Mar 31, 2023
Company Overview
Ion Exchange (India) Limited (the âcompany'') offers a wide range of solutions across the water cycle from pre-treatment to process water treatment, waste water treatment, recycle, zero liquid discharge, sewage treatment, packaged drinking water, sea water desalination etc. The company is also engaged in manufacturing resins, speciality chemicals for water and waste water treatment as well as non-water applications. The company''s water and environment management solutions extend beyond the industrial sector to homes, hotels, spas, educational institutions, hospitals, laboratories, realty sector, defense establishments and rural communities, providing safe drinking water and a clean environment.
The company is a public limited company incorporated and domiciled in India. It is listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).
1. Significant Accounting Policies
1.1 Statement of compliance
These financial statements are prepared and presented in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time as notified under Section 133 of Companies Act, 2013, the relevant provisions of the Companies Act, 2013 (âthe Actâ), and the guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
The financial statements are authorised for issue by the Board of Directors of the company at their meeting held on 26th May 2023.
1.2 Basis of preparation
The standalone financial statements have been prepared on the going concern basis and at historical cost, on the accrual basis of accounting except for certain financial assets and financial liabilities that are measured at fair values at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.
The standalone financial statements includes financials statements of IEI Shareholding (Staff Welfare) Trusts (60 trusts) and HMIL Shareholding (Staff Welfare) Trusts (17 trusts).
The operating cycle in case of projects division comprising of turnkey projects which forms a part of engineering segment is determined for each project separately based on the expected execution period of the contract. In case of the other divisions the company has ascertained its operating cycle as twelve months.
1.3 Functional and presentation currency
The standalone financial statements are presented in Indian rupees, which is also the company''s functional currency. All amounts have been rounded off to two decimal places to the nearest lacs, unless otherwise indicated.
1.4 Basis of measurement
The standalone financial statements have been prepared on a historical cost convention, except for the following:
⢠certain financial assets and liabilities (including derivative instruments) that are measured at fair value; and
⢠net defined benefit (asset)/ liability that are measured at fair value of plan assets less present value of defined benefit obligations.
1.5 Use of estimates
The preparation of the standalone financial statements in accordance with Ind AS requires use of judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31st March 2023 are as follows:
a) Evaluation of percentage completion
Determination of revenues under the percentage of completion method necessarily involves making estimates, some of which are technical in nature, concerning, where relevant, the percentage of completion, costs to completion, expected revenues from the project or activity and the foreseeable losses to completion. Estimates of project income, as well as project costs, are reviewed periodically. The effect of changes, if any, to estimates is recognised in the financial statements for the period in which such changes are determined.
b) useful life of property, plant and equipment
Determination of the estimated useful lives of tangible assets and the assessment as to which components of the cost may be capitalised. useful lives of tangible assets are based on the life prescribed in Schedule II of the Act. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers'' warranties and maintenance support.
1.5 Use of estimates (contd...)
c) Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
d) Expected credit loss (ECL) - Refer note no. 1.13 on Impairment of financial assets
1.6 Measurement of fair values
The company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The company has an established control framework with respect to the measurement of fair values, which includes overseeing all significant fair value measurements, including level 3 fair values by the management. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
1.7 Property, plant and equipment and depreciation
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any. Cost includes taxes, duties, freight and other incidental expenses directly related to acquisition/ construction and installation of the assets. Any trade discounts and rebates are deducted in arriving at the purchase price.
Depreciation is provided on straight line basis based on life assigned to each asset in accordance with Schedule II of the Act or as per life estimated by the Management based on technical evaluation, whichever is lower, as stated below.
Assets |
useful lives |
Road |
10 years |
Building - Other than factory buildings |
30 - 60 years |
- Factory buildings |
20 - 30 years |
Plant and machinery |
10 - 15 years |
Site equipments |
3 years |
Furniture and fixtures |
10 years |
Vehicles |
4 - 8 years |
Office equipments |
3 - 5 years |
In case of certain class of assets, the company uses different useful life than those prescribed in Schedule II of the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of the management''s best estimation of getting economic benefits from those class of assets. The company uses its technical expertise along with historical and industry trends for arriving the economic life of an asset.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
An item of property, plant and equipment is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal are recognised in the statement of profit and loss.
1.8 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost and are carried at cost less accumulated amortisation and impairment.
Intangible assets are amortised on a straight-line basis over the estimated useful economic life. The amortisation period and the amortisation method are reviewed at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly.
Computer software is amortised on a straight-line basis over the period of 5 years.
An intangible asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal are recognised in the statement of profit and loss.
1.9 Impairment
Impairment loss, if any, is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal/external factors. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at end of its useful life. In assessing value in use, the present value is discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Net selling price is the amount obtainable from sale of an asset in an arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.
The company reviews its carrying value of investments carried at cost and amortised cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
1.10 Foreign currency transactions
Transactions in foreign currencies are recognised at exchange rates prevailing on the transaction dates. Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise. Foreign currency monetary items are reported at the year-end rates. Exchange differences arising on reinstatement of foreign currency monetary items are recognised as income or expense in the statement of profit and loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
1.11 Inventories
Inventories are valued at lower of cost and net realizable value.
Cost of raw materials, components, stores and spares are computed on a weighted average basis. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Cost of work-in-progress includes cost of raw material and components, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.
Contract cost that has been incurred and relates to the future activity of the contract are recognised as contract work-in-progress as it is probable that it will be recovered from the customer.
Cost of finished goods includes cost of raw material and components, cost of conversion, other costs including manufacturing overheads incurred in bringing the inventories to their present location/ condition. Cost is computed on weighted average basis.
Costs of traded goods are computed on first-in-first-out basis. Cost includes cost of purchases and other costs incurred in bringing the inventories to their present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
1.12 Research and development
Capital expenditure on research and development is treated in the same manner as property, plant and equipment. Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured.
Financial assets and financial liabilities are recognised in the balance sheet when the company becomes a party to the contractual provisions of the instrument. The company determines the classification of its financial assets and financial liabilities at initial recognition based on its nature and characteristics.
A. Financial assets
(i) Initial recognition and measurement
Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to the fair value measured on initial recognition of financial asset.
The financial assets include debt instruments, equity investments, trade and other receivables, loans, cash and bank balances and derivative financial instruments.
(ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial assets are classified in the following categories:
a) At amortised cost,
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset 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.
b) At fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
c) At fair value through profit or loss (FVTPL).
A financial asset which is not classified in any of the above categories is measured at FVTPL.
(iii) Equity investments
All equity investments in the scope of Ind AS 109 are measured at fair value except in case of investment in subsidiaries, associates and joint venture carried at deemed cost. Deemed cost is the carrying amount under the previous GAAP as at the transition date i.e. 1st April 2016.
Equity instruments included within the FVTPL category, if any, are measured at fair value with all changes recognised in profit or loss. The company may make an irrevocable election to present in OCI subsequent changes in the fair value. The company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the company decides to classify an equity instrument at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in OCI. There is no recycling of the amounts from OCI to profit or loss, even on sale of investment.
However, the company may transfer the cumulative gain or loss within equity.
(iv) Impairment of financial assets
The Company assesses impairment based on Expected Credit Losses (ECL) model for the following:
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 115
Other financial assets such as deposits, advances etc., the company follows âsimplified approach'' for recognition of impairment loss allowance. 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.
As a practical expedient, the Company uses the provision matrix to determine impairment loss allowance on the trade receivables. The provision matrix is based on its historical observed default rates over the expected life of the trade receivables and its adjusted forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) during the period is recognised as other expense in the statement of profit and 110 loss.
The company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the assets.
B. Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial liabilities (other than financial liabilities at fair value through profit or loss) are deducted from the fair value measured on initial recognition of financial liabilities.
The financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, derivative financial instruments, etc.
(ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial liabilities are classified in two categories:
a) Financial liabilities excluding derivative financial instruments at amortised cost, and
b) Derivative financial instruments at fair value through profit or loss (FVTPL).
- Financial liabilities excluding derivative financial instruments at amortised cost
After initial recognition, financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
- Derivative financial instruments
The company uses derivative financial instruments, such as forward currency contracts. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value at each reporting period. Any changes therein are generally recognised in the profit and loss account.
(iii) De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. The difference between the carrying amount of the financial liability de-recognised and the consideration paid and payable is recognised in the statement of profit and loss.
1.14 Financial guarantees
Where guarantees in relation to loans of group companies are provided for no compensation, the fair value are accounted for as contribution and recognised as part of cost of investment.''
1.15 Retirement and other employee benefits
(i) Retirement benefit in the form of provident fund managed by Government Authorities and Superannuation Fund are defined contribution scheme and the contribution is charged to the statement of profit and loss for the year when the contribution to the respective fund is due. There is no other obligation other than the contribution payable.
(ii) Provident Fund scheme managed by trust set up by the company is a defined benefit plan. Employee benefits, in form of contribution to provident fund managed by such trust, are charged to the statement of profit and loss as and when the related services are rendered. The deficit, if any, in the accumulated corpus of the trust is recognised in the statement of profit and loss based on actuarial valuation.
(iii) Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on Projected Unit Credit method made at the end of each financial year. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income (OCI).
(iv) Short term employee benefits are charged off at the undiscounted amount in the year in which the related service is rendered.
(v) Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per Projected Unit Credit method made at the end of each financial year. The company presents the leave liability as non-current in the balance sheet, to the extent it has an unconditional right to defer its settlement for a period beyond 12 months, balance amount is presented as current.
1.16 Employee stock compensation cost
Equity-settled plans are accounted at fair value as at the grant date. The fair value of the share-based option is determined at the grant date using a market-based option valuation model (Black Scholes Option Valuation Model). The fair value of the option is recorded as compensation expense amortised over the vesting period of the options, with a corresponding increase in Reserves and Surplus under the head âEmployee Stock Option Outstandingâ. On exercise of the option, the proceeds are recorded as share capital and security premium account.
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the company''s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the statement of profit and loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the company''s best estimate of the number of equity instruments that will ultimately vest.
1.17 Revenue recognition
Revenue from sale of goods is recognised at the point in time when control of the assets is transferred to the customer, generally on delivery of the goods.
Revenue is recognised upon transfer of control of promised products or services to customers for an amount that reflects the consideration which the company expects to receive in exchange for those products or services.
Revenue related to fixed price maintenance and support services contracts where the company is standing ready to provide services is recognised based on time elapsed mode and revenue is straight lined over the period of performance.
In respect of fixed-price construction contracts, revenue is recognised using percentage-of-completion method (âPOC method'') of accounting with contract costs incurred determining the degree of completion of the performance obligation. The contract costs used in computing the revenues include cost of fulfilling warranty obligations.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts and incentives, if any, as specified in the contract with the customer.
Revenue also excludes taxes collected from customers.
Revenue from subsidiaries is recognised based on transaction price which is at arm''s length.
Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Unearned and deferred revenue (âcontract liabilityâ) is recognised when there are billings in excess of revenues.
The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period.
In accordance with Ind AS 37, the company recognises an onerous contract provision when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received.
Contracts are subject to modification to account for changes in contract specification and requirements. The company reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for.
The Company disaggregates revenue from contracts with customers into categories that depict the nature of services and geography.
Use of significant judgments in revenue recognition
⢠The company''s contracts with customers could include promises to transfer multiple products and services to a customer. The company assesses the products / services promised in a contract and identify distinct performance obligations in the contract. Identification of distinct performance obligation involves judgment to determine the deliverables and the ability of the customer to benefit independently from such deliverables.
⢠Judgment is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts and incentives. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.
⢠The company uses judgment to determine an appropriate standalone selling price for a performance obligation. The company allocates the transaction price to each performance obligation on the basis of the relative standalone selling price of each distinct product or service promised in the contract. Where standalone selling price is not observable, the company uses the expected cost plus margin approach to allocate the transaction price to each distinct performance obligation.
⢠The company exercises judgment in determining whether the performance obligation is satisfied at a point in time or over a period of time. The company considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc.
⢠Revenue for fixed-price construction contract is recognised using percentage-of-completion method. The company uses judgment to estimate the future cost-to-completion of the contracts which is used to determine the degree of completion of the performance obligation.
Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective interest
method.
1.18 Taxation
(i) Provision for current taxation has been made in accordance with the Indian Income tax laws prevailing for the relevant assessment years.
(ii) Deferred tax is recognised, subject to the consideration of prudence, on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised 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.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Un-recognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss are recognised in correlation to the underlying transaction either in Other Comprehensive Income (OCI) or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation.
1.19 Provisions and contingent liabilities
A provision is recognised if, as a result of a past event, the company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but will probably not, require an outflow of resources. When there is a possible obligation of a present obligation in respect of which the likelihood of outflow of resources is remote, no provision disclosure is made.
1.20 Earnings per share
Basic earnings per equity share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period.
For calculating the weighted average number of equity shares outstanding, 2,368,939 (2021-22: 2,368,939) equity shares and 4,675 (2021-22: 4,675) equity shares are being excluded on consolidation of equity shares held by IEI Shareholding (Staff Welfare) Trusts and HMIL Shareholding (Staff Welfare) Trusts respectively.
For the purpose of calculating diluted earnings per equity 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.
1.21 Segment reporting policies
Identification of segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chairman and Managing Director who makes strategic decisions.
Inter-segment Transfers
The company accounts for inter-segment sales and transfers at cost plus appropriate margin.
Allocation of common costs
Common allocable costs are allocated to each segment according to the turnover of the respective segments. unallocated costs
The unallocated segment includes general corporate income and expense items which are not allocated to any business segment. Segment policies
The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.
1.22 Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
1.23 Leases
Where the company is the lessor
Leases in which the company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets given on operating lease by the company are included in property, plant and equipment. Lease income is recognised in the statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation, are recognised as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the statement of profit and loss.
Where the company is the lessee
Assets taken on lease are accounted as right-of-use assets and the corresponding lease liability is accounted at the lease commencement date.
Initially the right-of-use asset is measured at cost which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred.
The lease liability is initially measured at the present value of the lease payments, discounted using the Company''s incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or a rate, or a change in the estimate of the guaranteed residual value, or a change in the assessment of purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in the statement of profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.
The right-of-use asset is measured by applying cost model i.e. right-of-use asset at cost less accumulated amortisation and cumulative impairment, if any. The right-of-use asset is amortised, using the straight-line method over the period of lease, from the commencement date to the end of the lease term or useful life of the underlying asset whichever is earlier. Carrying amount of lease liability is increased by interest on lease liability and reduced by lease payments made.
Lease payments associated with following leases are recognised as expense on straight-line basis:
(i) Low value leases; and
(ii) Leases which are short-term.
1.24 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset till such time that it is required to complete and prepare the assets to get ready for its intended use. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
1.25 Dividend payable
Final dividend on shares are recorded as a liability on the date of approval by the shareholders and interim dividend are recorded as a liability on the date of declaration by the company''s board of directors. A corresponding amount is recognised directly in equity.
The company pays / distributes dividend after deducting applicable taxes.
Mar 31, 2022
Company Overview
Ion Exchange (India) Limited (the âcompany'') offers a wide range of solutions across the water cycle from pre-treatment to process water treatment, waste water treatment, recycle, zero liquid discharge, sewage treatment, packaged drinking water, sea water desalination etc. The company is also engaged in manufacturing resins, speciality chemicals for water and waste water treatment as well as non-water applications. The company''s water and environment management solutions extend beyond the industrial sector to homes, hotels, spas, educational institutions, hospitals, laboratories, realty sector, defense establishments and rural communities, providing safe drinking water and a clean environment.
The company is a public limited company incorporated and domiciled in India. It is listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).
1. Significant Accounting Policies1.1 Statement of compliance
These financial statements are prepared and presented in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time as notified under Section 133 of Companies Act, 2013, the relevant provisions of the Companies Act, 2013 (âthe Actâ), and the guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
The financial statements are authorised for issue by the Board of Directors of the company at their meeting held on 27th May 2022.
The standalone financial statements have been prepared on the going concern basis and at historical cost, on the accrual basis of accounting except for certain financial assets and financial liabilities that are measured at fair values at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.
The standalone financial statements includes financials statements of IEI Shareholding (Staff Welfare) Trusts (60 trusts) and HMIL Shareholding (Staff Welfare) Trusts (17 trusts).
The operating cycle in case of projects division comprising of turnkey projects which forms a part of engineering segment is determined for each project separately based on the expected execution period of the contract. In case of the other divisions the company has ascertained its operating cycle as twelve months.
1.3 Functional and presentation currency
The standalone financial statements are presented in Indian rupees, which is also the company''s functional currency. All amounts have been rounded off to two decimal places to the nearest lacs, unless otherwise indicated.
The standalone financial statements have been prepared on a historical cost convention, except for the following:
⢠certain financial assets and liabilities (including derivative instruments) that are measured at fair value; and
⢠net defined benefit (asset)/ liability that are measured at fair value of plan assets less present value of defined benefit obligations.
The preparation of the standalone financial statements in accordance with Ind AS requires use of judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31st March 2022 are as follows:
a) Evaluation of percentage completion
Determination of revenues under the percentage of completion method necessarily involves making estimates, some of which are technical in nature, concerning, where relevant, the percentage of completion, costs to completion, expected revenues from the project or activity and the foreseeable losses to completion. Estimates of project income, as well as project costs, are reviewed periodically. The effect of changes, if any, to estimates is recognised in the financial statements for the period in which such changes are determined.
b) useful life of property, plant and equipment
Determination of the estimated useful lives of tangible assets and the assessment as to which components of the cost may be capitalised. useful lives of tangible assets are based on the life prescribed in Schedule II of the Act. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers'' warranties and maintenance support.
1.5 Use of estimates (contd...)
c) Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
d) Expected credit loss (ECL) - Refer note no. 1.13 on Impairment of financial assets
1.6 Measurement of fair values
The company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The company has an established control framework with respect to the measurement of fair values, which includes overseeing all significant fair value measurements, including level 3 fair values by the management. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
1.7 Property, plant and equipment and depreciation
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any. Cost includes taxes, duties, freight and other incidental expenses directly related to acquisition/ construction and installation of the assets. Any trade discounts and rebates are deducted in arriving at the purchase price.
Depreciation is provided on straight line basis based on life assigned to each asset in accordance with Schedule II of the Act or as per life estimated by the Management based on technical evaluation, whichever is lower, as stated below.
Assets |
useful lives |
Road |
10 years |
Building - Other than factory buildings |
30 - 60 years |
- Factory buildings |
20 - 30 years |
Plant and machinery |
10 - 15 years |
Site equipments |
3 years |
Furniture and fixtures |
10 years |
Vehicles |
4 - 8 years |
Office equipments |
3 - 5 years |
In case of certain class of assets, the company uses different useful life than those prescribed in Schedule II of the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of the management''s best estimation of getting economic benefits from those class of assets. The company uses its technical expertise along with historical and industry trends for arriving the economic life of an asset.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
An item of property, plant and equipment is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal are recognised in the statement of profit and loss.
Intangible assets acquired separately are measured on initial recognition at cost and are carried at cost less accumulated amortization and impairment.
Intangible assets are amortised on a straight-line basis over the estimated useful economic life. The amortization period and the amortization method are reviewed at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly.
Computer software is amortised on a straight-line basis over the period of 5 years.
An intangible asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal are recognised in the statement of profit and loss.
Impairment loss, if any, is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal/external factors. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at end of its useful life. In assessing value in use, the present value is discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Net selling price is the amount obtainable from sale of an asset in an arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.
The company reviews its carrying value of investments carried at cost and amortised cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
1.10 Foreign currency transactions
Transactions in foreign currencies are recognised at exchange rates prevailing on the transaction dates. Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise. Foreign currency monetary items are reported at the year-end rates. Exchange differences arising on reinstatement of foreign currency monetary items are recognised as income or expense in the statement of profit and loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
Inventories are valued at lower of cost and net realizable value.
Cost of raw materials, components, stores and spares are computed on a weighted average basis. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Cost of work-in-progress includes cost of raw material and components, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.
Contract cost that has been incurred and relates to the future activity of the contract are recognised as contract work-in-progress as it is probable that it will be recovered from the customer.
Cost of finished goods includes cost of raw material and components, cost of conversion, other costs including manufacturing overheads incurred in bringing the inventories to their present location/ condition. Cost is computed on weighted average basis.
Costs of traded goods are computed on first-in-first-out basis. Cost includes cost of purchases and other costs incurred in bringing the inventories to their present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Capital expenditure on research and development is treated in the same manner as property, plant and equipment. Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured.
Financial assets and financial liabilities are recognised in the balance sheet when the company becomes a party to the contractual provisions of the instrument. The company determines the classification of its financial assets and financial liabilities at initial recognition based on its nature and characteristics.
A. Financial assets
(i) Initial recognition and measurement
Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to the fair value measured on initial recognition of financial asset.
The financial assets include debt instruments, equity investments, trade and other receivables, loans, cash and bank balances and derivative financial instruments.
(ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial assets are classified in the following categories:
a) At amortised cost
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset 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.
b) At fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
c) At fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories is measured at FVTPL.
(iii) Equity investments
All equity investments in the scope of Ind AS 109 are measured at fair value except in case of investment in subsidiaries, associates and joint venture carried at deemed cost. Deemed cost is the carrying amount under the previous GAAP as at the transition date i.e. 1st April 2016.
Equity instruments included within the FVTPL category, if any, are measured at fair value with all changes recognised in profit or loss. The company may make an irrevocable election to present in OCI subsequent changes in the fair value. The company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the company decides to classify an equity instrument at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in OCI. There is no recycling of the amounts from OCI to profit or loss, even on sale of investment.
However, the company may transfer the cumulative gain or loss within equity.
(iv) Impairment of financial assets
The Company assesses impairment based on Expected Credit Losses (ECL) model for the following:
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 115
Other financial assets such as deposits, advances etc., the company follows âsimplified approach'' for recognition of impairment loss allowance. 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.
As a practical expedient, the Company uses the provision matrix to determine impairment loss allowance on the trade receivables. The provision matrix is based on its historical observed default rates over the expected life of the trade receivables and its adjusted forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) during the period is recognised as other expense in the statement of profit and loss.
The company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the assets.
B. Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial liabilities (other than financial liabilities at fair value through profit or loss) are deducted from the fair value measured on initial recognition of financial liabilities.
The financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, derivative financial instruments, etc.
(ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial liabilities are classified in two categories:
a) Financial liabilities excluding derivative financial instruments at amortised cost, and
b) Derivative financial instruments at fair value through profit or loss (FVTPL).
- Financial liabilities excluding derivative financial instruments at amortised cost
After initial recognition, financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
- Derivative financial instruments
The company uses derivative financial instruments, such as forward currency contracts. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value at each reporting period. Any changes therein are generally recognised in the profit and loss account.
(iii) De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. The difference between the carrying amount of the financial liability de-recognised and the consideration paid and payable is recognised in the statement of profit and loss.
Where guarantees in relation to loans of group companies are provided for no compensation, the fair value are accounted for as contribution and recognised as part of cost of investment.
1.15 Retirement and other employee benefits
(i) Retirement benefit in the form of provident fund managed by Government Authorities and Superannuation Fund are defined contribution scheme and the contribution is charged to the statement of profit and loss for the year when the contribution to the respective fund is due. There is no other obligation other than the contribution payable.
(ii) Provident Fund scheme managed by trust set up by the company is a defined benefit plan. Employee benefits, in form of contribution to provident fund managed by such trust, are charged to the statement of profit and loss as and when the related services are rendered. The deficit, if any, in the accumulated corpus of the trust is recognised in the statement of profit and loss based on actuarial valuation.
(iii) Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on Projected Unit Credit method made at the end of each financial year. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income (OCI).
(iv) Short term employee benefits are charged off at the undiscounted amount in the year in which the related service is rendered.
(v) Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per Projected Unit Credit method made at the end of each financial year. The company presents the leave liability as non-current in the balance sheet, to the extent it has an unconditional right to defer its settlement for a period beyond 12 months, balance amount is presented as current.
1.16 Employee stock compensation cost
Equity-settled plans are accounted at fair value as at the grant date. The fair value of the share-based option is determined at the grant date using a market-based option valuation model (Black Scholes Option Valuation Model). The fair value of the option is recorded as compensation expense amortised over the vesting period of the options, with a corresponding increase in Reserves and Surplus under the head âEmployee Stock Option Outstandingâ. On exercise of the option, the proceeds are recorded as share capital and security premium account.
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the company''s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the statement of profit and loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the company''s best estimate of the number of equity instruments that will ultimately vest.
Revenue from sale of goods is recognised at the point in time when control of the assets is transferred to the customer, generally on delivery of the goods.
Revenue is recognised upon transfer of control of promised products or services to customers for an amount that reflects the consideration which the company expects to receive in exchange for those products or services.
Revenue related to fixed price maintenance and support services contracts where the company is standing ready to provide services is recognised based on time elapsed mode and revenue is straight lined over the period of performance.
In respect of fixed-price construction contracts, revenue is recognised using percentage-of-completion method (âPOC method'') of accounting with contract costs incurred determining the degree of completion of the performance obligation. The contract costs used in computing the revenues include cost of fulfilling warranty obligations.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts and incentives, if any, as specified in the contract with the customer.
Revenue also excludes taxes collected from customers.
Revenue from subsidiaries is recognised based on transaction price which is at arm''s length.
Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Unearned and deferred revenue (âcontract liabilityâ) is recognised when there are billings in excess of revenues.
The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period.
In accordance with Ind AS 37, the company recognises an onerous contract provision when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received.
Contracts are subject to modification to account for changes in contract specification and requirements. The company reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for.
The Company disaggregates revenue from contracts with customers into categories that depict the nature of services and geography.
Use of significant judgments in revenue recognition
⢠The company''s contracts with customers could include promises to transfer multiple products and services to a customer. The company assesses the products / services promised in a contract and identify distinct performance obligations in the contract. Identification of distinct performance obligation involves judgment to determine the deliverables and the ability of the customer to benefit independently from such deliverables.
⢠Judgment is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts and incentives. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.
⢠The company uses judgment to determine an appropriate standalone selling price for a performance obligation. The company allocates the transaction price to each performance obligation on the basis of the relative standalone selling price of each distinct product or service promised in the contract. Where standalone selling price is not observable, the company uses the expected cost plus margin approach to allocate the transaction price to each distinct performance obligation.
⢠The company exercises judgment in determining whether the performance obligation is satisfied at a point in time or over a period of time. The company considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc.
⢠Revenue for fixed-price construction contract is recognised using percentage-of-completion method. The company uses judgment to estimate the future cost-to-completion of the contracts which is used to determine the degree of completion of the performance obligation.
Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective interest method.
(i) Provision for current taxation has been made in accordance with the Indian Income tax laws prevailing for the relevant assessment years.
(ii) Deferred tax is recognised, subject to the consideration of prudence, on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised 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.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Un-recognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss are recognised in correlation to the underlying transaction either in Other Comprehensive Income (OCI) or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation.
1.19 Provisions and contingent liabilities
A provision is recognised if, as a result of a past event, the company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
1.19 Provisions and contingent liabilities (contd...)
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but will probably not, require an outflow of resources. When there is a possible obligation of a present obligation in respect of which the likelihood of outflow of resources is remote, no provision disclosure is made.
Basic earnings per equity share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period.
For calculating the weighted average number of equity shares outstanding, 2,368,939 (2020-21: 2,368,939) equity shares and 4,675 (2020-21: 4,675) equity shares are being excluded on consolidation of equity shares held by IEI Shareholding (Staff Welfare) Trusts and HMIL Shareholding (Staff Welfare) Trusts respectively.
For the purpose of calculating diluted earnings per equity 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.
1.21 Segment reporting policies
Identification of segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chairman and Managing Director who makes strategic decisions.
Inter-segment Transfers
The company accounts for inter-segment sales and transfers at cost plus appropriate margin.
Allocation of common costs
Common allocable costs are allocated to each segment according to the turnover of the respective segments. unallocated costs
The unallocated segment includes general corporate income and expense items which are not allocated to any business segment. Segment policies
The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.
1.22 Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
Where the company is the lessor
Leases in which the company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets given on operating lease by the company are included in property, plant and equipment. Lease income is recognised in the statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation, are recognised as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the statement of profit and loss.
Where the company is the lessee
Assets taken on lease are accounted as right-of-use assets and the corresponding lease liability is accounted at the lease commencement date.
Initially the right-of-use asset is measured at cost which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred.
The lease liability is initially measured at the present value of the lease payments, discounted using the Company''s incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or a rate, or a change in the estimate of the guaranteed residual value, or a change in the assessment of purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in the statement of profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.
The right-of-use asset is measured by applying cost model i.e. right-of-use asset at cost less accumulated amortisation and cumulative impairment, if any. The right-of-use asset is amortised, using the straight-line method over the period of lease, from the commencement date to the end of the lease term or useful life of the underlying asset whichever is earlier. Carrying amount of lease liability is increased by interest on lease liability and reduced by lease payments made.
Lease payments associated with following leases are recognised as expense on straight-line basis:
(i) Low value leases; and
(ii) Leases which are short-term.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset till such time that it is required to complete and prepare the assets to get ready for its intended use. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Final dividend on shares are recorded as a liability on the date of approval by the shareholders and interim dividend are recorded as a liability on the date of declaration by the company''s board of directors. A corresponding amount is recognised directly in equity.
The company pays / distributes dividend after deducting applicable taxes.
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 23rd March 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from 1st April 2022, as below:
Ind AS 103 - Reference to Conceptual Framework. The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 16 - Proceeds before intended use. The amendments mainly prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, an entity will recognise such sales proceeds and related cost in profit or loss. The company does not expect the amendments to have any impact in its recognition of its property, plant and equipment in its financial statements.
Ind AS 37 - Onerous Contracts - Costs of Fulfilling a Contract. The amendments specify that that the âcost of fulfilling'' a contract comprises the âcosts that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts. The amendment is essentially a clarification and the Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 109 - Annual Improvements to Ind AS (2021). The amendment clarifies which fees an entity includes when it applies the â10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability. The company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 116 - Annual Improvements to Ind AS (2021). The amendments remove the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives were described in that illustration. The company does not expect the amendment to have any significant impact in its financial statements
None of the amendments notified by MCA, which are applicable from 1st April 2022 are expected to have any material impact on the financial statement of the Company.
Mar 31, 2018
Overview of the company
Ion Exchange (India) Limited (the âcompany'') offers a wide range of solutions across the water cycle from pre- treatment to process water treatment, waste water treatment, recycle, zero liquid discharge, sewage treatment, packaged drinking water, sea water desalination etc. The company is also engaged in manufacturing resins, specialty chemicals for water and waste water treatment as well as non-water applications. The company''s water and environment management solutions extend beyond the industrial sector to homes, hotels, spas, educational institutions, hospitals, laboratories, realty sector and defense establishments providing safe drinking water and a clean environment.
The company is a public limited company incorporated and domiciled in India. It is listed on BSE Limited (BSE).
1. Significant accounting policies
1.1 Statement of compliance
These financial statements are prepared and presented in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 notified under section 133 of the Companies Act, 2013, the relevant provisions of the Companies Act, 2013 (âthe Act'''') and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable
These standalone financial statements are the first standalone financial statements prepared in accordance with Ind AS. For all periods upto and including the year ended 31st March 2017, the Company reported its financial statements in accordance with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as âprevious GAAP''). The financial statements for the year ended 31st March 2017 and the opening Balance Sheet as at 1st April 2016 have been restated in accordance with Ind AS for comparative information. Reconciliations and explanations of the effect of the transition from previous GAAP to Ind AS on the company''s balance sheet, statement of profit and loss and statement of cash flows are provided in note 41.
1.2 Basis of preparation
The standalone financial statements have been prepared on the going concern basis and at historical cost, on the accrual basis of accounting except for certain financial assets and financial liabilities that are measured at fair values at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.
The standalone financials statements have been approved for issue by the Board of Directors at their meeting held on 23rd May 2018.
The operating cycle in case of projects division comprising of turnkey projects which forms a part of engineering segment is determined for each project separately based on the expected execution period of the contract. In case of the other divisions the company has ascertained its operating cycle as twelve months.
1.3 Functional and presentation currency
The standalone financial statements are presented in Indian rupees, which is also the company''s functional currency. All amounts have been rounded off to two decimal places to the nearest lacs, unless otherwise indicated.
1.4 Basis of measurement
The standalone financial statements have been prepared on a historical cost convention, except for the following:
- certain financial assets and liabilities (including derivative instruments) that are measured at fair value; and
- net defined benefit (asset)/ liability that are measured at fair value of plan assets less present value of defined benefit obligations.
1.5 Use of estimates
The preparation of the standalone financial statements in accordance with Ind AS requires use of judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31st March 2018 are as follows:
a) Evaluation of percentage completion
Determination of revenues under the percentage of completion method necessarily involves making estimates, some of which are technical in nature, concerning, where relevant, the percentage of completion, costs to completion, expected revenues from the project or activity and the foreseeable losses to completion. Estimates of project income, as well as project costs, are reviewed periodically. The effect of changes, if any, to estimates is recognized in the financial statements for the period in which such changes are determined.
b) Useful life of property, plant and equipment
Determination of the estimated useful lives of tangible assets and the assessment as to which components of the cost may be capitalised. Useful lives of tangible assets are based on the life prescribed in Schedule II of the Act. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers'' warranties and maintenance support.
c) Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
1.6 Measurement of fair values
The Company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values, which includes overseeing all significant fair value measurements, including Level 3 fair values by the management. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
1.7 Summary of significant accounting policies
a) Property, plant and equipment and depreciation
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any. Cost includes taxes, duties, freight and other incidental expenses directly related to acquisition/construction and installation of the assets. Any trade discounts and rebates are deducted in arriving at the purchase price.
Leasehold assets are depreciated over the period of lease.
In case of certain class of assets, the Company uses different useful life than those prescribed in Schedule II of the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of the management''s best estimation of getting economic benefits from those class of assets. The Company uses its technical expertise along with historical and industry trends for arriving the economic life of an asset.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
An item of property, plant and equipment is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal are recognised in the Statement of Profit and Loss.
The Company has elected to continue with the carrying value of all its property, plant and equipment as recognized in the standalone financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the transition date pursuant to the exemption under Ind AS 101.
b) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost and are carried at cost less accumulated amortization and impairment.
Intangible assets are amortized on a straight-line basis over the estimated useful economic life. The amortization period and the amortization method are reviewed at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly.
Computer software is amortized on a straight-line basis over the period of 5 years.
An intangible asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal are recognised in the statement of profit and loss.
The company has elected to continue with the carrying value of all its intangible assets as recognized in the standalone financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the transition date pursuant to the exemption under Ind AS 101.
c) Impairment
Impairment loss, if any, is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal/external factors. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at end of its useful life. In assessing value in use, the present value is discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Net selling price is the amount obtainable from sale of an asset in an arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.
d) Foreign currency transactions
Transactions in foreign currencies are recognized at exchange rates prevailing on the transaction dates. Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise. Foreign currency monetary items are reported at the year-end rates. Exchange differences arising on reinstatement of foreign currency monetary items are recognized as income or expense in the statement of profit and loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
e) Inventories
Inventories are valued at lower of cost and net realizable value.
Cost of raw materials, components, stores and spares are computed on a weighted average basis. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Cost of work-in-progress includes cost of raw material and components, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.
Contract cost that has been incurred and relates to the future activity of the contract are recognized as contract work-in-progress as it is probable that it will be recovered from the customer.
Cost of finished goods includes cost of raw material and components, cost of conversion, other costs including manufacturing overheads incurred in bringing the inventories to their present location/ condition. Cost is computed on weighted average basis.
Costs of traded goods are computed on first-in-first-out basis. Cost includes cost of purchases and other costs incurred in bringing the inventories to their present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
f) Research and development
Capital expenditure on research and development is treated in the same manner as property, plant and equipment. Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured.
g) Financial instruments
Financial assets and financial liabilities are recognised in the balance sheet when the company becomes a party to the contractual provisions of the instrument. The company determines the classification of its financial assets and financial liabilities at initial recognition based on its nature and characteristics.
A. Financial assets
(i) Initial recognition and measurement
Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to the fair value measured on initial recognition of financial asset.
The financial assets include debt instruments, equity investments, trade and other receivables, loans, cash and bank balances and derivative financial instruments.
(ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial assets are classified in the following categories:
a) At amortised cost,
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset 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.
b) At fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
c) At fair value through profit or loss (FVTPL).
A financial asset which is not classified in any of the above categories are measured at FVTPL.
(iii) Equity investments
All equity investments in the scope of Ind AS 109 are measured at fair value except in case of investment in subsidiaries, associates and joint venture carried at deemed cost. Deemed cost is the carrying amount under the previous GAAP as at the transition date i.e. 1st April 2016.
Equity instruments included within the FVTPL category, if any, are measured at fair value with all changes recognized in profit or loss. The company may make an irrevocable election to present in OCI subsequent changes in the fair value. The company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the company decides to classify an equity instrument at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in OCI. There is no recycling of the amounts from OCI to profit or loss, even on sale of investment.
However, the company may transfer the cumulative gain or loss within equity.
(iv) Impairment of financial assets
All financial assets are reviewed for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired.
(v) De-recognition of financial assets
The company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the assets.
B. Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial liabilities (other than financial liabilities at fair value through profit or loss) are deducted from the fair value measured on initial recognition of financial liabilities.
The financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, derivative financial instruments, etc.
(ii) Classification and subsequent measurement
For the purpose of subsequent measurement, Financial liabilities are classified in two categories:
a) Financial liabilities excluding derivative financial instruments at amortised cost, and
b) Derivative financial instruments at fair value through profit or loss (FVTPL).
- Financial liabilities excluding derivative financial instruments at amortised cost
After initial recognition, financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
- Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at each reporting period. Any changes therein are generally recognised in the profit and loss account.
(iii) De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. The difference between the carrying amount of the financial liability de-recognised and the consideration paid and payable is recognised in the statement of profit and loss.
h) Financial guarantees
Where guarantees in relation to loans of group companies are provided for no compensation, the fair value are accounted for as contribution and recognized as part of cost of investment.
i) Retirement and other employee benefits
(i) Retirement benefit in the form of provident fund managed by Government Authorities and Superannuation Fund are defined contribution scheme and the contribution is charged to the statement of profit and loss of the year when the contribution to the respective fund is due. There is no other obligation other than the contribution payable.
(ii) Provident Fund scheme managed by trust set up by the company is a defined benefit plan. Employee benefits, in form of contribution to provident fund managed by such trust, is charged to the statement of profit and loss as and when the related services are rendered. The deficit, if any, in the accumulated corpus of the trust is recognised in the statement of profit and loss based on actuarial valuation.
(iii) Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on Projected Unit Credit method made at the end of each financial year. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income (OCI).
(iv) Short term employee benefits are charged off at the undiscounted amount in the year in which the related service is rendered.
(v) Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per Projected Unit Credit method made at the end of each financial year. The company presents the leave liability as non-current in the balance sheet, to the extent it has an unconditional right to defer its settlement for a period beyond 12 months, balance amount is presented as current.
j) Employee stock compensation cost
Equity-settled plans are accounted at fair value as at the grant date. The fair value of the share-based option is determined at the grant date using a market-based option valuation model (Black Scholes Option Valuation Model). The fair value of the option is recorded as compensation expense amortized over the vesting period of the options, with a corresponding increase in Reserves and Surplus under the head âEmployee Stock Option Outstandingâ. On exercise of the option, the proceeds are recorded as share capital and security premium account.
The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the Statement of Profit and Loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the company''s best estimate of the number of equity instruments that will ultimately vest.
k) 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.
Sales are accounted for inclusive of excise duty but excluding sales tax, VAT & GST. Sale of goods is recognized when the property and all significant risks and reward of ownership is transferred to the buyer and no significant uncertainty exists regarding the amount of consideration that is derived from the sale of goods.
Contract revenue and contract costs in respect of construction contracts, execution of which is spread over different accounting periods, is recognized as revenue and expense respectively by reference to the basis of percentage of completion method of the project at the balance sheet date.
Determination of revenues under the percentage of completion method by the company is based on estimates (some of which are technical in nature) concerning the percentage of completion, costs to completion, contracted revenue from the contract and the foreseeable losses of completion. Foreseeable losses, if any, which are based on technical estimates, are provided in the accounts irrespective of the work done. The company does not have outflow on account of warranty given to customers as substantially all the outsourced work has a back to back guarantee.
Income from services:
Revenue from maintenance contracts are recognized pro-rata over the period of the contract as and when services are rendered. Income from management fees is recognized on completion of services. The company collects service tax and GST on behalf of the government and therefore, it is not an economic benefit flowing to the company. Hence, Service tax and GST is excluded from revenue.
Interest:
Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instruments or a shorter period, where appropriate, to the gross carrying amount of the financial assets or to the amortised cost of a financial liability. Interest income is included in finance income in the statement of profit and loss.
Dividends:
Revenue is recognized when the shareholder''s right to receive payment is established by the balance sheet date.
Export incentive:
An export incentive is recognized in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of export made, and there is no uncertainty as to its receipt.
l) Taxation
(i) Provision for current taxation has been made in accordance with the Indian Income tax laws prevailing for the relevant assessment years.
(ii) Deferred tax is recognized, subject to the consideration of prudence, on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are 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.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Un-recognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss are recognised in correlation to the underlying transaction either in Other Comprehensive Income (OCI) or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation.
m) Provisions and contingent liabilities
A provision is recognised if, as a result of a past event, the company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but will probably not, require an outflow of resources. When there is a possible obligation of a present obligation in respect of which the likelihood of outflow of resources is remote, no provision disclosure is made.
n) Earnings per share
Basic earnings per equity share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period.
For calculating the weighted average number of equity shares outstanding, 2,662,914 equity shares is being excluded on consolidation of equity shares held by IEI Shareholding (Staff Welfare) Trusts and is shown under treasury shares.
For the purpose of calculating diluted earnings per equity 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.
o) Segment reporting policies
Identification of segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chairman and Managing Director who makes strategic decisions.
Inter-segment Transfers
The Company accounts for inter-segment sales and transfers at cost plus appropriate margin.
Allocation of common costs
Common allocable costs are allocated to each segment according to the turnover of the respective segments.
Unallocated costs
The unallocated segment includes general corporate income and expense items which are not allocated to any business segment. Segment policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.
p) Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
q) Leases
Where the company is the lessor
Leases in which the company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets given on operating leases by the company are included in property, plant and equipment. Lease income is recognized in the statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation, are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.
Where the company is the lessee
Finance leases, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease term at the lower of the fair value of the leased property and present value of minimum lease payments. 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 recognized as finance costs in the statement of profit and loss. However, finance charges pertaining to the period up to date of commissioning of assets are capitalised. Lease management fees, legal charges and other initial direct costs of lease are capitalized.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
In case of profit on sale and lease back arrangements resulting in operating leases, where the sale price is above fair value, the excess over the fair value is deferred and amortized over the period for which the asset is expected to be used.
r) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset till such time that it is required to complete and prepare the assets to get ready for its intended use. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
s) Dividend payable
Final dividend on shares are recorded as a liability on the date of approval by the shareholders and interim dividend are recorded as a liability on the date of declaration by the company''s board of directors. A corresponding amount is recognised directly in equity.
Mar 31, 2015
1. Basis of Preparation:
The financial statements ofthe company have been prepared in accordance
with generally accepted accounting principles in India (Indian GAAP).
The financial statements have been prepared under historical cost
convention on accrual basis except in case of assets acquired before
30th April 1986 which are carried at revalued amounts. The financial
statements comply in all material respects with the accounting
standards as prescribed under section 133 of the Companies Act, 2013
(the "Act") read with rule 7 of the Companies (Accounts) Rules,
2014, provisions ofthe Act (to the extent notified). The accounting
policies adopted in the preparation of financial statements are
consistent with those of previous year.
The operating cycle in case of projects division comprising of turnkey
projects which forms a part of engineering segment is determined for
each project separately based on the expected execution period of the
contract. In case of the other divisions the company has ascertained
its operating cycle as twelve months.
2. Significant Accounting Policies:
(i) Fixed assets, depreciation, amortization and impairment:
Tangible assets
Fixed assets acquired before 30th April 1986 are stated at revalued
amounts while assets acquired subsequent to that date are stated at
historical cost of acquisition less accumulated depreciation and
impairment losses, if any. Cost comprises of the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to acquisition of fixed
assets which take substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
Depreciation is provided on straight line basis based on life assigned
to each asset in accordance with Schedule II of the Act or as per life
estimated by the Management, whichever is lower, as stated below.
Site equipments are depreciated over 3 years.
Leasehold assets are amortized over the period of lease.
The incremental depreciation attributable to the revalued amount is
transferred from the revaluation reserve to the statement of profit and
loss.
Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost and are carried at cost less accumulated
amortization and impairment.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life. The amortization period and the
amortization method are reviewed at least at each financial year end.
If the expected useful life ofthe asset is significantly different from
previous estimates, the amortization period is changed accordingly.
Computer Software is amortized on a straight line basis over the period
of 5 years.
Impairment
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is the
higher of an asset's net selling price and its value in use. Carrying
amounts of assets are reviewed at each Balance Sheet date for any
indication of impairment based on internal/external factors. Value in
use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at end
of its useful life. In assessing value in use, the present value is
discounted using a pre-tax discount rate that reflects current market
assessments ofthe time value of money and risks specific to the asset.
Net selling price is the amount obtainable from sale of an asset in an
arm's length transaction between knowledgeable, willing parties, less
the costs of disposal.
(ii) Foreign currency transactions:
Transactions in foreign currencies are recognized at exchange rates
prevailing on the transaction dates. Exchange differences arising on
the settlement of monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognized as income or as expenses in the
year in which they arise. Foreign currency monetary items are reported
at the year-end rates. Exchange differences arising on reinstatement of
foreign currency monetary items are recognized as income or expense in
the statement of profit and loss. Non-monetary items which are carried
in terms of historical cost denominated in a foreign currency are
reported using the exchange rate at the date of the transaction.
The premium or discount arising at the inception of forward exchange
contracts is amortized as income or expense over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year. None of the forward exchange contracts are taken for trading or
speculation purpose.
(iii) 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.
(iv) Inventories:
Inventories are valued at lower of cost and net realizable value.
Cost of raw materials, components, stores and spares are computed on a
weighted average basis. However, materials and other items held for use
in the production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost.
Cost of work-in-progress includes cost of raw material and components,
cost of conversion and other costs incurred in bringing the inventories
to their present location and condition. Cost is computed on weighted
average basis.
Contract cost that has been incurred and relates to the future activity
of the contract are recognized as contract Work-in-Progress as it is
probable that it will be recovered from the customer.
Cost of finished goods includes cost of raw material and components,
cost of conversion, other costs including manufacturing overheads
incurred in bringing the inventories to their present location/
condition and excise duty. Cost is computed on weighted average basis.
Costs of traded goods are computed on First-in-First-out basis. Cost
includes cost of purchases and other costs incurred in bringing the
inventories to their present location and condition.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(v) Accounting for CENVAT:
The Company follows on a consistent basis, the "non-inclusive"
method of accounting for CENVAT under Central Excise Act with regard to
its inventories, purchases and consumption.
(vi) Research and development:
Capital expenditure on research and development is treated in the same
manner as fixed assets. Research costs are expensed as incurred.
Development expenditure incurred on an individual project is carried
forward when its future recoverability can reasonably be regarded as
assured.
(vii) Retirement and other employee benefits:
a) Retirement benefit in the form of provident fund managed by
Government Authorities, Employee State Insurance Corporation, Labour
Welfare Fund and Superannuation Fund are defined contribution scheme
and the contribution is charged to the statement of profit and loss of
the year when the contribution to the respective fund is due. There is
no other obligation other than the contribution payable.
b) Gratuity Liability is defined benefit obligation and is provided for
on the basis of an actuarial valuation on Projected Unit Credit method
made at the end ofeach financial year.
c) Short term employee benefits are charged off at the undiscounted
amount in the year in which the related service is rendered. Long term
compensated absences are provided for based on actuarial valuation. The
actuarial valuation is done as per Projected Unit Credit method made at
the end of each financial year. The Company presents the leave
liability as non- current in the Balance Sheet, to the extent it has an
unconditional right to defer its settlement for a period beyond 12
months, balance amount is presented as current.
d) Provident Fund scheme managed by trust set up by the company is a
defined benefit plan. Employee benefits, in form of contribution to
provident fund managed by such trust, is charged to the statement of
profit and loss as and when the related services are rendered. The
deficit, if any, in the accumulated corpus of the trust is recognised
in the statement of profit and loss based on actuarial valuation.
e) Actuarial gains/losses are immediately taken to the statement of
profit and lossand are not deferred.
(viii) 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.
Sales are accounted for inclusive of excise duty but excluding sales
tax / VAT. Sale of goods is recognized when the property and all
significant risks and reward of ownership is transferred to the buyer
and no significant uncertainty exists regarding the amount of
consideration that is derived from the sale of goods.
Contract revenue and contract costs in respect of construction
contracts, execution of which is spread over different accounting
periods, is recognized as revenue and expense respectively by reference
to the basis of percentage of completion method of the project at the
balance sheet date.
Determination of revenues under the percentage of completion method by
the company is based on estimates (some of which are technical in
nature) concerning the percentage of completion, costs to completion,
contracted revenue from the contract and the foreseeable losses of
completion.
Foreseeable losses, if any, which are based on technical estimates, are
provided in the accounts irrespective of the work done. The company
does not have outflow on account of warranty given to customers as all
the outsourced work has a back to back guarantee. Income from
services:
Revenue from maintenance contracts are recognized pro-rata over the
period of the contract as and when services are rendered. Income from
commission and management fees is recognized on completion of services.
Service income is accounted net of service tax.
Interest:
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends:
Revenue is recognized when the shareholders' right to receive payment
is established by the Balance Sheet date.
(ix) Taxation:
a) Provision for current taxation has been made in accordance with the
Indian income tax laws prevailing for the relevant assessment years.
b) Deferred tax is recognized, subject to the consideration of
prudence, on timing differences being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax is
measured 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. If the company has unabsorbed depreciation or
carry forward losses, deferred tax assets are recognized only if there
is virtual certainty supported by convincing evidence that such
deferred tax assets can be realized against future taxable profits.
The carrying amount of deferred tax assets is reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
At each balance sheet date, the company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
(x) Employee stock compensation cost:
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and guidance note on accounting
for Employee Share-based Payments, issued by the Institute of Chartered
Accountants of India. The company measures compensation cost relating
to employee stock options using the intrinsic value method.
Compensation expense is amortized over the vesting period of the option
on a straight- line basis. The unamortized portion of the cost is shown
under stock options outstanding.
(xi) Provisions and contingent liabilities:
Provisions are recognized when the company has a present obligation as
a result of past event for which it is probable that an outflow of
resources will be required and a reliable estimate can be made of the
amount of obligation. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates (without discounting to
its present value).
Contingent liability is disclosed for a present obligation that arises
from past events but is not recognized because it is not probable that
an outflow of resources embodying economic benefits will be required to
settle the obligation; ora reliable estimate of the amount of the
obligation cannot be made.
(xii) Earnings per share:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) 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.
(xiii) Segment reporting policies:
Identification of segments:
Segments are identified and reported taking into account the nature of
products and services, the differing risks and returns, the
organization structure and the internal financial reporting system. The
analysis of geographical segments is based on the areas in which major
operating divisions of the Company operate.
Inter-segment Transfers:
The Company accounts for inter-segment sales and transfers at cost plus
appropriate margin.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
turnover of the respective segments.
Unallocated costs:
The unallocated segment includes general corporate income and expense
items which are not allocated to any business segment. Segment
policies:
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements ofthe Company as a whole.
(xiv) Cash and cash equivalents:
Cash and cash equivalents in the cash flow statement comprise cash at
bank and in hand and short-term investments with an original maturity
of three months or less.
(xv) Leases:
Where the company is the lessor
Leases in which the company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets given on operating leases by the company are
included in fixed assets. Lease income is recognized in the statement
of profit and loss on a straight-line basis over the lease term. Costs,
including depreciation, are recognized as an expense in the statement
of profit and loss. Initial direct costs such as legal costs, brokerage
costs, etc. are recognized immediately in the statement of profit and
loss.
Where the company is the lessee
Finance leases, which effectively transfer to the company substantially
all the risks and benefits incidental to ownership ofthe leased item,
are capitalized at the inception of the lease term at the lower of the
fair value of the leased property and present value of minimum lease
payments. Lease payments are apportioned between the finance charges
and reduction ofthe lease liability so as to achieve a constant rate of
interest on the remaining balance ofthe liability. Finance charges are
recognized as finance costs in the statement of profit and loss.
However, finance charges pertaining to the period upto date
ofcommissioning ofassets are capitalised. Lease management fees, legal
charges and other initial direct costs of lease are capitalized.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
In case of profit on sale and lease back arrangements resulting in
operating leases, where the sale price is above fair value, the excess
over the fair value is deferred and amortized over the period for which
the asset is expected to be used.
(xvi) Borrowing costs:
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
(xvii) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the date ofthe
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
Mar 31, 2013
(i) Fixed Assets, Depreciation and Impairment:
Fixed assets acquired before 30th April 1986 are stated at revalued
amounts while assets acquired subsequent to that date are stated at
historical cost of acquisition less accumulated depreciation and
impairment losses, if any. Cost comprises of the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to acquisition of fixed
assets which take substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
Depreciation is provided at the following rates which is the useful
lives estimated by the Management, on straight-line basis for assets
acquired upto 31st March 1994:
Depreciation on additions made since April 1994 has been made on a
pro-rata basis at the rates as prescribed in Schedule XIV to the Act on
straight-line basis or as per the useful lives estimated by the
Management, whichever is higher as stated below
Site equipments are depreciated over 3 years.
Leasehold lands/assets are amortized over the period of lease being 3
to 5 years
All assets individually costing less than Rs. 5,000 are depreciated at
100% in the year of acquisition.
The incremental depreciation attributable to the revalued amount is
transferred from the Revaluation Reserve to the Profit and Loss
Account.
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is the
higher of an asset''s net selling price and its value in use. Carrying
amount of assets are reviewed at each Balance Sheet date for any
indication of impairment based on internal/external factors. Value in
use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at end
of its useful life. In assessing value in use, the present value is
discounted using a pre-tax discount rate that reflects current market
assessments of the time value of money and risks specific to the asset.
Net selling price is the amount obtainable from sale of an asset in an
arm''s length transaction between knowledgeable, willing parties, less
the costs of disposal.
(ii) Foreign Currency Transactions:
Transactions in foreign currencies are recognized at exchange rates
prevailing on the transaction dates. Exchange differences arising on
the settlement of monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognized as income or as expenses in the
year in which they arise. Foreign currency monetary items are reported
at the year end rates. Exchange differences arising on reinstatement of
foreign currency monetary items are recognized as income or expense in
the Profit and Loss Account. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.
The premium or discount arising at the inception of forward exchange
contracts is amortized as income or expense over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year. None of the forward exchange contracts are taken for trading or
speculation purpose.
(iii) 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.
(iv) Inventories:
Inventories are valued at lower of Cost and Net Realisable Value. Cost
for raw materials, stores and spares are computed on a weighted average
basis. However, materials and other items held for use in the
production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost.
Cost for Work-in-Progress includes raw material cost, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. Cost is computed on weighted
average basis.
Contract cost that has been incurred and relates to the future activity
of the contract are recognized as contract Work-in-Progress as it is
probable that it will be recovered from the customer.
Cost for Finished Goods includes raw material cost, cost of conversion,
other costs incurred in bringing the inventories to their present
location/ condition and excise duty. Cost is computed on weighted
average basis.
Costs of traded goods is computed on First-in-First-out basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(v) Accounting for CENVAT:
The Company follows on a consistent basis, the "non-inclusive"
method of accounting for CENVAT under Central Excise Act with regard to
its inventories, purchases and consumption.
(vi) Research and Development:
Capital expenditure on Research and Development is treated in the same
manneras fixed assets. Research costs are expensed as incurred.
Development expenditure incurred on an individual project is carried
forward when its future recoverability can reasonably be regarded as
assured.
(vii) Retirement & Other Employee Benefits:
a) Retirement Benefit in the form of Superannuation Fund is a defined
contribution scheme and the contribution is charged to the Profit and
Loss Account of the year when the contribution to the fund is due.
There is no other obligation other than the contribution payable.
b) Gratuity Liability is defined benefit obligation and is provided for
on the basis of an actuarial valuation on Projected Unit Credit method
made at the end of each financial year.
c) Short Term employee benefits are charged off at the undiscounted
amount in the year in which the related service is rendered. Long Term
compensated absences are provided for based on actuarial valuation. The
actuarial valuation is done as per Projected Unit Credit method made at
the end of each financial year. The Company has an unconditional
contractual right to defer leaves.
d) Provident Fund scheme managed by trust is a defined benefit plan.
The present value of obligation under such defined benefit plan is
determined based on actuarial valuation using the Projected Unit Credit
method.
e) Actuarial gains/losses are immediately taken to Profit and Loss
Account and are not deferred.
(viii) 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.
Sales are accounted for inclusive of Excise duty but excluding Sales
tax. Sale of goods is recognized when the property and all significant
risks and reward of ownership is transferred to the buyer and no
significant uncertainty exists regarding the amount of consideration
that is derived from the sale of goods.
Contract Revenue and Contract Costs in respect of construction
contracts, execution of which is spread over different accounting
periods, is recognized as revenue and expense respectively by reference
to the basis of percentage of completion method of the project at the
Balance Sheet date.
Determination of revenues under the percentage of completion method by
the Company is based on estimates (some of which are technical in
nature) concerning the percentage of completion, costs to completion,
contracted revenue from the contract and the foreseeable losses of
completion.
Foreseeable losses, if any, which are based on technical estimates, are
provided in the accounts irrespective of the work done. The Company
does not have outflow on account of warranty given to customers as all
the outsourced work has a back to back guarantee.
Income from Services:
Revenue from maintenance contracts are recognized pro-rata over the
period of the contract as and when services are rendered. Income from
commission and management fees is recognized on completion of services.
Service income is accounted net of service tax.
Interest:
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends:
Revenue is recognized when the shareholders'' right to receive payment
is established by the Balance Sheet date.
(ix) Taxation:
a) Provision for current taxation has been made in accordance with the
Indian Income tax laws prevailing for the relevant assessment years.
b) Deferred tax is recognized, subject to the consideration of
prudence, on timing differences being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax is
measured 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. If the Company has unabsorbed depreciation or
carry forward losses, deferred tax assets are recognized only if there
is virtual certainty supported by convincing evidence that such
deferred tax assets can be realized against future taxable profits.
The carrying amount of deferred tax assets is reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
At each Balance Sheet date, the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
(x) Employee Stock Compensation cost:
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and Guidance note on Accounting
for Employee Share-based Payments, issued by the Institute of Chartered
Accountants of India. The Company measures compensation cost relating
to employee stock options using the Intrinsic Value method.
Compensation expense is amortized over the vesting period of the option
on a straight-line basis. The unamortized portion of the cost is shown
under Stock Options Outstanding.
(xi) Provisions and Contingent Liabilities:
Provisions are recognized when the Company has a present obligation as
a result of past event for which it is probable that an outflow of
resources will be required and a reliable estimate can be made of the
amount of obligation. These are reviewed at each Balance Sheet date and
adjusted to refect the current best estimates (without discounting to
its present value).
Contingent liability is disclosed for a present obligation that arises
from past events but is not recognized because it is not probable that
an outflow of resources embodying economic benefits will be required to
settle the obligation; or a reliable estimate ofthe amount of the
obligation cannot be made.
(xii) Earnings Per Share:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) 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.
(xiii) Segment Reporting Policies:
Identification of segments:
Segments are identified and reported taking into account the nature of
products and services, the differing risks and returns, the
organization structure and the internal financial reporting system. The
analysis of geographical segments is based on the areas in which major
operating divisions of the Company operate.
Inter-segment Transfers:
The Company accounts for inter-segment sales and transfers at market
prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
turnover of the respective segments.
Unallocated costs:
The unallocated segment includes general corporate income and expense
items which are not allocated to any business segment. Segment
policies:
The Company prepares its segment information in conformity with the
Accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(xiv) Cash and Cash Equivalents:
Cash and Cash equivalents in the Cash Flow statement comprise Cash at
Bank and in Hand and short-term investments with an original maturity
of three months or less.
(xv) Leases:
Where the Company is the Lessor
Leases in which the company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets given on operating leases by the Company are
included in fixed assets. Lease income is recognized in the Profit and
Loss Account on a straight-line basis over the lease term. Costs,
including depreciation, are recognized as an expense in the Profit and
Loss Account. Initial direct costs such as legal costs, brokerage
costs, etc. are recognized immediately in the Profit and Loss Account.
Where the Company is lessee
Finance leases, which effectively transfer to the company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the inception of the lease term at the lower of the
fair value of the leased property and present value of minimum lease
payments. 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 recognized as finance costs in the statement of profit and loss.
Lease management fees, legal charges and other initial direct costs of
lease are capitalized.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
(xvi) Borrowing costs:
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
(xvii) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires Management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon Management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
Mar 31, 2012
(i) Change in Accounting Policies: Presentation and disclosure of
financial statements
During the year ended 31 March 2012, the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the company, for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
(ii) Fixed Assets, Depreciation and Impairment:
Fixed assets acquired before 30th April 1986 are stated at revalued
amounts while assets acquired subsequent to that date are stated at
historical cost of acquisition less accumulated depreciation and
impairment losses, if any. Cost comprises of the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to acquisition of fixed
assets which take substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
Depreciation is provided at the following rates which is the useful
lives estimated by the Management, on straight-line basis for assets
acquired upto 31st March 1994:
Depreciation on additions made since April 1994 has been made on a
pro-rata basis at the rates as prescribed in Schedule XIV to the Act on
straight-line basis or as per the useful lives estimated by the
Management, whichever is higher.
Site equipments are depreciated over 3 years.
Leasehold lands/assets are amortized over the period of lease.
All assets individually costing less than Rs. 5,000 are depreciated at
100% in the year of acquisition.
The incremental depreciation attributable to the revalued amount is
transferred from the Revaluation Reserve to the Profit and Loss
Account.
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is the
higher of an asset's net selling price and its value in use. Carrying
amount of assets are reviewed at each Balance Sheet date for any
indication of impairment based on internal/external factors. Value in
use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at end
of its useful life. In assessing value in use, the present value is
discounted using a pre-tax discount rate that reflects current market
assessments of the time value of money and risks specific to the asset.
Net selling price is the amount obtainable from sale of an asset in an
arm's length transaction between knowledgeable, willing parties, less
the costs of disposal.
(iii) Foreign Currency Transactions:
Transactions in foreign currencies are recognized at exchange rates
prevailing on the transaction dates. Exchange differences arising on
the settlement of monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognized as income or as expenses in the
year in which they arise. Foreign currency monetary items are reported
at the year end rates. Exchange differences arising on reinstatement of
foreign currency monetary items are recognized as income or expense in
the Profit and Loss Account. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.
The premium or discount arising at the inception of forward exchange
contracts is amortized as income or expense over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year. None of the forward exchange contracts are taken for trading or
speculation purpose.
(iv) 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.
(v) Inventories:
Inventories are valued at lower of Cost and Net Realisable Value. Cost
for raw materials, stores and spares are computed on a weighted average
basis. However, materials and other items held for use in the
production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost.
Cost for Work-in-Progress includes raw material cost, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. Cost is computed on weighted
average basis.
Contract cost that has been incurred and relates to the future activity
of the contract are recognized as contract Work-in-Progress as it is
probable that it will be recovered from the customer.
Cost for Finished Goods includes raw material cost, cost of conversion,
other costs incurred in bringing the inventories to their present
location/ condition and excise duty. Cost is computed on weighted
average basis.
Costs of traded goods is computed on First-in-First-out basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(vi) Accounting for CENVAT:
The Company follows on a consistent basis, the "non-inclusive"
method of accounting for CENVAT under Central Excise Act with regard to
its inventories, purchases and consumption.
(vii) Research and Development: .
Capital expenditure on Research and Development is treated in the same
manner as fixed assets. Research costs are expensed as incurred.
Development expenditure incurred on an individual project is carried
forward when its future recoverability can reasonably be regarded as
assured.
(viii) Retirement & Other Employee Benefits:
a) Retirement Benefits in the form of Provident Fund and Superannuation
Fund are defined contribution schemes and the contributions are charged
to the Profit and Loss Account of the year when the contributions to
the respective funds are due. There are no other obligations other
than the contribution payable.
b) Gratuity Liability is defined benefit obligation and is provided for
on the basis of an actuarial valuation on Projected Unit Credit method
made at the end of each financial year.
c) Short Term employee benefits are charged off at the undiscounted
amount in the year in which the related service is rendered. Long Term
compensated absences are provided for based on actuarial valuation. The
actuarial valuation is done as per Projected Unit Credit method made at
the end of each financial year.
d) Actuarial gains/losses are immediately taken to Profit and Loss
Account and are not deferred.
(ix) 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.
Sales are accounted for inclusive of Excise duty but excluding Sales
tax. Sale of goods is recognized when the property and all significant
risks and reward of ownership is transferred to the buyer and no
significant uncertainty exists regarding the amount of consideration
that is derived from the sale of goods.
Contract Revenue and Contract Costs in respect of construction
contracts, execution of which is spread over different accounting
periods, is recognized as revenue and expense respectively by reference
to the basis of percentage of completion method of the project at the
Balance Sheet date.
Determination of revenues under the percentage of completion method by
the Company is based on estimates (some of which are technical in
nature) concerning the percentage of completion, costs to completion,
contracted revenue from the contract and the foreseeable losses of
completion.
Foreseeable losses, if any, which are based on technical estimates, are
provided in the accounts irrespective of the work done.
The Company does not have outflow on account of warranty given to
customers as all the outsourced work has a back to back guarantee.
Income from Services:
Revenue from maintenance contracts are recognized pro-rata over the
period of the contract as and when services are rendered. Income from
commission and management fees is recognized on completion of services.
Service income is accounted net of service tax.
Interest:
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends:
Revenue is recognized when the shareholders' right to receive payment
is established by the Balance Sheet date.
(x) Taxation:
a) Provision for current taxation has been made in accordance with the
Indian Income tax laws prevailing for the relevant assessment years.
b) Deferred tax is recognized, subject to the consideration of
prudence, on timing differences being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax is
measured 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. If the Company has unabsorbed depreciation or
carry forward losses, deferred tax assets are recognized only if there
is virtual certainty supported by convincing evidence that such
deferred tax assets can be realized against future taxable profits.
The carrying amount of deferred tax assets is reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
At each Balance Sheet date, the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
(xi) Employee Stock Compensation cost:
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and Guidance note on Accounting
for Employee Share-based Payments, issued by the Institute of
Chartered Accountants of India. The Company measures compensation cost
relating to employee stock options using the Intrinsic Value method.
Compensation expense is amortized over the vesting period of the option
on a straight-line basis. The unamortized portion of the cost is shown
under Stock Options Outstanding.
(xii) Provisions and Contingent Liabilities:
Provisions are recognized when the Company has a present obligation as
a result of past event for which it is probable that an outflow of
resources will be required and a reliable estimate can be made of the
amount of obligation. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates (without discounting to
its present value).
Contingent liability is disclosed for a present obligation that arises
from past events but is not recognized because it is not probable that
an outflow of resources embodying economic benefits will be required to
settle the obligation; or a reliable estimate of the amount of the
obligation cannot be made.
(xiii) Derivative Instruments:
The Company uses derivative financial instruments such as forward
exchange contracts to hedge its risk associated with foreign currency
fluctuations. Accounting policy for forward exchange contracts is given
in 1 (ii).
(xiv) Earnings Per Share:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) 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.
(xv) Segment Reporting Policies:
Identification of segments:
Segments are identified and reported taking into account the nature of
products and services, the differing risks and returns, the
organization structure and the internal financial reporting system. The
analysis of geographical segments is based on the areas In which major
operating divisions of the Company operate.
Inter-segment Transfers:
The Company accounts for inter-segment sales and transfers at market
prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
turnover of the respective segments.
Unallocated costs:
The unallocated segment includes general corporate income and expense
items which are not allocated to any business segment. Segment
policies:
The Company prepares its segment information in conformity with the
Accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(xvi) Cash and Cash Equivalents:
Cash and Cash equivalents In the Cash Flow statement comprise Cash at
Bank and in Hand and short-term investments with an original maturity
of three months or less.
(xvii) Leases:
Where the Company is the Lessor
Leases in which the company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets given on operating leases by the Company are
included in fixed assets. Lease income is recognized in the Profit and
Loss Account on a straight-line basis over the lease term. Costs,
including depreciation, are recognized as an expense in the Profit and
Loss Account. Initial direct costs such as legal costs, brokerage
costs, etc. are recognized immediately in the Profit and Loss Account.
Where the Company is lessee
Finance leases, which effectively transfer to the company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the inception of the lease term at the lower of the
fair value of the leased property and present value of minimum lease
payments. 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 recognized as finance costs in the statement of profit and loss.
Lease management fees, legal charges and other initial direct costs of
lease are capitalized.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
(xviii) Borrowing costs:
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
(xix) Use of estimates:
The preparation of financial statements in conformity with Indian GAAP
requires Management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon Management's best
knowledge of current events and actions, actual results could differ
from these estimates.
Mar 31, 2011
The financial statements have been prepared under historical cost
convention on accrual basis except in case of assets for which
revaluation is carried out. The financial statements comply in all
material respects with the Accounting Standards notified by Companies
Accounting Standard Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956 of India (the "Act"). The
accounting policies have been consistently applied by the Company.
(i) Fixed Assets, Depreciation and Impairment:
Fixed assets acquired before 30th April 1986 are stated at revalued
amounts while assets acquired subsequent to that date are stated at
historical cost of acquisition less accumulated depreciation and
impairment losses, if any. Cost comprises of the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to acquisition of fixed
assets which take substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
Depreciation is provided at the following rates which is the useful
lives estimated by the Management, on straight-line basis for assets
acquired upto 31st March 1994:
Assets Depreciation rate applied %
Buildings à Other than Factory Buildings 5
à Factory Buildings 5
Plant and Machinery 10/12.5
Effluent Treatment Plants 20
Moulds and Dies 20
Furniture and Fixtures 10
Office Equipments 15
Vehicles 20
Depreciation on additions made since April 1994 has been made on a
pro-rata basis at the rates as prescribed in Schedule XIV to the Act on
straight-line basis or as per the useful lives estimated by the
Management, whichever is higher.
Site equipments are depreciated over 3 years.
Leasehold lands are amortized over the period of lease.
All assets individually costing less than Rs. 5,000 are depreciated at
100% in the year of acquisition.
The incremental depreciation attributable to the revalued amount is
transferred from the Revaluation Reserve to the Profit and Loss
Account.
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is the
higher of an asset's net selling price and its value in use. Carrying
amount of assets are reviewed at each Balance Sheet date for any
indication of impairment based on internal/external factors. Value in
use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at end
of its useful life. In assessing value in use, the present value is
discounted using a pre-tax discount rate that reflects current market
assessments of the time value of money and risks specific to the asset.
Net selling price is the amount obtainable from sale of an asset in an
arm's length transaction between knowledgeable, willing parties, less
the costs of disposal.
(ii) Foreign Currency Transactions:
Transactions in foreign currencies are recognized at exchange rates
prevailing on the transaction dates. Exchange differences arising on
the settlement of monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognized as income or as expenses in the
year in which they arise. Foreign currency monetary items are reported
at the year end rates. Exchange differences arising on reinstatement of
foreign currency monetary items are recognized as income or expense in
the Profit and Loss Account. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.
The premium or discount arising at the inception of forward exchange
contracts is amortized as income or expense over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year. None of the forward exchange contracts are taken for trading or
speculation purpose.
(iii) 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.
(iv) Inventories:
Inventories are valued at lower of Cost and Net Realisable Value. Cost
for raw materials, stores and spares are computed on a weighted average
basis. However, materials and other items held for use in the
production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost.
Cost for Work-in-Progress includes raw material cost, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition.
Contract cost that has been incurred and relates to the future activity
of the contract are recognized as contract Work-in- Progress as it is
probable that it will be recovered from the customer.
Cost for Finished Goods includes raw material cost, cost of conversion,
other costs incurred in bringing the inventories to their present
location/ condition and excise duty.
Costs of traded goods is computed on First-in-First-out basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(v) Accounting for CENVAT:
The Company follows on a consistent basis, the "non-inclusive" method
of accounting for CENVAT under Central Excise Act with regard to its
inventories, purchases and consumption.
(vi) Research and Development:
Capital expenditure on Research and Development is treated in the same
manner as fixed assets. Research costs are expensed as incurred.
Development expenditure incurred on an individual project is carried
forward when its future recoverability can reasonably be regarded as
assured.
(vii) Retirement & Other Employee Benefits:
a) Retirement Benefits in the form of Provident Fund and Superannuation
Fund are defined contribution schemes and the contributions are charged
to the Profit and Loss Account of the year when the contributions to
the respective funds are due. There are no other obligations other than
the contribution payable to the respective Trusts.
b) Gratuity Liability is defined benefit obligation and is provided for
on the basis of an actuarial valuation on Projected Unit Credit method
made at the end of each financial year.
c) Short Term employee benefits are charged off at the undiscounted
amount in the year in which the related service is rendered. Long Term
compensated absences are provided for based on actuarial valuation. The
actuarial valuation is done as per Projected Unit Credit method made at
the end of each financial year.
d) Actuarial gains/losses are immediately taken to Profit and Loss
Account and are not deferred.
(viii) 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.
Sales are accounted for inclusive of Excise duty but excluding Sales
tax. Sale of goods is recognized when the property and all significant
risks and reward of ownership is transferred to the buyer and no
significant uncertainty exists regarding the amount of consideration
that is derived from the sale of goods.
Contract Revenue and Contract Costs in respect of construction
contracts, execution of which is spread over different accounting
periods, is recognized as revenue and expense respectively by reference
to the basis of percentage of completion method of the project at the
Balance Sheet date.
Determination of revenues under the percentage of completion method by
the Company is based on estimates (some of which are technical in
nature) concerning the percentage of completion, costs to completion,
expected revenue from the contract and the foreseeable losses of
completion.
Foreseeable losses, if any, which are based on technical estimates, are
provided in the accounts irrespective of the work done. The Company
does not have outflow on account of warranty given to customers as all
the outsourced work has a back to back guarantee.
Income from Services:
Revenue from maintenance contracts are recognized pro-rata over the
period of the contract as and when services are rendered. Income from
commission and management fees is recognized on completion of services.
Interest:
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends:
Revenue is recognized when the shareholders' right to receive payment
is established by the Balance Sheet date. Dividend from subsidiaries is
recognized even if same are declared after the Balance Sheet date but
pertains to period on or before the date of Balance Sheet as per the
requirement of schedule VI of the Companies Act, 1956.
(ix) Taxation:
a) Provision for current taxation has been made in accordance with the
Indian Income tax laws prevailing for the relevant assessment years.
b) Deferred tax is recognized, subject to the consideration of
prudence, on timing differences being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax is
measured 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. If the Company has unabsorbed depreciation or
carry forward losses, deferred tax assets are recognized only if there
is virtual certainty supported by convincing evidence that such
deferred tax assets can be realized against future taxable profits.
The carrying amount of deferred tax assets is reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
At each Balance Sheet date, the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
(x) Employee Stock Compensation cost:
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and guidance note on Accounting
for Employee Share-based Payments, issued by the Institute of Chartered
Accountants of India. The Company measures compensation cost relating
to employee stock options using the Intrinsic Value method.
Compensation expense is amortized over the vesting period of the option
on a straight-line basis. The unamortized portion of the cost is shown
under Stock Options Outstanding.
(xi) Provisions and Contingent Liabilities:
Provisions are recognized when the Company has a present obligation as
a result of past event for which it is probable that an outflow of
resources will be required and a reliable estimate can be made of the
amount of obligation. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates (without discounting to
its present value).
Contingent liability is disclosed for a present obligation that arises
from past events but is not recognized because it is not probable that
an outflow of resources embodying economic benefits will be required to
settle the obligation; or a reliable estimate of the amount of the
obligation cannot be made.
(xii) Derivative Instruments:
The Company uses derivative financial instruments such as forward
exchange contracts to hedge its risk associated with foreign currency
fluctuations. Accounting policy for forward exchange contracts is given
in 1 (ii).
(xiii) Earnings Per Share:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) 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 equity shares outstanding during the
period are adjusted for the effects of all dilutive potential equity
shares.
(xiv) Segment Reporting Policies:
Identification of segments:
Segments are identified and reported taking into account the nature of
products and services, the differing risks and returns, the
organization structure and the internal financial reporting system. The
analysis of geographical segments is based on the areas in which major
operating divisions of the Company operate.
Inter-segment Transfers:
The Company accounts for inter-segment sales and transfers at
competitive prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
turnover of the respective segments.
Unallocated costs:
The unallocated segment includes general corporate income and expense
items which are not allocated to any business segment.
Segment policies:
The Company prepares its segment information in conformity with the
Accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(xv) Cash and Cash Equivalents:
Cash and Cash equivalents in the Cash Flow statement comprise Cash at
Bank and in Hand and short-term investments with an original maturity
of three months or less.
(xvi) Leases:
Assets given on operating leases by the Company are included in fixed
assets. Lease income is recognized in the Profit and Loss Account on a
straight-line basis over the lease term. Costs, including depreciation,
are recognized as an expense in the Profit and Loss Account. Initial
direct costs such as legal costs, brokerage costs, etc. are recognized
immediately in the Profit and Loss Account.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
(xvii) Borrowing costs:
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
(xviii) Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires Management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon Management's best
knowledge of current events and actions, actual results could differ
from these estimates.
Mar 31, 2010
The financial statements have been prepared under historical cost
convention on accrual basis except in case of assets for which
revaluation is carried out. The financial statements comply in all
material respects with the Accounting Standards notified by Companies
Accounting Standard Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956 of India (the "Act"). The
accounting policies have been consistently applied by the Company.
(i) Fixed Assets, Depreciation and Impairment:
Fixed assets acquired before 30th April 1986 are stated at revalued
amounts while assets acquired subsequent to that date are stated at
historical cost of acquisition less accumulated depreciation and
impairment losses, if any. Cost comprises of the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to acquisition of fixed
assets which take substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
Depreciation on additions made since April 1994 has been made on a
pro-rata basis at the rates as prescribed in Schedule XIV to the Act on
straight-line basis or as per the useful lives estimated by the
Management, whichever is higher.
Site equipments are depreciated over 3 years.
Leasehold lands are amortized over the period of lease.
All assets individually costing less than Rs. 5,000 are depreciated at
100% in the year of acquisition.
The incremental depreciation attributable to the revalued amount is
transferred from the Revaluation Reserve to the Profit and Loss
Account.
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is the
higher of an assets net selling price and its value in use. Carrying
amount of assets are reviewed at each Balance Sheet date for any
indication of impairment. Value in use is the present value of
estimated future cash flows expected to arise from the continuing use
of an asset and from its disposal at end of its useful life. Net
selling price is the amount obtainable from sale of an asset in an
arms length transaction between knowledgeable, willing parties, less
the costs of disposal.
(ii) Foreign Currency Transactions:
Transactions in foreign currencies are recognized at exchange rates
prevailing on the transaction dates. Exchange differences arising on
the settlement of monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognized as income or as expenses in the
year in which they arise. Foreign currency monetary items are reported
at the year end rates. Exchange differences arising on reinstatement of
foreign currency monetary items are recognized as income or expense in
the Profit and Loss Account. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.
The premium or discount arising at the inception of forward exchange
contracts is amortized as income or expense over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year. None of the forward exchange contracts are taken for trading or
speculation purpose.
(iii) 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. 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.
(iv) Inventories:
Inventories are valued at lower of Cost and Net Realisable Value. Cost
for raw materials, stores and spares are computed on a weighted average
basis. However, materials and other items held for use in the
production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost.
Cost for Work-in-Progress includes raw material cost, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition.
Contract cost that has been incurred and relates to the future activity
of the contract are recognized as contract Work-in- progress as it is
probable that it will be recovered from the customer.
Cost for Finished Goods includes raw material cost, cost of conversion,
other costs incurred in bringing the inventories to their present
location/ condition and excise duty.
Costs of traded goods is computed on First-in-First-out basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(v) Accounting for CENVAT:
The Company follows on a consistent basis, the "non-inclusive" method
of accounting for CENVAT under Central Excise Act with regard to its
inventories, purchases and consumption.
(vi) Research and Development:
Capital expenditure on Research and Development is treated in the same
manner as fixed assets. Research costs are expensed as incurred.
Development expenditure incurred on an individual project is carried
forward when its future recoverability can reasonably be regarded as
assured.
(vii) Retirement & Other Employee Benefits:
a) Retirement Benefits in the form of Provident Fund and Superannuation
Fund are defined contribution schemes and the contributions are charged
to the Profit and Loss Account of the year when the contributions to
the respective funds are due. There are no other obligations other than
the contribution payable to the respective Trusts.
b) Gratuity Liability is defined benefit obligation and is provided for
on the basis of an actuarial valuation on Projected Unit Credit method
made at the end of each financial year.
c) Short Term employee benefits are charged off at the undiscounted
amount in the year in which the related service is rendered. Long Term
compensated absences are provided for based on actuarial valuation. The
actuarial valuation is done as per Projected Unit Credit method made at
the end of each financial year.
d) Actuarial gains/losses are immediately taken to Profit and Loss
Account and are not deferred.
(viii) 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.
Sales are accounted for inclusive of Excise duty but excluding Sales
tax. Sale of goods is recognized when the property and all significant
risks and reward of ownership is transferred to the buyer and no
significant uncertainty exists regarding the amount of consideration
that is derived from the sale of goods.
Contract Revenue and Contract Costs in respect of construction
contracts, execution of which is spread over different accounting
periods, is recognized as revenue and expense respectively by reference
to the basis of percentage of completion method of the project at the
Balance Sheet date.
Determination of revenues under the percentage of completion method by
the Company is based on estimates (some of which are technical in
nature) concerning the percentage of completion, costs to completion,
expected revenue from the contract and the foreseeable losses of
completion.
Foreseeable losses, if any, which are based on technical estimates, are
provided in the accounts irrespective of the work done. The Company
does not have outflow on account of warranty given to customers as all
the outsourced work has a back to back guarantee.
Income from Services:
Revenue from maintenance contracts are recognized pro-rata over the
period of the contract as and when services are rendered. Income from
commission and management fees is recognized on completion of services.
Interest:
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends:
Revenue is recognized when the shareholders right to receive payment
is established by the Balance Sheet date. Dividend from subsidiaries is
recognized even if same are declared after the Balance Sheet date but
pertains to period on or before the date of Balance Sheet as per the
requirement of schedule VI of the Companies Act, 1956.
(ix) Taxation:
a) Provision for current taxation has been made in accordance with the
Indian Income tax laws prevailing for the relevant assessment years.
b) Deferred tax is recognized, subject to the consideration of
prudence, on timing differences being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax is
measured 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. If the Company has unabsorbed depreciation or
carry forward losses, deferred tax assets are recognized only if there
is virtual certainty supported by convincing evidence that such
deferred tax assets can be realized against future taxable profits.
The carrying amount of deferred tax assets is reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized.
At each Balance Sheet date, the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
(x) Employee Stock Compensation cost:
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and guidance note on Accounting
for Employee Share-based Payments, issued by the Institute of Chartered
Accountants of India. The Company measures compensation cost relating
to employee stock options using the Intrinsic Value method.
Compensation expense is amortized over the vesting period of the option
on a straight-line basis. The unamortized portion of the cost is shown
under Stock Options Outstanding.
(xi) Provisions and Contingent Liabilities:
Provisions are recognized when the Company has a present obligation as
a result of past event for which it is probable that an outflow of
resources will be required and a reliable estimate can be made of the
amount of obligation. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates (without discounting to
its present value).
Contingent liability is disclosed for a present obligation that arises
from past events but is not recognized because it is not probable that
an outflow of resources embodying economic benefits will be required to
settle the obligation; or a reliable estimate of the amount of the
obligation cannot be made.
(xii) Derivative Instruments:
The Company uses derivative financial instruments such as forward
exchange contracts to hedge its risk associated with foreign currency
fluctuations. Accounting policy for forward exchange contracts is given
in 1 (ii).
(xiii) Earnings Per Share:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) 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.
(xiv) Segment Reporting Policies:
Identification of segments:
Segments are identified and reported taking into account the nature of
products and services, the differing risks and returns, the
organization structure and the internal financial reporting system. The
analysis of geographical segments is based on the areas in which major
operating divisions of the Company operate.
Inter-segment Transfers:
The Company accounts for inter-segment sales and transfers at
competitive prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
turnover of the respective segments.
Unallocated costs:
The unallocated segment includes general corporate income and expense
items which are not allocated to any business segment.
Segment policies:
The Company prepares its segment information in conformity with the
Accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(xv) Cash and Cash Equivalents:
Cash and Cash equivalents in the Cash Flow statement comprise Cash at
Bank and in Hand and short-term investments with an original maturity
of three months or less.
(xvi) Leases:
Assets given on operating leases by the Company are included in fixed
assets. Lease income is recognized in the Profit and Loss Account on a
straight-line basis over the lease term. Costs, including depreciation,
are recognized as an expense in the Profit and Loss Account. Initial
direct costs such as legal costs, brokerage costs, etc. are recognized
immediately in the Profit and Loss Account.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
(xvii) Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires Management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon Managements best
knowledge of current events and actions, actual results could differ
from these estimates.