOGNITION:
i) SALES:
a) Revenue is recognized when it is earned and no significant
uncertainty exists as to its realization or collection. Revenue from
sale of goods is recognized on delivery of the products, when all
significant contractual obligations have been satisfied , the property
in the goods is transferred for a price , significant risks and rewards
of ownership are transferred to the customers and no effective
ownership is retained.
b) Sales is inclusive of excise, and exclusive of export
incentives/licenses, profit or loss on forward exchange contracts on
sales and VAT/central sales tax and trade and cash discount.
c) Excise duty paid for captive consumption of goods, where cenvat
credit is not available, is shown as excise expense.
ii) DIVIDEND INCOME:
Dividend income from Investment is accounted for when the right to
receive is established.
iii) EXPORT BENEFITS/INCENTIVES:
The benefits are accounted on the accrual basis.
D) FIXED ASSETS, DEPRECIATION AND EXPENDITURE DURING CONSTRUCTION
PERIOD:
i) Fixed assets are stated at cost of acquisition & installation, net
of cenvat and VAT credits availed ,if any, less accumulated
depreciation and impairment loss, if any. Borrowing costs incurred
during the period of Construction/acquisition of assets is added to the
cost of Fixed Assets. Major expenses on modification / alterations
increasing efficiency/capacity of the plant are also capitalised.
ii) a) Depreciation on fixed assets is provided on Straight Line Method
at the rates and in the manner prescribed in Schedule XIV of the
Companies Act 1956, (as amended).
b) In respect of major alterations/modifications forming an integral
part of existing assets, depreciation is provided at the rate arrived
on the basis of useful life of such assets after such
alterations/modifications or at the rate prescribed under Schedule XIV,
whichever is higher on the total value of such assets.
iii) IMPAIRMENT OF ASSETS
The carrying amount of assets is reviewed at each Balance Sheet date
for any indication of impairment based on internal/external factors. An
impairment loss is recognised wherever the carrying amount of fixed
assets exceeds its recoverable amount. The recoverable amount is
measured as the higher of the net selling price and the value in use
determined by the present value of estimated future cash flows.
E) INVESTMENTS:
Investments are classified into current and long term investments. Long
term investments are carried at cost. A provision for diminution in
value of long term investments is made for each investment
individually, if such decline is other than temporary. Current
investments are stated at the lower of cost and fair value, computed
category-wise.
F) INVENTORIES:
Inventories are valued as under:
i) RAW MATERIALS, PACKING Valued at lower of cost or net realizable
value and for this purpose cost is MATERIALS AND STORES& SPARES.
determined on weighted average basis. Due provision for obsolescence is
made.
ii) FINISHED GOODS & WORK IN At cost or net realisable value, whichever
is lower. Cost is PROGRESS determined on absorption basis. Due
provision for obsolescence is made.
iii) BY PRODUCTS At net realisable value
G) EMPLOYEE BENEFITS:
a) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, short term compensated absences etc., and the
expected cost of bonus, ex-gratia are recognised in the period in which
the employee renders the related service.
b) Post-Employment Benefits:
(i) Defined Contribution Plans:
State governed provident fund scheme and employees state insurance
scheme are defined contribution plans. The contribution paid / payable
under the schemes is recognised during the period in which the
employees renders the related services.
(ii) Defined Benefit Plans:
The employee's gratuity fund scheme and compensated absences is
Company's defined benefit plans.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to
additional unit of employee benefits entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, is based on the market
yields on Government Securities as at the Balance Sheet date, having
maturity periods approximating to the terms of related obligations.
Actuarial gains and losses are recognised immediately in the Profit and
Loss account.
In case of funded plans, the fair value of the plan assets is reduced
from the gross obligations under the defined benefit plans, to
recognise the obligation on net basis. Gains or losses on the
curtailment or settlement of any defined benefits plans are recognised
when the curtailment or settlement occurs. Past service cost is
recognised as expense on a straight-line basis over the average period
until the benefits become vested.
c) Long term employee benefits:
The obligation for long term employee benefits such as long term
compensated absences, is recognised in the same manner as in case of
defined benefit plans as mentioned in b) (ii) above.
H) BORROWING COSTS:
Borrowing costs whether specific or general, utilized for acquisition,
construction or production of qualifying assets are capitalised as part
of cost of such assets till the activities necessary for its intended
use are complete. General borrowing costs are capitalised at the
weighted average of such borrowings outstanding during the year. All
other borrowing costs are charged in statement of Profit & Loss of the
year in which incurred.
I) TAXES ON INCOME:
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred tax is recognised, on timing
difference, 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. Where there is unabsorbed depreciation or
carry forward losses, deferred tax assets are recognised only if there
is virtual certainty that sufficient future taxable income will be
available against which such assets can be realised. Other deferred tax
assets are recognised only to the extent there is reasonable certainty
of realisation in future. Such assets are reviewed at each Balance
Sheet date to reassess realisation.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only for the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement".
The company reviews the "MAT credit entitlement" asset at each
reporting date and writes down the asset to the extent the company does
not have convincing evidence that it will pay normal tax during the
specified period.
J) FOREIGN CURRENCY TRANSACTIONS:
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing at the time of the transaction.
ii) Monetary items denominated in foreign currency at the year end are
translated at the exchange rates prevailing at the Balance Sheet date.
iii) Premium or discount arising at the inception of the forward
exchange contract is amortised as income or expense over the period of
the contract. Any profit or loss arising in renewal or cancellation of
forward exchange contracts is recognised as income or expense during
the year.
iv) Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Profit and Loss
Account.
v) As per the notification issued by Ministry of Corporate Affairs on
29-12-2011 relating to "The Effects of Changes in Foreign Exchange
Rates", paragraph 46A of Accounting standard 11, namely, in respect
of accounting periods commencing on or after the 1st April, 2011, the
Company which had earlier exercised the option under paragraph 46 and
such option to be irrevocable and to be applied to all such foreign
currency monetary items, the exchange differences arising on reporting
of long-term foreign currency monetary items at rates different from
those at which they were initially recorded during the period, or
reported in previous financial statements, in so far as they relate to
the acquisition of a depreciable capital asset, is added to or deducted
from the cost of the asset and shall be depreciated over the balance
life of the asset, and in other cases, is accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" in the
financial statements and amortized over the balance period of such long
term asset or liability, by recognition as income or expense in each of
such periods, with the exception of exchange differences dealt with in
accordance with the provisions of paragraph 15 of the said rules. This
policy will be applicable till 31-03-2020.
K) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING:
The Company uses foreign currency contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating
to certain firm commitments and highly probable forecast transactions.
The Company does not hold derivative financial instruments for
speculative purposes. The Company has applied to such contracts the
principles of recognition set out in the Accounting Standard (AS 30) on
'Financial Instruments - Recognition and Measurement'. Changes in
the fair value of the contracts that are designated and effective as
cash flow hedge is directly recorded in the Hedge Reserve Account and
is recognized in the Statement of Profit and Loss in the same period or
periods during which the hedged transaction affects profit and loss.
Gains or losses on the ineffective transactions are recognized
immediately in the Profit and Loss Account.
L) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions are recognised when the company has present obligation as a
result of past events, for which 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 for the amount of the
obligation.
Contingent Liabilities are disclosed by way of notes to financial
statements. Contingent Assets are neither recognised nor disclosed in
the financial statements. Provisions and contingent liabilities are
reviewed at each Balance Sheet date.
M) CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE:
All contingencies and events occurring after the Balance Sheet date
which have a material effect on the financial position of the Company
are considered for preparing the financial statements.
N) RESEARCH AND DEVELOPMENT EXPENSES:
Expenditure relating to capital items is debited to Fixed Assets and
depreciated at applicable rates. Revenue expenditure is charged to
Profit and Loss Account of the period in which they are incurred.
O) GOVERNMENT GRANTS:-
i) The grants/subsidies received in the nature of promoters'
contribution are treated as capital receipts and credited to Capital
Reserve.
ii) The grants /subsidies relating to specific fixed assets are shown
as deduction from the cost of the respective assets concerned in
arriving at its book value.
iii) Grant in the form of revenue subsidy is treated as revenue receipt
and credited to 'Other Income' in Profit and Loss Account.
P) EXCISE DUTY:
Finished Goods lying at factories have been valued at inclusive of
Excise Duty. The claim of Cenvat for Excise Duty paid on inputs is
accounted on the basis of claim. The Cenvat claim for Excise paid on
capital goods is accounted when the claim is allowed.
Q) SEGMENT REPORTING:
i) Identification of segments - The company's operating businesses
are organized and managed separately according to the nature of
products and services provided, with each segment representing a
strategic business unit that offers different products and serves
different markets. The analysis of geographical segments is based on
the areas in which major operating divisions of the company operate.
ii) Inter-segment transfers - The company generally accounts for
intersegment sales and transfers at cost plus appropriate margins.
iii) Allocation of common costs - Common allocable costs are allocated
to each segment according to the relative contribution of each segment
to the total common costs.
iv) Unallocated items - Unallocated items include general corporate
income and expense items which are not allocated to any business
segment.
v) Segment accounting policies - The company prepares its segment
information in conformity with the accounting policies adopted for
preparing and presenting the financial statements of the company as a
whole.
R) EARNINGS PER SHARE:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes, if any) by the
weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the
period is adjusted for events such as bonus issue, bonus element in a
rights issue, share spilt, and reverse share split (consolidation of
shares) that have changed the number of equity shares outstanding,
without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
S) CASH AND CASH EQUIVALENTS:
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
T) MEASUREMENT OF EBIDTA:
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures EBITDA on the basis of profit/(loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expenses, finance costs and tax expenses.
Mar 31, 2011
A) ACCOUNTING CONVENTION
The financial statements have been prepared in accordance with the
accounting principles generally accepted in India (Indian GAAP) and
comply with the Companies (Accounting Standards) Rules,2006 issued by
the Central Government and relevant provisions of Companies Act,1956
and are based on the historical cost convention.
B) USE OF ESTIMATES
Preparation of financial statements in conformity with the generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
on the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Difference between
the actual result and estimates, are recognised in the period in which
the results are known/materialised.
C) REVENUE RECOGNITION
i) SALES
a) Revenue is recognized when it is earned and no significant
uncertainty exists as to its realization or collection. Revenue from
sale of goods is recognized on delivery of the products, when all
significant contractual obligations have been satisfied , the property
in the goods is transferred for a price , significant risks and rewards
of ownership are transferred to the customers and no effective
ownership is retained.
b) Sales is inclusive of excise, export incentives/licenses, profit or
loss on forward exchange contracts on sales and exclusive of VAT/ sales
tax and trade discount.
c) Excise duty paid for captive consumption of goods, where cenvat
credit is not available, is shown as excise expense.
ii) DIVIDEND INCOME
Dividend income from Investment is accounted for when the right to
receive is established. iii) EXPORT BENEFITS/INCENTIVES
The benefits are accounted on the accrual basis.
D) FIXED ASSETS, DEPRECIATION AND EXPENDITURE DURING CONSTRUCTION
PERIOD
i) Fixed assets are stated at cost of acquisition & installation, net
of cenvat and VAT credits availed, if any, less accumulated
depreciation and impairment loss, if any. Borrowing costs incurred
during the period of Construction/acquisition of assets is added to the
cost of Fixed Assets. Major expenses on modification /alterations
increasing efficiency/capacity of the plant are also capitalised.
ii) a) Depreciation on fixed assets is provided on Straight Line Method
at the rates and in the manner prescribed in Schedule XIV of the
Companies Act 1956, (as amended).
b) Incremental cost arising on account of translation of foreign
currency liabilities up to 31.03.2007 for acquisition of fixed assets,
depreciation has been provided over the residual life of the respective
assets.
c) In respect of major alterations/modifications forming an integral
part of existing assets, depreciation is provided at the rate arrived
on the basis of useful life of such assets after such
alterations/modifications or at the rate prescribed under Schedule XIV,
whichever is higher on the total value of such assets.
iii) Impairment of Assets
The carrying amount of assets is reviewed at each Balance Sheet date
for any indication of impairment based on internal/external factors.
An impairment loss is recognised wherever the carrying amount of fixed
assets exceeds its recoverable amount. The recoverable amount is
measured as the higher of the net selling price and the value in use
determined by the present value of estimated future cash flows.
E) INVESTMENTS
Investments are classified into current and long term investments. Long
term investments are carried at cost. A provision for diminution in
value of long term investments is made for each investment
individually, if such decline is other than temporary. Current
investments are stated at the lower of cost and fair value , computed
categorywise.
F) INVENTORIES
Inventories are valued as under:
i) RAW MATERIALS, PACKING
MATERIALS AND STORES& SPARES.
Valued at lower of cost or net realizable value and for this purpose
cost is determined on weighted average basis. Due provision for
obsolescence is made.
ii) FINISHED GOODS & WORK IN PROGRESS
At cost or net realisable value, whichever is lower. Cost is determined
on absorption basis. Due provision for obsolescence is made.
iii) By Products At net realisable value
G) EMPLOYEE BENEFITS
a) Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, short term compensated absences etc., and the
expected cost of bonus, ex-gratia are recognised in the period in which
the employee renders the related service.
b) Post-Employment Benefits
(i) Defined Contribution Plans
State governed provident fund scheme and employees state insurance
scheme are defined contribution plans. The contribution paid / payable
under the schemes is recognised during the period in which the
employees renders the related services.
(ii) Defined Benefit Plans
The employee's gratuity fund scheme and compensated absences is
Company's defined benefit plans.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to
additional unit of employee benefits entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, is based on the market
yields on Government Securities as at the Balance Sheet date, having
maturity periods approximating to the terms of related obligations.
Actuarial gains and losses are recognised immediately in the Profit and
Loss account.
In case of funded plans, the fair value of the plan assets is reduced
from the gross obligations under the defined benefit plans, to
recognise the obligation on net basis.
Gains or losses on the curtailment or settlement of any defined
benefits plans are recognised when the curtailment or settlement
occurs. Past service cost is recognised as expense on a straight-line
basis over the average period until the benefits become vested. c)
Long term employee benefits
The obligation for long term employee benefits such as long term
compensated absences, is recognised in the same manner as in case of
defined benefit plans as mentioned in b) (ii) above.
H) BORROWING COSTS
Borrowing costs whether specific or general, utilized for acquisition,
construction or production of qualifying assets are capitalised as part
of cost of such assets till the activities necessary for its intended
use are complete. General borrowing costs are capitalised at the
weighted average of such borrowings outstanding during the year. All
other borrowing costs are charged in statement of Profit & Loss of the
year in which incurred.
I) TAXES ON INCOME
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred tax is recognised, on timing
difference, 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. Where there is unabsorbed depreciation or
carry forward losses, deferred tax assets are recognised only if there
is virtual certainty that sufficient future taxable income will be
available against which such assets can be realised. Other deferred tax
assets are recognised only to the extent there is reasonable certainty
of realisation in future. Such assets are reviewed at each Balance
Sheet date to reassess realisation.
J) FOREIGN CURRENCY TRANSACTIONS
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing at the time of the transaction.
ii) Monetary items denominated in foreign currency at the year end are
translated at the exchange rates prevailing at the Balance Sheet date.
iii) Premium or discount arising at the inception of the forward
exchange contract is amortised as income or expense over the period of
the contract. Any profit or loss arising in renewal or cancellation of
forward exchange contracts is recognised as income or expense during
the year.
iv) Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Profit and Loss
Account.
K) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING
The Company uses foreign currency contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating
to certain firm commitments and highly probable forecast transactions.
The Company does not hold derivative financial instruments for
speculative purposes. The Company has applied to such contracts the
principles of recognition set out in the Accounting Standard (AS 30) on
ÃFinancial Instruments - Recognition and Measurement'. Changes in the
fair value of the contracts that are designated and effective as
cashflow hedge is directly recorded in the Hedge Reserve Account and is
recognized in the Statement of Profit and Loss in the same period or
periods during which the hedged transaction affects profit and loss.
Gains or losses on the ineffective transactions are recognized
immediately in the Profit and Loss Account.
L) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognised when the company has present obligation as a
result of past events, for which 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 for the amount of the
obligation.
Contingent Liabilities are disclosed by way of notes to financial
statements.
Contingent Assets are neither recognised nor disclosed in the financial
statements.
Provisions and contingent liabilities are reviewed at each Balance
Sheet date.
M) CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
All contingencies and events occurring after the Balance Sheet date
which have a material effect on the financial position of the Company
are considered for preparing the financial statements.
N) RESEARCH AND DEVELOPMENT EXPENSES
Expenditure relating to capital items is debited to Fixed Assets and
depreciated at applicable rates. Revenue expenditure is charged to
Profit and Loss Account of the period in which they are incurred.
O) GOVERNMENT GRANTS
i) The grants/subsidies received in the nature of promoters'
contribution are treated as capital receipts and credited to Capital
Reserve.
ii) The grants /subsidies relating to specific fixed assets are shown
as deduction from the cost of the respective assets concerned in
arriving at its book value.
iii) Grant in the form of revenue subsidy is treated as revenue receipt
and credited to ÃOther Income' in Profit and Loss Account.
P) EXCISE DUTY
Finished Goods lying at factories have been valued at inclusive of
Excise Duty. The claim of Cenvat for Excise Duty paid on inputs is
accounted on the basis of claim. The Cenvat claim for Excise paid on
capital goods is accounted when the claim is allowed.
Mar 31, 2010
A) ACCOUNTING CONVENTION:
The financial statements have been prepared in accordance with the
accounting principles generally accepted in India (Indian GAAP) and
comply with the Companies (Accounting Standards) Rules,2006 issued by
the Central Government and relevant provisions of Companies Act,1956
and are based on the historical cost convention.
B) USE OF ESTIMATES:
Preparation of financial statements in conformity with the generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
on the date of the financial statements and the reported amount of
revenues and expenses during the reporting period.
Difference between the actual result and estimates, are recognised in
the period in which the results are known/materialised.
C) REVENUE RECOGNITION:
i) SALES:
a) Revenue is recognized when it is earned and no significant
uncertainty exists as to its realization or collection. Revenue from
sale of goods is recognized on delivery of the products, when all
significant contractual obligations have been satisfied , the property
in the goods is transferred for a price , significant risks and rewards
of ownership are transferred to the customers and no effective
ownership is retained.
b) Sales is inclusive of excise, export incentives/licenses, profit or
loss on forward exchange contracts on sales and exclusive of VAT/ sales
tax and trade discount.
c) Excise duty paid for captive consumption of goods, where cenvat
credit is not available, is shown as excise expense.
ii) DIVIDEND INCOME:
Dividend income from Investment is accounted for when the right to
receive is established.
iii) EXPORT BENEFITS/INCENTIVES:
The benefits are accounted on the accrual basis.
D) FIXED ASSETS, DEPRECIATION AND EXPENDITURE DURING CONSTRUCTION
PERIOD:
i) Fixed assets are stated at cost of acquisition & installation, net
of cenvat and VAT credits availed ,if any, less accumulated
depreciation and impairment loss, if any. Borrowing costs incurred
during the period of Construction/acquisition of assets is added to the
cost of Fixed Assets. Major expenses on modification /alterations
increasing efficiency/capacity of the plant are also capitalised.
ii) a) Depreciation on fixed assets is provided on Straight Line Method
at the rates and in the manner prescribed in Schedule XIV of the
Companies Act 1956, (as amended).
b) Incremental cost arising on account of translation of foreign
currency liabilities up to 31.03.2007 for acquisition of fixed assets,
depreciation has been provided over the residual life of the respective
assets.
c) In respect of major alterations/modifications forming an integral
part of existing assets, depreciation is provided at the rate arrived
on the basis of useful life of such assets after such
alterations/modifications or at the rate prescribed under Schedule XIV,
whichever is higher on the total value of such assets.
iii) IMPAIRMENT OF ASSETS
The carrying amount of assets is reviewed at each Balance Sheet date
for any indication of impairment based on internal/external factors.
An impairment loss is recognised wherever the carrying amount of fixed
assets exceeds its recoverable amount. The recoverable amount is
measured as the higher of the net selling price and the value in use
determined by the present value of estimated future cash flows.
E) INVESTMENTS:
Investments are classified into current and long term investments. Long
term investments are carried at cost. A provision for diminution in
value of long term investments is made for each investment
individually, if such decline is other than temporary. Current
investments are stated at the lower of cost and fair value , computed
categorywise.
F) INVENTORIES:
Inventories are valued as under:
i) RAW MATERIALS, PACKING Valued at lower of cost or net realizable
value and for this purpose cost is
determined
MATERIALS AND STORES& SPARES. on weighted average basis. Due provision
for obsolescence is made.
ii) FINISHED GOODS & WORK IN At cost or net realisable value, whichever
is lower. Cost is determined on absorption
PROGRESS basis. Due provision for obsolescence is
made.
iii) BY PRODUCTS At cost or net realisable value, whichever
is lower.
G) EMPLOYEE BENEFITS:
a) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, short term compensated absences etc., and the
expected cost of bonus, ex-gratia are recognised in the period in which
the employee renders the related service.
b) Post-Employment Benefits:
(i) Defined Contribution Plans:
State governed provident fund scheme and employees state insurance
scheme are defined contribution plans. The contribution paid / payable
under the schemes is recognised during the period in which the
employees renders the related services.
(ii) Defined Benefit Plans:
The employees gratuity fund scheme and compensated absences is
Companys defined benefit plans.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to
additional unit of employee benefits entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, is based on the market
yields on Government Securities as at the Balance Sheet date, having
maturity periods approximating to the terms of related obligations.
Actuarial gains and losses are recognised immediately in the Profit and
Loss account.
In case of funded plans, the fair value of the plan assets is reduced
from the gross obligations under the defined benefit plans, to
recognise the obligation on net basis.
Gains or losses on the curtailment or settlement of any defined
benefits plans are recognised when the curtailment or settlement
occurs. Past service cost is recognised as expense on a straight-line
basis over the average period until the benefits become vested.
c) Long term employee benefits :
The obligation for long term employee benefits such as long term
compensated absences, is recognised in the same manner as in case of
defined benefit plans as mentioned in b) (ii) above.
H) BORROWING COSTS:
Borrowing costs whether specific or general, utilized for acquisition,
construction or production of qualifying assets are capitalised as part
of cost of such assets till the activities necessary for its intended
use are complete. General borrowing costs are capitalised at the
weighted average of such borrowings outstanding during the year. All
other borrowing costs are charged in statement of Profit & Loss of the
year in which incurred.
I) TAXES ON INCOME:
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred tax is recognised, on timing
difference, 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. Where there is unabsorbed depreciation or
carry forward losses, deferred tax assets are recognised only if there
is virtual certainty that sufficient future taxable income will be
available against which such assets can be realised. Other deferred tax
assets are recognised only to the extent there is reasonable certainty
of realisation in future. Such assets are reviewed at each Balance
Sheet date to reassess realisation.
J) FOREIGN CURRENCY TRANSACTIONS:
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing at the time of the transaction. ii)
Monetary items denominated in foreign currency at the year end are
translated at the exchange rates prevailing at the Balance Sheet date.
iii) Premium or discount arising at the inception of the forward
exchange contract is amortised as income or expense over the period of
the contract.
Any profit or loss arising in renewal or cancellation of forward
exchange contracts is recognised as income or expense during the year.
iv) Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Profit and Loss
Account.
K) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING:
The Company uses foreign currency contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating
to certain firm commitments and highly probable forecast transactions.
The Company does not hold derivative financial instruments for
speculative purposes. The Company has applied to such contracts the
principles of recognition set out in the Accounting Standard (AS 30) on
ÃFinancial Instruments à Recognition and MeasurementÃ. Changes in the
fair value of the contracts that are designated and effective as hedge
is directly recorded in the Hedge Reserve Account and is recognized in
the Statement of Profit and Loss in the same period or periods during
which the hedged transaction affects profit and loss. Gains or losses
on the ineffective transactions are recognized immediately in the
Profit and Loss Account.
L) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions are recognised when the company has present obligation as a
result of past events, for which 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 for the amount of the
obligation.
Contingent Liabilities are disclosed by way of notes to financial
statements.
Contingent Assets are neither recognised nor disclosed in the financial
statements.
Provisions and contingent liabilities are reviewed at each Balance
Sheet date.
M) CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE:
All contingencies and events occurring after the Balance Sheet date
which have a material effect on the financial position of the Company
are considered for preparing the financial statements.
N) RESEARCH AND DEVELOPMENT EXPENSES:
Expenditure relating to capital items is debited to Fixed Assets and
depreciated at applicable rates. Revenue expenditure is charged to
Profit and Loss Account of the period in which they are incurred.
O) GOVERNMENT GRANTS:-
i) The grants/subsidies received in the nature of promotersÃ
contribution are treated as capital receipts and credited to Capital
Reserve.
ii) The grants /subsidies relating to specific fixed assets are shown
as deduction from the cost of the respective assets concerned in
arriving at its book value.
iii) Grant in the form of revenue subsidy is treated as revenue receipt
and credited to ÃOther Incomeà in Profit and Loss Account.
P) EXCISE DUTY:
Finished Goods lying at factories have been valued at inclusive of
Excise Duty. The claim of Cenvat for Excise Duty paid on inputs is
accounted on the basis of claim. The Cenvat claim for Excise paid on
capital goods is accounted when the claim is allowed.