A Oneindia Venture
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Accounting Policies of Incredible Industries Ltd. Company
Mar 31, 2025
2. MATERIAL ACCOUNTING POLICY INFORMATION
A) Basis of Preparation
The financial statements of the Company have been prepared in accordance with the relevant provisions of the Companies
Act, 2013, Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013
All assets and liabilities have been classified as current or non-current as per Company''s operating cycle and other criteria
set out in Schedule-III (Revised) of the Companies Act, 2013. Based on the nature of business, the Company has ascertained
its operating cycle as 12 months for the purpose of Current or non-current classification of assets and liabilities.
The financial statements have been prepared on historical cost basis, except for financial instruments that are measured
at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally
based on the fair value of the consideration given in exchange for goods and services.
B) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the
characteristics of the asset or liability if market participants would take those characteristics into account when pricing the
asset or liability at the measurement date.
Fair value for measurement and/ or disclosures in these financial statements is determined on such a basis, and
measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 -
Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can
access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
C) Use of estimates and critical accounting judgements
In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the
carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and the associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and the underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and future periods affected.
Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of
property, plant and equipment and intangible assets, impairment of property, plant and equipment, intangible assets and
investments, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and
contingencies.
D) Property, Plant and Equipment
An item of property, plant and equipment is recognised as an asset if it is probable that the future economic benefits
associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is
applied to the costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred
subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are
recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced
part is de-recognised. Where an item of property, plant and equipment comprises major components having different
useful lives, these components are accounted for as separate items.
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment. Cost includes all direct
costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run
expenses (net of revenue) are capitalised. Borrowing costs incurred during the period of construction is capitalised as part
of cost of the qualifying assets.
The gain or loss arising on disposal of an asset is determined as the difference between the sale proceeds and the carrying
value of the asset, and is recognised in the statement of profit and loss.
E) Intangible Assets
Intangible assets are capitalized on the basis of costs incurred to bring the specific intangibles to its intended use. These
costs are amortized on a straight line basis over their estimated useful life of three years.
F) Depreciation and amortisation of property, plant and equipment and intangible assets
(i) Depreciation is provided prorata basis on straight line method at the rates determined based on estimated useful
lives of tangible assets where applicable, specified in Schedule II to the Act. These charges are commenced from
the dates the assets are available for their intended use and are spread over their estimated useful economic lives or,
in the case of leased assets, over the lease period, if shorter. The estimated useful lives of assets and residual values
are reviewed regularly and, when necessary, revised. No further charge is provided in respect of assets that are fully
written down but are still in use. Depreciation on assets under construction commences only when the assets are
ready for their intended use.
(ii) Freehold land is not depreciated.
(iii) Leasehold Land is amortised over the tenure of respective leases.
(iv) Company do not have any intangible assets.
G) Impairment of tangible and intangible assets
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible
assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through
continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the
extent of impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets,
the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been
adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset
exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to
the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value
that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior
years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
H) Leases
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 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. After considering current and future economic conditions, the Company has concluded that no changes
are required to lease period relating to the existing lease contracts.
The Company as a Lessee
The Company''s lease asset classes primarily consist of leases for buildings. The Company assesses whether a contract
contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right
to control the use of an identified asset, the Company assesses whether :
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease
liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term
leases) and low value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an
operating expense on a straight-line basis over the term of the lease
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives.
They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and
useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances
indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable
amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis
unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental
borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment
to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination
option.
Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified
as financing cash flows.
I) Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions
of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial
liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition
of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and
financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating
interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash
receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
a) Financial assets
Cash and bank balances
Cash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash in hand, deposits held at call with banks and other short term
deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change
in value and have maturities of less than one year from the date of such deposits. These balances with banks are
unrestricted for withdrawal and usage.
(ii) Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and
usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model
whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial
asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a
business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial
assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding. The Company in respect of equity investments (other than
in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present
in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is
made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments.
Financial asset not measured at amortised cost or at fair value through other comprehensive income is carried at fair value
through the statement of profit and loss.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition
of impairment loss on the following financial assets:
⢠Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits and
trade receivables
⢠Financial assets that are debt instruments and are measured as at FVTOCI
⢠Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that
are within the scope of Ind AS 18.
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. The
application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether
there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly,
12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.
If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in
credit risk since initial recognition, the Company reverts to recognising impairment loss allowance based on 12-month
ECL."
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12
months after the reporting date. ECL is the difference between all contractual cash flows that are due to the Company in
accordance with the contract and all the cashflows that the entity expects to receive (i.e., all cash shortfalls), discounted at
the original EIR.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the
statement of profit and loss. This amount is reflected under the head ''other expenses'' in the statementof profit and loss.
The balance sheet resentation for various financial instruments is described below:
Financial assets measured as at amortised cost: ECL is presented as an allowance, i.e., as an integral part of the measurement
of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off
criteria, the Company does not reduce impairment allowance from the gross carrying amount.
Debt instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not
further reduced from its value. Rather, ECL amount is presented as ''accumulated impairment amount'' in the OCI.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of
shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable signifi cant increases
in credit risk to be identified on a timely basis.
Derecognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it
transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control
the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it
may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company
continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
b) Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of
its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at
amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are measured at fair value.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled
or they expire
Derivative financial instruments
In the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks
which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally
to forward foreign exchange contracts and interest rate swaps. The instruments are employed as hedges of transactions
included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These
derivatives contracts do not generally extend beyond six months except for interest rate derivatives.
Derivatives are initially accounted for and measured at fair value from the date the derivative contract is entered into and
are subsequently re-measured to their fair value at the end of each reporting period.
J) Employee benefits
Defined contribution plans
Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed
retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company''s obligations
under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Defined benefit plans
For defined benefit retirement schemes the cost of providing benefits is determined using the Projected Unit Credit
Method, with actuarial valuation being carried out at each balance sheet date. Re-measurement gains and losses of the
net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net
interest on the net defined benefit liability/(asset) is treated as a net expense within employment costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related
restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined-benefit
obligation as reduced by the fair value plan assets.
Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the
employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as
on the reporting date.
K) Inventories
(a) Raw Materials, Stores & Spares & Packing Materials are valued at lower of cost computed on FIFO basis and net
realizable value.
(b) Finished Goods are valued at lower of cost computed on weighted average basis or net realizable value. Cost of
finished goods includes direct materials and labour and a proportion of manufacturing overheads based on normal
operating capacity.
(c) By-products are valued at net realizable value.
(d) 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.
Mar 31, 2024
1. CORPORATE INFORMATION
Incredible Industries Limited (the Company) is a public limited company domiciled in India with its registered office located at 14 N.S. Road, 2nd Floor, Kolkata - 700001, West Bengal. Its equity shares are listed on stock exchanges in India. The Company is primarily engaged in the manufacturing and sale of iron and steel related rolled products. The Company has manufacturing facilities in Durgapur, West Bengal. The Corporate Identification Number (CIN) of the company is L27100WB1979PLC032200.
2. MATERIAL ACCOUNTING POLICY INFORMATION
A) Basis of Preparation
The financial statements of the Company have been prepared in accordance with the relevant provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013.
All assets and liabilities have been classified as current or non-current as per Company''s operating cycle and other criteria set out in Schedule-III (Revised) of the Companies Act, 2013. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the purpose of Current or non-current classification of assets and liabilities.
The financial statements have been prepared on historical cost basis, except for financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
Fair value for measurement and/ or disclosures in these financial statements is determined on such a basis, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 -Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
C) Use of estimates and critical accounting judgements
In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and the associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of property, plant and equipment and intangible assets, impairment of property, plant and equipment, intangible assets and investments, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies.
D) Property, Plant and Equipment
An item of property, plant and equipment is recognised as an asset if it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to the costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run expenses (net of revenue) are capitalised. Borrowing costs incurred during the period of construction is capitalised as part of cost of the qualifying assets.
The gain or loss arising on disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of profit and loss.
E) Intangible Assets
Intangible assets are capitalized on the basis of costs incurred to bring the specific intangibles to its intended use. These costs are amortized on a straight line basis over their estimated useful life of three years.
F) Depreciation and amortisation of property, plant and equipment and intangible assets
(i) Depreciation is provided prorata basis on straight line method at the rates determined based on estimated useful lives of tangible assets where applicable, specified in Schedule II to the Act. These charges are commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of leased assets, over the lease period, if shorter. The estimated useful lives of assets and residual values are reviewed regularly and, when necessary, revised. No further charge is provided in respect of assets that are fully written down but are still in use. Depreciation on assets under construction commences only when the assets are ready for their intended use.
(ii) Freehold land is not depreciated.
(iii) Leasehold Land is amortised over the tenure of respective leases.
(iv) Company do not have any intangible assets.
G) Impairment of tangible and intangible assets
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying
value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
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 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. After considering current and future economic conditions, the Company has concluded that no changes are required to lease period relating to the existing lease contracts.
The Company as a Lessee
The Company''s lease asset classes primarily consist of leases for buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether :
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination option.
Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
a) Financial assetsCash and bank balancesCash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash in hand, deposits held at call with banks and other short term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have maturities of less than one year from the date of such deposits. These balances with banks are unrestricted for withdrawal and usage.
(ii) Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company in respect of equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments. Financial asset not measured at amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets:
⢠Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits and trade receivables
⢠Financial assets that are debt instruments and are measured as at FVTOCI
⢠Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18.
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date. ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cashflows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the statement of profit and loss. This amount is reflected under the head ''other expenses'' in the statementof profit and loss. The balance sheet resentation for various financial instruments is described below:
Financial assets measured as at amortised cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
Debt instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as ''accumulated impairment amount'' in the OCI.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Derecognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
b) Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are measured at fair value.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire.
Derivative financial instruments
In the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts and interest rate swaps. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months except for interest rate derivatives.
Derivatives are initially accounted for and measured at fair value from the date the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.
J) Employee benefits Defined contribution plans
Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company''s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Defined benefit plans
For defined benefit retirement schemes the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Re-measurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) is treated as a net expense within employment costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined-benefit obligation as reduced by the fair value plan assets.
Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as on the reporting date.
(a) Raw Materials, Stores & Spares & Packing Materials are valued at lower of cost computed on FIFO basis and net realizable value.
(b) Finished Goods are valued at lower of cost computed on weighted average basis or net realizable value. Cost of finished goods includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
(c) By-products are valued at net realizable value.
(d) Net realizable value is the estimated selling price in the ordinary course ofbusiness less estimated costs of completion and the estimated costs necessary to make the sale.
L) Provisions and Contingencies
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change.
Management judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/ claim/ litigations/ against the Company as it is not possible to predict the outcome of pending matters with accuracy.
The carrying amounts of provisions and liabilities and estimation for contingencies are reviewed regularly and revised to take account of changing facts and circumstances.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company''s liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method.Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to cover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. MAT is recognised as deferred tax assets in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
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 net of discounts, taking into account contractually defined terms excluding taxes or duties collected on behalf of the government.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the amount due, associated costs or the possible return of goods.
Revenue is recognised when it is earned and no significant uncertanity exists as to its realisation or collection.
Interest Income, Dividend and Claims
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.
Dividend Income is recognised when the right to receive payment is established.
Insurance Claims/ Other claims are accounted as and when admitted/ settled.
Other Operating Revenue
Export incentive and subsidies are recognised when there is a reasonable assurance that the company will comply with the conditions and the incentive will be received.
Revenue from the sale of By products is recognised when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the amount due, associated costs or the possible return of goods.
P) Foreign currency transactions and translations
The financial statements of the Company are presented in Indian rupees (''), which is the functional currency of the Company and the presentation currency for the financial statements.
In preparing the financial statements, transactions in currencies other than the Company''s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising on the retranslation or settlement of other monetary items are included in the statement of profit and loss for the period.
Q) Borrowing Costs
Borrowing cost comprises of interest and other costs incurred in connection with the borrowing of the funds. All borrowing costs are recognized in the Statement of Profit and Loss using the effective interest method except to the extent attributable to qualifying Property Plant Equipment (PPE) which are capitalized to the cost of the related assets. A qualifying PPE is an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale. Borrowing cost also includes exchange differences to the extent considered as an adjustment to the borrowing costs.
R) Cash and Cash Equivalents
Cash and cash equivalents as indicated in cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
S) Segment Reporting Identification of Segments
The Company has identified Iron & Steel products as its sole operating segment and the same has been treated as primary segment. The Company''s secondary geographical segments have been identified based on the location of customers and then demarcated into Indian and overseas revenue earnings.
T) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
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.
Mar 31, 2023
1. CORPORATE INFORMATION
Incredible Industries Limited (Formerly Known as Adhunik industries Limited) (the Company) is a public limited company domiciled in India with its registered office located at 14 N.S. Road, 2nd Floor, Kolkata - 700001, West Bengal. Its equity shares are listed on stock exchanges in India. The Company is primarily engaged in the manufacturing and sale of iron and steel related rolled products. The Company has manufacturing facilities in Durgapur, West Bengal. The Corporate Identification Number (CIN) of the company is L27100WB1979PLC032200.
The name of the Company is changed from'' Adhunik Industries Limited ''to'' Incredible Industries Limited'' with effect from 6th May, 2021 vide fresh certificate of incorporation pursuant to change of name issued by the Office of the Registrar of Companies, West Bengal, Ministry of Corporate Affairs, Government of India.
2. SIGNIFICANT ACCOUNTING POLICIES
A) Basis of Preparation
The financial statements of the Company have been prepared in accordance with the relevant provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013.
All assets and liabilities have been classified as current or non-current as per Company''s operating cycle and other criteria set out in Schedule-III (Revised) of the Companies Act, 2013. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the purpose of Current or non-current classification of assets and liabilities.
The financial statements have been prepared on historical cost basis, except for financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
B) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
Fair value for measurement and/ or disclosures in these financial statements is determined on such a basis, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
C) Use of estimates and critical accounting judgements
In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and the associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of property, plant and equipment and intangible assets, impairment of property, plant and equipment, intangible assets and investments, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies.
D) Property, Plant and Equipment
An item of property, plant and equipment is recognised as an asset if it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to the costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items. Property, plant and equipment are stated at cost, less accumulated depreciation and impairment. Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run expenses (net of revenue) are capitalised. Borrowing costs incurred during the period of construction is capitalised as part of cost of the qualifying assets.
The gain or loss arising on disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of profit and loss.
E) Intangible Assets
Intangible assets are capitalized on the basis of costs incurred to bring the specific intangibles to its intended use. These costs are amortized on a straight line basis over their estimated useful life of three years.
F) Depreciation and amortisation of property, plant and equipment and intangible assets
(i) Depreciation is provided prorata basis on straight line method at the rates determined based on estimated useful lives of tangible assets where applicable, specified in Schedule II to the Act. These charges are commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of leased assets, over the lease period, if shorter. The estimated useful lives of assets and residual values are reviewed regularly and, when necessary, revised. No further charge is provided in respect of assets that are fully written down but are still in use. Depreciation on assets under construction commences only when the assets are ready for their intended use.
(ii) Freehold land is not depreciated.
(iii) Leasehold Land is amortised over the tenure of respective leases.
(iv) Company do not have any intangible assets.
G) Impairment of tangible and intangible assets
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
H) Leases
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 lease hold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset 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. After considering current and future economic conditions, the Company has concluded that no changes are required to lease period relating to the existing lease contracts.
The Company as a Lessee
The Companyâs lease asset classes primarily consist of leases for buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether :
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised. The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or determination option.
Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
I) Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period. a) Financial assets
Cash and bank balances Cash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash in hand, deposits held at call with banks and other short term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have maturities of less than one year from the date of such deposits. These balances with banks are unrestricted for withdrawal and usage.
(ii) Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company in respect of equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments.
Financial asset not measured at amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets:
⢠Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits and trade receivables
⢠Financial assets that are debt instruments and are measured as at FVTOCI
⢠Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date. ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the statement of profit and loss. This amount is reflected under the head ''other expensesâ in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below: Financial assets measured as at amortised cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
Debt instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as ''accumulated impairment amountâ in the OCI.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase/ origination.
Derecognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
b) Financial liabilities and equity instruments Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are measured at fair value.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or they expire.
Derivative financial instruments
In the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts and interest rate swaps. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months except for interest rate derivatives.
Derivatives are initially accounted for and measured at fair value from the date the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.
J) Employee benefits Defined contribution plans
Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Companyâs obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Defined benefit plans
For defined benefit retirement schemes the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Re-measurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) is treated as a net expense within employment costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined-benefit obligation as reduced by the fair value plan assets.
Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as on the reporting date.
K) Inventories
(a) Raw Materials, Stores & Spares & Packing Materials are valued at lower of cost computed on FIFO basis and net realizable value.
(b) Finished Goods are valued at lower of cost computed on weighted average basis or net realizable value. Cost of finished goods includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
(c) By-products are valued at net realizable value.
(d) 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.
L) Provisions and Contingencies
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change.
Management judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/ claim/ litigations/ against the Company as it is not possible to predict the outcome of pending matters with accuracy.
The carrying amounts of provisions and liabilities and estimation for contingencies are reviewed regularly and revised to take account of changing facts and circumstances.
M) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
N) Income taxes
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Companyâs liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to cover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction. Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. MAT is recognised as deferred tax assets in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
O) 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 net of discounts, taking into account contractually defined terms excluding taxes or duties collected on behalf of the government.
Sale of Goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the amount due, associated costs or the possible return of goods.
Sale of Services
Revenue is recognised when it is earned and no significant uncertanity exists as to its realisation or collection. Interest Income, Dividend and Claims
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.
Dividend Income is recognised when the right to receive payment is established.
Insurance Claims/ Other claims are accounted as and when admitted/ settled.
Other Operating Revenue
Export incentive and subsidies are recognised when there is a reasonable assurance that the company will comply with the conditions and the incentive will be received.
Revenue from the sale of By products is recognised when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the amount due, associated costs or the possible return of goods.
P) Foreign currency transactions and translations
The financial statements of the Company are presented in Indian rupees C), which is the functional currency of the Company and the presentation currency for the financial statements.
In preparing the financial statements, transactions in currencies other than the Companyâs functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising on the retranslation or settlement of other monetary items are included in the statement of profit and loss for the period.
Q) Borrowing Costs
Borrowing cost comprises of interest and other costs incurred in connection with the borrowing of the funds. All borrowing costs are recognized in the Statement of Profit and Loss using the effective interest method except to the extent attributable to qualifying Property Plant Equipment (PPE) which are capitalized to the cost of the related assets. A qualifying PPE is an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale. Borrowing cost also includes exchange differences to the extent considered as an adjustment to the borrowing costs.
R) Cash and Cash Equivalents
Cash and cash equivalents as indicated in cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
S) Segment Reporting Identification of Segments
The Company has identified Iron & Steel products as its sole operating segment and the same has been treated as primary segment. The Company''s secondary geographical segments have been identified based on the location of customers and then demarcated into Indian and overseas revenue earnings.
T) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
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.
Mar 31, 2016
1) CORPORATE INFORMATION:
Adhunik Industries Ltd (âthe companyâ) is a public limited company, having manufacturing facilities at Durgapur, West Bengal. Its equity shares are listed on Stock Exchanges in India. The Company is primarily engaged in the manufacture and sale of iron and steel products.
2) SIGNIFICANT ACCOUNTING POLICIES:
(I) Basis of Accounting:
The financial statements have been prepared to comply in all material respects with the notified Accounting Standards by the Companies (Accounting Standards) Rules 2006 (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on an accrual basis under the historical cost convention. Except otherwise mentioned, the accounting policies applied by the Company are consistent with those used in the previous year.
(II) Presentation and disclosure of financial statement:
The Company has prepared financial statements as per schedule III notified under the Companies Act, 2013. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.
(III) Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and result of operation during the reported year. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.
(IV) 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.
(a) Revenue from sale of goods and services rendered is recognized when significant risks and rewards of ownership of products and services have passed to the customers.
(b) Claims made in respect thereof is accounted as income in the year of receipts or acceptance by the client or evidence of acceptance received by the client.
(c) Dividend is recognized on cash basis.
(d) Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
(e) Revenue in respect of rejected/scrapped materials is recognized as and when these are sold or amount there against is ascertained.
(V) Fixed Assets:
(a) Fixed assets are stated at cost, less accumulated depreciation / amortization and impairment if any. Cost comprises the purchase price inclusive of duties (net of CENVAT & VAT), taxes, incidental expenses, erection/commissioning expenses, and interest, etc up to the date the asset is put to use.
(b) Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular, are capitalized and depreciated over the residual useful life of the respective assets.
(c) Expenditure on New Projects and Substantial Expansion: Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure is indirectly related to construction activity or is incidental thereto. Other indirect expenditure (including borrowing costs) incurred during the construction period which is not related to the construction activity nor is incidental thereto is charged to the Profit & Loss Account. Income earned during construction period is deducted from the total of the indirect expenditure. All direct capital expenditure on expansion are capitalized. As regards indirect expenditure on expansion, only that portion is capitalized which represents the marginal increase in such expenditure involved as a result of capital expansion. Both direct and indirect expenditure are capitalized only if they increase the value of the asset beyond its original standard of performance.
(VI) Depreciation:
(a) The Classification of Plant and Machinery into continuous and non-continuous process is done as per technical certification and depreciation thereon is provided accordingly.
(b) Depreciation on Fixed Assets is provided on Straight Line Method based on the estimated useful life of the assets as prescribed in Schedule II of the Companies Act, 2013. The residual value has been considered as 5% for the assets.
(c) Depreciation includes the amount written off in respect of leasehold land over the respective lease period.
(d) Depreciation on fixed assets added / disposed off during the year, is provided on pro-rata basis with reference to the month of addition / disposal.
(e) Discarded Fixed Assets awaiting disposal are valued at estimated realizable value and disclosed separately.
(f) Depreciation on Insurance Spares / standby equipments is provided over the useful lives of the respective mother assets.
(VII) Fixed Assets acquired under lease:
(a) Finance Lease
(i) Assets acquired under lease agreements which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payment after discounting them at an appropriate discount rate at the inception of the lease term and disclosed as leased assets. Lease Payments are apportioned between the 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 charged directly to expenses account.
(ii) Lease assets capitalized, if any, are depreciated over the shorter of the estimated useful life of the asset or the lease term.
(b) Operating Lease
Lease where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets, are classified as operating lease. Operating lease payments are recognized as expense in the profit and loss account on a straight line basis over the lease term.
(VIII) Investments:
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.
(IX) Inventories:
(a) Raw Materials, Stores & Spares & Packing Materials are valued at lower of cost computed on FIFO basis and net realizable value.
(b) Finished Goods are valued at lower of cost computed on weighted average basis or net realizable value. Cost of finished goods includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
(c) By-products are valued at net realizable value.
(d) 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.
(X) Cash & Cash Equivalents:
Cash and cash equivalents in the Cash Flow comprise cash at bank and in hand (including cheques / drafts in hand), balance lying in banks in current account (including overdraft) and deposits with maturity within 3 months.
(XI) Excise Duty:
Excise Duty on Finished Goods stock lying at the factories is accounted for at the point of manufacture of goods and is accordingly considered for valuation of finished goods stock lying in the factories as on the Balance Sheet date.
(XII) Employees Benefits:
I. Provident Fund is a defined contribution scheme and the contributions are charged to the Profit & Loss Account of the year when these are due.
ii. Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation made at the end of Financial Year.
iii. Actuarial gain/losses are immediately taken to the Profit & Loss Account and are not deferred.
(XIII) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalized until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
(XIV) Provisions:
A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 are not discounted to its present value and are determined based on the best estimates required to settle the obligation at the Balance Sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
(XV) Taxation:
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is ''reasonable certainty'' that sufficient future taxable income will be available against which such deferred tax assets can be realized.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.
(XVI) Segment Reporting:
The Company has identified Iron & Steel products as its sole operating segment and the same has been treated as primary segment.
(XVII) Contingent Liabilities:
Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent and disclosed by way of Notes to the Accounts.
(XVIII) Earning per share:
Earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.
(XIX) Impairment of Assets:
i. The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.
ii. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
(XX) Foreign Currency Translation:
Initial recognition: Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.
Conversion: Foreign currency monetary items are translated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value determined.
Mar 31, 2015
(I) Basis of Accounting:
The financial statements have been prepared to comply in all material
respects with the notified Accounting Standards by the Companies
(Accounting Standards) Rules 2006 (as amended) and the relevant
provisions of the Companies Act, 2013. The financial statements have
been prepared on an accrual basis under the historical cost convention.
Except otherwise mentioned, the accounting policies applied by the
Company are consistent with those used in the previous year.
(II) Presentation and disclosure of financial statement:
The Company has prepared financial statements as per schedule III
notified under the Companies Act 2013. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
(III) Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and result of operation during the reported year.
Although these estimates are based upon management's best knowledge of
current events and actions, actual results could differ from these
estimates.
(IV) 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.
(a) Revenue from sale of goods and services rendered is recognized when
significant risks and rewards of ownership of products and services
have passed to the customers.
(b) Claims made in respect thereof are accounted as income in the year
of receipts or acceptance by the client or evidence of acceptance
received by the client.
(c) Dividend is recognized on cash basis.
(d) Interest is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
(e) Revenue in respect of rejected / scrapped materials is recognized
as and when these are sold or amount there against is ascertained.
(V) Fixed Assets:
(a) Fixed assets are stated at cost, less accumulated depreciation /
amortization and impairment if any Cost comprises the purchase price
inclusive of duties (net of CENVAT &VAT), taxes, incidental expenses,
erection / commissioning expenses, and interest, etc up to the date the
asset is put to use.
(b) Machinery spares which can be used only in connection with an item
of fixed assets and whose use as per technical assessment is expected
to be irregular, are capitalized and depreciated over the residual
useful life of the respective assets.
(c) Expenditure on New Projects and Substantial Expansion: Expenditure
directly relating to construction activity is capitalized. Indirect
expenditure incurred during construction period is capitalized as part
of the indirect construction cost to the extent to which the
expenditure is indirectly related to construction activity or is
incidental thereto. Other indirect expenditure (including borrowing
costs) incurred during the construction period which is not related to
the construction activity nor is incidental thereto is charged to the
Profit & Loss Account. Income earned during construction period is
deducted from the total of the indirect expenditure. All direct capital
expenditures on expansion are capitalized. As regards to indirect
expenditure on expansion, only that portion is capitalized which
represents the marginal increase in such expenditure involved as a
result of capital expansion. Both direct and indirect expenditures are
capitalized only if they increase the value of the asset beyond its
original standard of performance.
(VI) Depreciation:
(a) The classification of Plant and Machinery into continuous and
non-continuous process is done as per technical certification and
depreciation thereon is provided accordingly.
(b) Depreciation on Fixed Assets is provided on Straight Line Method
based on the estimated useful life of the assets as prescribed in
Schedule II of the Companies Act, 2013. The residual value has been
considered as 5% for the assets.
(c) Depreciation includes the amount written off in respect of
leasehold land over the respective lease period.
(d) Depreciation on Fixed Assets added/disposed off during the year, is
provided on pro-rata basis with reference to the month of
addition/disposal.
(e) Discarded Fixed Assets awaiting disposal are valued at estimated
realizable value and disclosed separately.
(f) Depreciation on Insurance Spares / standby equipments is provided
over the useful lives of the respective mother assets.
(VII) Fixed Assets acquired under lease:
(a) Finance Lease
(i) Assets acquired under lease agreements which effectively transfer
to the Company substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at the lower of the fair
value and present value of the minimum lease payment after discounting
them at an appropriate discount rate at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
the 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 charged directly to expenses account.
(ii) Lease assets capitalized, if any, are depreciated over the shorter
of the estimated useful life of the asset or the lease term.
(b) Operating Lease
Lease where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets, are classified as
operating lease. Operating lease payments are recognized as expense in
the Profit and Loss Account on a Straight Line Method basis over the
lease term.
(VIII) Investments:
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
(IX) Inventories:
(a) Raw Materials, Stores & Spares & Packing Materials are valued at
lower of cost computed on FIFO basis and net realizable value.
(b) Finished Goods are valued at lower of cost computed on weighted
average basis or net realizable value. Cost of finished goods includes
direct materials and labour and a proportion of manufacturing overheads
based on normal operating capacity.
(c) By-products are valued at net realizable value.
(d) 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.
(X) Cash & Cash Equivalents:
Cash and cash equivalents in the Cash Flow comprise cash at bank and in
hand (including cheques / drafts in hand), balance lying in banks in
current account (including overdraft).
(XI) Excise Duty:
Excise Duty on finished goods stock lying at the factories is accounted
for at the point of manufacture of goods and is accordingly considered
for valuation of finished goods stock lying in the factories as on the
Balance Sheet date.
(XII) Employees' Benefits:
i. Provident Fund is a defined contribution scheme and the
contributions are charged to the Profit & Loss Account of the year when
these are due.
ii. Gratuity liability is a defined benefit obligation and is provided
for on the basis of actuarial valuation made at the end of financial
year.
iii. Actuarial gain / losses are immediately taken to the Profit &
Loss Account and are not deferred.
(XIII) Borrowing Costs:
Borrowing costs that are directly attribut
abletotheacquisitionorconstructionofqualifyingassetsarecapitalized
until the time all substantial activities necessary to prepare the
qualifying assets for their intended use are complete. A qualifying
asset is one that necessarily takes substantial period of time to get
ready for its intended use. All other borrowing costs are charged to
revenue.
(XIV) Provisions:
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 are not discounted
to its present value and are determined based on the best estimates
required to settle the obligation at the Balance Sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
best estimates.
(XV) Taxation:
Tax expense comprises current and deferred tax. Current Income Tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961. Deferred Income Taxes
reflect the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years. Deferred tax is measured based on the tax
rates and the tax laws enacted or substantively enacted at the balance
sheet date. Deferred tax assets are recognized only to the extent that
there is 'reasonable certainty' that sufficient future taxable income
will be available against which such deferred tax assets can be
realized.
MAT credit is recognized as an asset only when and to the extent there
is convincing evidence that the Company will pay normal Income Tax
during the specified period. In the year in which the Minimum
Alternative Tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accountants of India, the said
asset is created byway of a credit to the Profit and Loss Account and
shown as MAT Credit Entitlement. The Company reviews the same at each
Balance Sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
(XVI) Segment Reporting:
The Company has identified Iron & Steel products as its sole operating
segment and the same has been treated asprimary segment.
(XVII) Contingent Liabilities:
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty, are treated as contingent and
disclosed byway of Notes to the Accounts.
(XVIII) Earning per share:
Earning per share is calculated by dividing the net profit or loss for
the year attributable to equity shareholders, by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and
weighted average number of shares outstanding during the year is
adjusted for the effects of all dilutive potential equity shares.
(XIX) Impairment of Assets:
i. The carrying amounts of assets are reviewed at each Balance Sheet
date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset's net selling price and
value in use. In assessing the value in use, the estimated future cash
flows are discounted to their present value at the weighted average
cost of capital.
ii. After impairment, depreciation is provided on the revised carrying
amount of the assets over its remaining useful life
(XX) Foreign Currency Translation:
Initial recognition: Foreign currency transactions are recorded in the
reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of transaction.
Conversion: Foreign currency monetary items are translated using the
exchange rate prevailing at the reporting date. Non-monetary items,
which are measured in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of the
transaction. Non-monetary items, which are measured at fair value or
other similar valuation denominated in a foreign currency, are
translated using the exchange rate at the date when such value is
determined.
Exchange Difference: Exchange differences are recognized as income or
as expenses in the period in which they arise.
Mar 31, 2014
(I) Basis of Accounting :
The financial statements have been prepared to comply in all material
respects with the notified Accounting Standards by the Companies
(Accounting Standards) Rules 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared on an accrual basis under the historical cost convention.
Except otherwise mentioned, the accounting policies applied by the
Company are consistent with those used in the previous year.
(II) Presentation and disclosure of financial statement :
The Company has prepared financial statements as per revised schedule
VI notified under the Companies Act 1956. The company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
(III) Use of Estimates :
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and result of operation during the reported year.
Although these estimates are based upon management''s best knowledge of
current events and actions, actual results could differ from these
estimates.
(IV) 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.
a) Revenue from sale of goods and services rendered is recognized when
significant risks and rewards of ownership of products and services
have passed to the customers.
b) Claims made in respect thereof is accounted as income in the year of
receipts or acceptance by the client or evidence of acceptance received
by the client.
c) Dividend is recognized on cash basis.
d) Interest is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
(V) Fixed Assets :
a) Fixed assets are stated at cost, less accumulated depreciation /
amortization and impairment if any. Cost comprises the purchase price
inclusive of duties (net of CENVAT & VAT), taxes, incidental expenses,
erection/commissioning expenses, and interest etc. up to the date the
asset is put to use.
b) Machinery spares which can be used only in connection with an item
of fixed assets and whose use as per technical assessment is expected
to be irregular, are capitalized and depreciated over the residual
useful life of the respective assets.
c) Expenditure on New Projects and Substantial Expansion: Expenditure
directly relating to construction activity is capitalized. Indirect
expenditure incurred during construction period is capitalized as part
of the indirect construction cost to the extent to which the
expenditure is indirectly related to construction activity or is
incidental thereto. Other indirect expenditure (including borrowing
costs) incurred during the construction period which is not related to
the construction activity nor is incidental thereto is charged to the
Profit & Loss Account. Income earned during construction period is
deducted from the total of the indirect expenditure. All direct capital
expenditure on expansion are capitalized. As regards indirect
expenditure on expansion, only that portion is capitalized which
represents the marginal increase in such expenditure involved as a
result of capital expansion. Both direct and indirect expenditure are
capitalized only if they increase the value of the asset beyond its
original standard of performance.
(VI) Depreciation :
a) The Classification of Plant and Machinery into continuous and
non-continuous process is done as per technical certification and
depreciation thereon is provided accordingly.
b) Depreciation on Fixed Assets is provided on Straight Line Method at
the rates specified in Schedule XIV of the Companies Act, 1956 or
estimated useful life whichever is higher.
c) Depreciation Includes the amount written off in respect of leasehold
land over the respective lease period.
d) Depreciation on fixed assets added / disposed off during the year,
is provided on pro-rata basis with reference to the month of addition /
disposal.
e) Discarded Fixed Assets awaiting disposal are valued at estimated
realizable value and disclosed separately.
f) Depreciation on Insurance Spares / standby equipments is provided
over the useful lives of the respective mother assets.
(VII) Fixed Assets acquired under lease :
a) Finance Lease
(i) Assets acquired under lease agreements which effectively transfer
to the Company substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at the lower of the fair
value and present value of the minimum lease payment after discounting
them at an appropriate discount rate at the inception of the lease term
and disclosed as leased assets. Lease Payments are apportioned between
the 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 charged directly to expenses account.
(ii) Lease assets capitalized , if any, are depreciated over the
shorter of the estimated useful life of the asset or the lease term.
b) Operating Lease
Lease where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets, are classified as
operating lease. Operating lease payments are recognized as expense in
the profit and loss account on a straight line basis over the lease
term.
(VIII) Investments :
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
(IX) Inventories :
a) Raw Materials, Stores & Spares & Packing Materials are valued at
lower of cost computed on FIFO basis and net realizable value.
b) Finished Goods are valued at lower of cost computed on weighted
average basis or net realizable value. Cost of finished goods includes
direct materials and labour and a proportion of manufacturing overheads
based on normal operating capacity.
c) By-products are valued at net realizable value.
d) 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.
(X) Cash & Cash Equivalents :
Cash and cash equivalents in the Cash Flow comprise cash at bank and in
hand (including cheques / drafts in hand), balance lying in banks in
current account (including overdraft).
(XI) Excise Duty :
Excise Duty on Finished Goods stock lying at the factories is accounted
for at the point of manufacture of goods and is accordingly considered
for valuation of finished goods stock lying in the factories as on the
Balance Sheet date.
(XII) Employees Benefits :
a) Provident Fund is a defined contribution scheme and the
contributions are charged to the Profit & Loss Account of the year when
these are due.
b) Gratuity liability is a defined benefit obligation and is provided
for on the basis of actuarial valuation made at the end of Financial
Year.
c) Actuarial gain/losses are immediately taken to the Profit & Loss
Account and are not deferred.
(XIII) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition or
construction of qualifying assets are capitalized until the time all
substantial activities necessary to prepare the qualifying assets for
their intended use are complete. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs are charged to revenue.
(XIV) Provisions:
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 are not discounted
to its present value and are determined based on the best estimates
required to settle the obligation at the Balance Sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
best estimates.
(XV) Taxation:
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years. Deferred tax is measured based on the tax
rates and the tax laws enacted or substantively enacted at the balance
sheet date. Deferred tax assets are recognized only to the extent that
there is ''reasonable certainty'' that sufficient future taxable income
will be available against which such deferred tax assets can be
realized.
MAT credit is recognized as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative Tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal income tax during the specified
period.
(XVI) Segment Reporting:
The Company has identified Iron & Steel products as its sole operating
segment and the same has been treated as primary segment.
(XVII) Contingencies:
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty, are treated as contingent and
disclosed by way of Notes to the Accounts.
(XVIII) Earning per share:
Earning per share is calculated by dividing the net profit or loss for
the year attributable to equity shareholders, by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and
weighted average number of shares outstanding during the year is
adjusted for the effects of all dilutive potential equity shares.
(XIX) Impairment of Assets:
a) The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use. In assessing the value in use, the estimated future cash
flows are discounted to their present value at the weighted average
cost of capital.
ib) After impairment, depreciation is provided on the revised carrying
amount of the assets over its remaining useful life.
(XX) Foreign Currency Translation:
Initial recognition: Foreign currency transactions are recorded in the
reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of transaction.
Conversion: Foreign currency monetary items are translated using the
exchange rate prevailing at the reporting date. NonÂmonetary items,
which are measured in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of the
transaction. Non-monetary items, which are measured at fair value or
other similar valuation denominated in a foreign currency, are
translated using the exchange rate at the date when such value
determined.
Exchange Difference: Exchange differences are recognized as income or
as expenses in the period in which they arise.
(XXI) Miscellaneous Expenditure
Preliminary expenses are amortized over a period of five years.
Mar 31, 2013
(I) Basis of Accounting :
The financial statements have been prepared to comply in all material
respects with the notified Accounting Standards by the Companies
(Accounting Standards) Rules 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared on an accrual basis under the historical cost convention.
Except otherwise mentioned, the accounting policies applied by the
Company are consistent with those used in the previous year.
(II) Presentation and disclosure of financial statement;
The Company has prepared financial statements as per revised schedule
VI notified under the Companies Act 1956. The company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
(III) Use of Estimates :
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and result of operation during the reported year.
Although these estimates are based upon management''s best knowledge of
current events and actions, actual results could differ from these
estimates.
(IV) 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.
(a) Revenue from sale of goods and services rendered is recognised when
significant risks and rewards of ownership of products and services
have passed to the customers.
(b) Claims made in respect thereof is accounted as income in the year
of receipts or acceptance by the client or evidence of acceptance
received by the client.
(c) Dividend is recognized on cash basis.
(d) Interest is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
(V) Fixed Assets:
(a) Fixed assets are stated at cost, less accumulated depreciation /
amortization and impairment if any. Cost comprises the purchase price
inclusive of duties (net of CENVAT & VAT), taxes, incidental expenses,
erection/commissioning expenses, and interest etc. upto the date the
asset is put to use
(b) Machinery spares which can be used only in connection with an item
of fixed assets and whose use as per technical assessment is expected
to be irregular, are capitalised and depreciated over the residual
useful life of the respective assets.
(c) Expenditure on New Projects and Substantial Expansion: Expenditure
directly relating to construction activity is capitalised. Indirect
expenditure incurred during construction period is capitalised as part
of the indirect construction cost to the extent to which the
expenditure is indirectly related to construction activity or is
incidental thereto. Other indirect expenditure (including borrowing
costs) incurred during the construction period which is not related to
the construction activity nor is incidental thereto is charged to the
Profit & Loss Account. Income earned during construction period is
deducted from the total of the indirect expenditure. All direct capital
expenditure on expansion are capitalised. As regards indirect
expenditure on expansion, only that portion is capitalised which
represents the marginal increase in such expenditure involved as a
result of capital expansion. Both direct and indirect expenditure are
capitalised only if they increase the value of the asset beyond its
original standard of performance.
(Vi) Depreciation:
(a) The Classification of Plant and Machinery into continuous and
non-continuous process is done as per technical certification and
depreciation thereon is provided accordingly.
(b) Depreciation on Fixed Assets is provided on Straight Line Method at
the rates specified in Schedule XIV of the Companies Act, 1956 or
estimated useful life whichever is higher.
(c) Depreciation Includes the amount written off in respect of
leasehold land over the respective lease period.
(d) Depreciation on fixed assets added / disposed off during the year,
is provided on pro-rata basis with reference to the month of addition /
disposal.
(e) Discarded Fixed Assets awaiting disposal are valued at estimated
realisable value and disclosed separately.
(f) Depreciation on Insurance Spares / standby equipments is provided
over the useful lives of the respective mother assets.
(VII) Fixed Assets acquired under lease :
(a) Finance Lease
(i) Assets acquired under lease agreements which effectively transfer
to the Company substantially all the risks and benefits incidental to
ownership of the eased item, are capitalized at the lower of the fair
value and present value of the minimum lease payment after discounting
them at an appropriate discount rate at the inception of the lease term
and disclosed as leased assets. Lease Payments are apportioned between
the 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 charged directly to expenses account.
(ii) Lease assets capitalised , if any, are depreciated over the
shorter of the estimated useful life of the asset or the lease term.
(b) Operating Lease
Lease where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets, are classified as
operating lease. Operating lease payments are recognized as expense in
the profit and loss Account on a straight line basis over the lease
term.
(VIII) Investments :
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments.
Current investments are carried at lower of cost and fair value
determined on an individual investment basis. Long-term investments are
carried at cost. However, provision for diminution in value is made to
recognise a decline other than temporary in the value of the
investments.
(IX) Inventories :
a) Raw Materials, Stores & Spares & Packing Materials are valued at
lower of cost computed on FIFO basis and net realisable value.
(b) Finished Goods are valued at lower of cost computed on weighted
average basis and net realisable value. Cost of finished goods includes
direct materials and labour and a proportion of manufacturing overheads
based on normal operating capacity.
(c) By-products are valued at net realisable value.
(d) 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.
(X) Cash & Cash Equivalents :
Cash and cash equivalents in the Cash Flow comprise cash at bank and in
hand (including cheques / drafts in hand), balance lying in banks in
current account (including overdraft).
(XI) Excise Duty:
Excise Duty on Finished Goods stock lying at the factories is accounted
for at the point of manufacture of goods and is accordingly considered
for valuation of finished goods stock lying in the factories as on the
Balance Sheet date.
(XII) Employees Benefits:
i. Provident Fund is a defined contribution scheme and the
contributions are charged to the Profit & Loss Account of the year when
these are due.
ii. Gratuity liability is a defined benefit obligation and is provided
for on the basis of actuarial valuation made at the end of Financial
Year.
iii. Actuarial gain/losses are immediately taken to the Profit & Loss
Account and are not deferred.
(XIII) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition or
construction of qualifying assets are capitalised until the time all
substantial activities necessary to prepare the qualifying assets for
their intended use are complete. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs are charged to revenue.
(XIV) Provisions:
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 are not discounted
to its present value and are determined based on the best estimates
required to settle the obligation at the Balance Sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
best estimates.
(XV) Taxation:
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961. Deferred Income taxes
reflects the impact of current year timing differences between
taxable income and accounting income for the year and reversal of
timing differences of earlier years. Deferred tax is measured based on
the tax rates and the tax laws enacted or substantively enacted at the
balance sheet date Deferred tax assets are recognised only to the
extent that there is reasonable certainty'' that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative Tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to
the effect that Company will pay normal income tax during the specified
period.
(XVI) Segment Reporting:
The Company has identified Iron & Steel products as its sole operating
segment and the same has been treated as primary segment.
(XVII) Contingencies:
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty, are treated as contingent and
disclosed by way of Notes to the Accounts.
(XVII!) Earning per share:
Earning per share is calculated by dividing the net profit or loss for
the year attributable to equity shareholders, by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and
weighted average number of shares outstanding during the year is
adjusted for the effects of all dilutive potential equity shares.
(XIX) Impairment of Assets:
i. The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on internal/
externaI factors. An impairment loss is recognized wherever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use. In assessing the value in use, the estimated future cash
flows are discounted to their present value at the weighted average
cost of capital.
ii. After impairment, depreciation is provided on the revised carrying
amount of the assets over its remaining useful life.
(XX) Miscellaneous Expenditure
Preliminary expenses are amortized over a period of five years.
Mar 31, 2012
I) Basis of Accounting :
Thefinanciai-statements have been prepared to comply In all material
respects with the notic'd Accounting standards by the Companies
(Accounting Standards) Rules 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared op an accrual bails under the historical cost convention.
Except otherwise mentioned, the accounting policies applied by the.
Company are consistent with those used in the previous year.
(II) Presentation and disclosure of financial statement:
During The year 31st March 2012, the revised schedule VI notified under
Companies Act 1956, has become applicable to the company, for
preparation and presentation of its financial statement The adoption
of revised schedule VI does not Impact recognition and measurement
principles followed for preparation of financial statement. However it
has significant Impact on presentation,and disclosures made In
financial statement. The company has also reclassified the ptevlOus
year figures in accordance with the requirements applicable in the
current year.
(III) Use of Estimates ;
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingentliabilities at the date of the
financial statements and result of operation during the reported year.
Although these estimates are based upon management's best knowledge of
current events and actions, actual results could differ from these
estimates.
(IV) Fevenue Recognition:
Revenue recognised to the.extent that it is probable that the
economic benefits will flow to the Companyand the revenuecan be
reliably measured.
(a)Revenue from sale of goods and services rendered is recognised when
significant risks and rewards of ownership of products arid services ha
ve passed to the customer.
(b) Claims made In respect thereof is accounted as income In the year
of receipts or acceptance by the cllent or evidence of acceptance
received by the client.
(c) Dividend is recognized on cash basis.
(d) interest is recognised on a time proportion basis taking into
account the amount outstanding and the.rate applicable.
(V) Fixed Assets;
(a) Fixed assets -are stated at cost, less accumulated depreciation /
amortization and impairment if any. Cost comprises the puchase price
inclusive of duties (net of CENVAT & VAT), taxes, incidental expenses,
erection/commissioning- expenses, and interest etc. upto the date the
asset Is put to use
(b) Machinery spares which can be used only in connection with an Item
of fixed assets and Whose as per technical assessment Is expected to be
Irregular, are capitalised and depreciated Over the residual useful
life of the respective assets.
(c) Expenditure on New Projects, and Substantial Expansion; Expenditure
directly relating to construction activity Is capitalised. Indirect
expenditure Incurred during construction period is capitalised as part
of the. Indirect construction cost to the extent to which the
expenditure Is Indirectly related to construction activity or is
incidental thereto. Other indirect expenditure (including borrowing
costs) incurred during the construction period which is not related to
the construction activity nor is Incidental thereto is charged to the
Profit & Loss Account. Income earned during construction period is
deducted from the total of the indirect expenditure. All direct capital
expenditure On expansion are capitalised. As regards Indirect
exjSffc'nditure on expansion, only that portion is capitalised which
represents the marginal increase in such expenditure involved asa
result of capital expansion. Both direct and Indirect expenditure are
capitalised only If they: In crease the value of the asset beyond lts
original standard of performance.
(vi) Depreciation :
(a) .The Glassification of Plant and Machinery into continuous and
non-edntinuous process is done as per technical certification and
depreciation thereon is provided accordingly.
(b) Depredation on Fixed Assets is,provided on Straight Line Method at
the rates specified in Schedule XIV of the Companies Act, 1956 or
estimated useful life whichever is higher.
(c) Depreciation Includes the amount written off In respect of
leasehold land over the respective lease period.
(d) Depreciation on fixed assets added / disposed off during the year,
is provided on pro-rata basis with reference to the month of addition /
disposal.
(e) Discarded Fixed Assets awaiting disposal are valued at estimated
realisable value and disclosed separately.
(f) Depredation, on insurance Spares. / standby equipments Is provided
over the useful lives Of the respective mother assets.
(VII) Fixed Assets acquired under lease:
(a) Finance Lease
(i) Assets acquired under Jease agreements which effectively transfer
to the Company substantially all the risks and benefits Incidental to
ownership of the leased Item, are capitalized at the lower of the fair
value and present value of the minimum lease payment after discounting
them at an appropriate discount rate at the inception of the lease term
and disclosed as leased assets. Lease Payments are apportioned, between
the 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.charged directly to expenses account,
(ii) Lease assets capitalised ,if any,,are depreciated over the shorter
of the estimated useful life of the asset or the lease term.
(b) Operating Lease
Lease where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets, are classified as
operating lease. Operating lease payments are recognized as expense in
the profit and loss Account on a straight line basis over the lease
term.
(VIII) Investments :
Investments- that are readily realisable and intended to be held for
not more than a year are classified as current Investments. All other
Investments are classified as long-term investments. Current
Investments are carried at lower of cost and fair value determined on
an Individual investment basis. Long-term investments are carried at
cost:However,.provision for diminution In value Is made to recognlsea
decline otherthan temporary in the value,of the investments,
(IX) Inventories:
(a) Raw Materials, Stores & Spates & Packing Materia Is a re valued at
lower of cost computed on FIFO basis and net realisable value.
(b) Finished Goods a re valued at lower of cost computed on weighted
average basisand net realisable value. Cbst of finished goods Includes
direct materials Snd labour and a proportion of manufacturing overheads
based on normal operating capacity.
(c) By-products are valued at net realisable value.
(d) Net realizable value is the estimated selling price In the ordinary
course of business less estimated,costs of completion and the estimated
costs necessaryto make the sale.
(X) Cash & Cash Equivalents:
Cash and cash equivalents In the Cash Flow comprise cash at bank and In
hand (including cheques /drafts In hand), balance lying in banks in
current account (including overdraft).
(XI) Excise Duty:
Excise Duty on Finished Goods stock lying at the factories is accounted
for at the point of manufacture of goods and ^accordingly considered
for valuation of finished goods stock lying in the factories as on the
Balance Sheet date.
(XII) Employees Benefits :
i. Provident Fund ii a defined contribution scheme and the contributions
are charged to the Profit & Loss Account Of theyear when these are due.
ii. Gratuity liability is a defined benefit obligation and Is provided
for on the basis of actuarial valuation made at the end of. Financial
Year.
iii. Actuarial galn/losses afe Immediately taken to the Profit & Loss
Account and are not deferred.
(XIII) Borrowing cost:
Borrowing costs that are directly attributable to the acquisition or
construction of qualifying assets are capitalised until, the time all
substantial activities necessaryto prepare the qualifying assets for
their intended use are complete, A qualifying asset is one that
necessarily takes substantial period of time to get ready for Its
intended use. All other borrowing costs are charged to revenue.
(XIII) Provisions:
A provision is recognised when an enterprise has a present obligation
as' a result of past event and |t is probable that an outflow of
resources will be required to settle the obligation, In respect
ofwhicha reliable estimate can be made.
Provisions made In terms of Accounting Standard 29 are not discounted
to its present value and are determined based on the best estimates
required to settle the obligation at the Balance Sheet date, these are
reviewed at each balance sheet date and adjusted to reflect the current
best estimates,
(XIV) Taxation:
Tax expense comprises of current and. deferred tax. Current income tax
is measured at the amount expected to be paldSothe.tax authorities in
accordance with the'Indian Income Tax Act, 196L Deferred: income taxes
reflects the Impact of current year timing, differences between taxable
income and accounting Income for the year and reversal of timing
differences of earlier years. Deferred tax is measured based on the tax
rates and the tax laws enacted or substantively enacted at the balance
sheet date. Deferred tax assets are recognised Onlyte the extent that
there It'reasonable certainty1 that sufficient-future taxable Income
will be available against-fobich stifch deferred tax assets can be
realised
MAT credit Is recognised as an asset only when and to the extent there
Is convincing evidence that the company will pay normal income-tax
during the specified period. In the year In which the Minimum
Alternative Tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations Contained in guidance note
issued by the Institute of Chartered Accountants of lndia, the said
asset Is crea ted by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement, The Company reviews the same at each
balance sheet date and writes dowii the carrying amount of MAT Credit
Entitlement to the extent there Is rio tongerconVincing evidence to the
effect that.Company will' pay normal income tax during the specified
period.
(XV) Segment Reporting:
The Company has Identified Iron & Steel products as Its sole operating
segment and the same has been treated as primary-segment
(XVI) contingencies:
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable, certainty, are treated as contingent arid
disclosed by way of Notes to the Accounts.
(XVII) Earning per share:
Earning per share Is calculated by dividing the net profit or loss for
the year attributable to equity shareholders; by the weighted Sverage
number of equity shares outstanding during the year.
For the purpose of calculating- diluted earnings per share, the net
profit of loss for the year attributable to equity shareholders and
weighted average number of shares outstanding during the year is
adjusted:for the effects of all dilutive potential equity.shares.
(XVII)) Impairment of Assets:
i. The carrying amounts of assets are reviewed at each balance sheet
date if there Is any Indication of Impairment based on
Internal/externaI factors. An Impairment toss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverabje amotirit is the greater of the asset's net selling
pricerand value Imuse. In assessing the value fa use, the estimated
future cash flows are discounted to their present value a t the
weighted average cost.of Capital.
ii. After Impairment, depreciation is provided on the revised
carrying.amount of the assets over its remaining usefutlife.
(XIX) Miscellaneous Expenditure
Preliminary expdrts are amortized oyera period of five years.
Mar 31, 2011
Basis of Accounting :
The financial statements have been prepared to comply in all material
respects with the notified Accounting Standards by the Companies
(Accounting Standards) Rules 2006 (as amended) and the relevant
provisions of the Companies Act. 1956. The financial statements have
been prepared on an accrual basis under the historical cost convention.
Except otherwise mentioned, the accounting policies applied by the
Company are consistent with those used in the previous year. | ^
(II) Use of Estimates ;
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and result of operation dunng the reported year.
Although these estimates are based upon management''s best knowledge of
current events and actions, actual results could differ from these
estimates.
(III) 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.
(a) Revenue from sale of goods and services rendered is recognised when
significant risks and rewards of ownership of products and services
have passed to the customers.
(b) Claims made in respect thereof is accounted as income in the year
of receipts or acceptance by the client or evidence of acceptance
received by the client
(c) Dividend is recognized on cash basis.
(d) Interest is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
(IV) Fixed AssetsJ
(a) Fixed 3ssots are stated at cost, less accumulated depredation /
amortization and impairment if any.
Cost comprises the purchase price inclusive of duties (net of CENVAT &
VAT), taxes, incidental expenses, erectlorVcommissioning expenses, and
interest eta uplo the date the asset is put to use
(b) Machinery spares which can be used only in connection with an item
of fixed assets and whose use as per technical assessment is expected
to be irregular, are capitalised and depreciated over the residual
useful life of the respective assets.
(c) Expenditure on New Projects and Substantial Expansion: Expenditure
directly relating to construction activity is capitalised. Indirect
expenditure incurred during construction period is capitalised as part
of the indirect construction cost to the extent to which the expenditure
is indirectly related to construction activity or is incidental thereto.
Other Indirect expenditure (including borrowing costs) incurred during
the construction period which is not related to Ihe construction activity
nor is incidental thereto is charged to the Profit & Loss Account.
Income earned during construction period is deducted from the total of
the Indirect expenditure. All direct capital expenditure on expansion
are capitalised. As regards indirect expenditure on expansion, only
(hat portion is capitalised which represents the marginal increase in
such expenditure involved as a result of capital expansion Both direct
and indirect expenditure are capitalised only if they increase the
value of Ihe asset beyond4s original standard of performance /Cp
(a) The Classification of Plant and Machinery-into continuous and
non-continuous process is done as per technical certification and
depreciation thereon is provided accordingly.
(b) Depredation on Fixed Assets is provided on Straight Line Method at
the rates spedfied in Schedule XIV of the Companies Act, 1958 or
estimated useful life whichever is higher.
(c) Depreciation Includes the amount written off in respect of
leasehold land over the respective lease period.
(d) Depreciation on fixed assets added / disposed off during the year,
is provided on pro-rata basis with reference to the month of addition /
disposal.
(e) Discarded Fixed Assets awaiting disposal are valued at estimated
realisable value and disclosed separately.
(f) Depredation on Insurance Spares I standby equipments is provided
over the useful lives of the respective mother assets.
(VI) Fixed Assets acquired under lease:
(a) Finance Lease
(i) Assets acquired under lease agreements which effectively transfer
to the Company substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at the lower of the fair
value and present value of the minimum lease payment after discounting
them at an appropriate discount rate at the inception of the lease term
and disclosed as leased assets. Lease Payments are apportioned between
the 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 charged directly to expenses account
(D) Lease assets capitalised , if any, are depreciated over the shorter
of the estimated useful life of the asset or the lease term.
(b) Operating Lease
Lease where the lessor effectively retains substantially ail the risks
and benefits of ownership of the leased assets, are classified as
operating lease. Operating lease payments are recognized as expense in
the profit and toss Account on a straight line basis over the lease
term.
(VII) Investments:
Investments that are readily realisable and intended to be held for not
more than a year are classified as current Investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
(VIII) Inventories:
(a) Raw Materials, Stores & Spares .Packing Materials & Traded Goods
are valued at lower of cost computed on FIFO basis and net realisable
value.
(b) Finished Goods are valued at lower of cost computed on weighted
average basis and net realisable value. Cost of finished goods includes
direct materials and labour and a proportion of manufacturing overheads
based on normal operating capacity.
(c) By-products are valued at net realisable value.
(d) 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.
(IX) Cash & Cash Equivalents :
Cash and cash equivalents in the Cash Flow comprise cash at bank and in
hand (including cheques /
hand) balance lying in banks in current account (including overdraft).
(X) Excise Duty :
Excise Duty on Finished Goods stack lying at the factories is accounted
for at the point of manufacture of goods and is accordingly considered
for valuation of finished goods stock lying in the factories as on the
Balance Sheet date.
(XI) Fmniovees Benefits :
i. Provident Fund is a defined contribution scheme and the
contributions are charged to the Profit & Loss Account of the year when
these are due
ii. Gratuity liability is a defined benefit obligation and is provided
for on the basis of actuarial valuation made at the end of Financial
Year.
iii. Actuarial gain/tosses are immediately taken to the Profit 8 Loss
Account and are not deferred.
(XII) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition or
construction of qualifying assels are capitalised until the time all
substantial activities necessary to prepare the qualifying assets for
their intended use are complete. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs are charged to revenue. i
(XIII) Provisions:
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. .
Provisions made in terms of Accounting Standard 29 are not discounted
to its present value and are determined based on the best estimates
required to settle the obligation at the Balance Sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
best estimates,
(XIV) Taxation:
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years. Deferred tax is measured based on the tax
rates and the tax laws enacted or substantively enacted at the balance
sheet date. Deferred tax assets are recognised only to the extent that
there is ''reasonable certainty'' that sufficient future taxable income
wifi be available against which such deferred tax assets can be
realised.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which Ihe Minimum
Alternative Tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement, The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal income tax during the specified
period.
(XV) Segment Reporting:
The Company has identified Iron & Steel products as its sole operating
segment and the same has been treated as primary segment.
(XVI) Continqencios:
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty, are treated as contingent and
disclosed by way of Notes to the Accounts.
(XVII) Earning per share:
Earning per share is calculated by dividing the net profit or loss for
the year attributable to equity shareholders, by the weighted average
number of equity shares outstanding during the year
For the purpose of calculating diluted eamings''per share, the net
profit or loss for the year attributable to equity shareholders and
weighted average number of shares outstanding during the year is
adjusted for the effects of all dilutive potential equity shares.
(XVIII) impairment of Assets;
i The carrying amounts of assets are reviewed at each balance sheet
dale if there is any indication of impairment based on intemaltextemal
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing the value in use, the estimated future cash flows are
discounted to their present value at the weighted average cost of
capital.
ii. After impairment, depredation is provided on the revised carrying
amount of the assets over its remaining useful life. . .
1) Miscellaneous Expenditure
Preliminary expenses are amortized over a period of five years.
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