Accounting Policies of ISMT Ltd. Company
Mar 31, 2022
1. Corporate Information:
ISMT Limited (âISMTâ or âthe Companyâ) is a public limited company incorporated in India (CIN: L27109PN1999PLC016417) having its Registered Office in Pune. The Company is mainly engaged in manufacturing of seamless tubes and engineering steels. As on March 10, 2022, Kirloskar Ferrous Industries Limited (âKFILâ) owns 51.25% of the Ordinary Shares of the Company, and has become Parent Company of the Company.
These financial statements for the year ended March 31, 2022 were approved for the issue by the Board of Directors at their Board Meeting dated May 9, 2022.
2. Significant Accounting Policies:2.1 Basis of Preparation:
Financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the of the Companies Act 2013 (âActâ) read with Companies (Indian Accounting Standards) Rules, 2015; as amended and the other relevant provisions of the Act and Rules thereunder.
The financial statements have been prepared on a historical cost basis except for certain financial assets and financial liabilities (including financial instruments) which have been measured at fair value at the end of each reporting period as explained in the accounting policies stated below.
2.2 Functional and presentation currency and rounding off of the amounts:
The functional and presentation currency of the Company is Indian rupees. This standalone financial statements are presented in Indian rupees and all values are stated in Crore of Rupees except otherwise indicated. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.
2.3 Current versus non-current classification:
The Company has classified all its assets and liabilities under current and non-current as required by Ind AS 1-Presentation of Financial Statements. The asset is treated as current when it is:
⢠Expected to be realized or intended to be sold or consumed in normal operating cycle;
⢠Held primarily for purpose of trading;
⢠Expected to be realized within twelve months after the reporting period; or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current All liabilities are current when:
⢠It is expected to be settled in normal operating cycle;
⢠It is held primarily for the purpose of trading;
⢠It is due to be settled within twelve months after the reporting period; or
⢠There is no unconditional right to defer the settlement of liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The Company derives revenue primarily from
manufacturing of seamless tubes and engineering steels.
The Company follows specific recognition criteria as
described below before the revenue is recognized.
a) Revenue from contracts with customers is recognised when the entity satisfies a performance obligation by delivering a promised goods or service to customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment but excluding taxes or duties collected on behalf of the government and net of returns and allowances, trade discounts and volume rebates.
b) Inter Division Transfer represents transfer of finished / semi-finished products within the Segment for further processing and sale.
ii Other Operating Revenue:
Other Operating revenue comprises of following items:
⢠Export incentives
⢠Sale of scrap
Export Incentives are recognized when right to receive credit as per prevalent scheme is established in respect of the exports made and when there is no significant uncertainty regarding realization of such claim.
Interest income from financial assets is recognized using effective interest rate method.
2.5 Property, Plant and Equipment (PPE):
i. Property, plant and equipment are stated at their original cost of acquisition including taxes, duties, freight, other incidental expenses related to acquisition and installation of the concerned assets and exclude refundable taxes and duties.
ii. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repairs and maintenance costs are recognized as expense in statement of profit and loss as and when incurred.
iii. All incidental expenses incurred during project implementation, for the project as well as trial run expenses are treated as expenditure during construction and are capitalized.
i Leasehold Land is amortized over lease period.
ii Depreciation on Plant & Machinery other than Captive Power Plant is provided on its useful life estimated by the management on Written Down Value method. For these classes of assets, based on the technical evaluation carried out by the external experts, the management has estimated the useful lives in the range of 8 years to 65 years.
iii Depreciation on Building and Plant & Machinery of Captive Power Plant is provided as per the useful life specified in Part âCâof Schedule II of the Companies Act, 2013 on Straight Line Method.
iv Deprecation on Furniture & Fixtures, Office Equipment and vehicle is provided as per the useful life specified in Part âCâof Schedule II of the Companies Act, 2013 on Written Down Value Method.
v The management believes that the estimated useful lives are realistic and reflects fair approximation of the period over which the assets are likely to be used. At each financial year end, management reviews the residual values, useful lives and method of depreciation of property, plant and equipment and values of the same are adjusted prospectively where needed.
The Companyâs leased assets consist of leases for Buildings and Plant and Machinery. At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and (iii) the Company has the right to direct the use of the asset.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially 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 and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of Property, Plant and Equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Companyâs incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently measured at amortised cost using the effective interest method. It is re-measured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Companyâs estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in statement of profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.
Short-term leases and leases of low-value assets:
The Company has elected not to recognise right-to-use assets and lease liabilities for short-term lease that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an operating expense as per the terms of the lease.
i. Classification: Scrap generated from Tube Segment is classified as raw material as the same is mostly used by Steel Segment.
ii. Valuation
a) Raw Materials are valued at lower of cost or net realisable value. Cost is determined on weighted average basis.
b) Semi-finished and finished goods are valued at lower of cost or net realisable value. The cost includes raw material on weighted average basis, labour cost, manufacturing expenses, production overheads and depreciation.
c) Stores, Spares and Coal are valued at cost determined on weighted average basis except for those which have a longer usable life, which are valued on the basis of their remaining useful life.
iii. Inventories include goods in transit under the appropriate heads.
2.9 Employee Benefits:i. Defined Contribution Plan
The Company makes defined contribution to Provident Fund and Superannuation Schemes, which are recognized in the statement of profit and loss on accrual basis.
⢠Superannuation Plan:
Some employees of the Company are entitled to superannuation, a defined contribution plan which is administrated through Life Insurance Corporation of India (âLICâ). Superannuation benefits are recognized in the statement of profit and loss.
The Company provides for the liability at year end on account of un availed earned leave as per the actuarial valuation.
⢠Gratuity:
The Company provides for gratuity obligations through a Defined Benefits Retirement plan (âThe Gratuity Planâ) covering all employees. The present value of the obligation under such Defined benefits plan is determined based on actuarial valuation using the Project Unit Credit method with actuarial valuations being carried out at the end of each reporting period. Re-measurements, comprising of actuarial gains and losses, are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.
The Company operates a defined benefit plan for gratuity, which requires contributions to be made to a separately administered fund.
2.10 Research and Development:
Research and Development costs (other than costs of fixed
assets acquired) are charged to statement of profit and loss
in the year in which they are incurred.
2.11 Foreign Currency Transactions:
Transactions in foreign currency are recorded at the
exchange rate prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities at the Balance Sheet date are translated at the exchange rate prevailing on the date of Balance Sheet. Exchange rate differences resulting from foreign currency transactions settled during the period including year-end translation of assets and liabilities are recognized in the statement of profit and loss.
Non-monetary assets, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss are also recognized in OCI or statement of profit and loss, respectively).
The Company has availed the exemption available in IND AS 101, to continue capitalisation of foreign currency fluctuation on long term foreign currency monetary liabilities outstanding on transition date (April 1, 2016).
Borrowing Costs directly attributed to the acquisition, construction or production of qualifying assets are capitalized as a part of the cost of asset till the asset is ready for its intended use of sale. Other Borrowing Costs are charged to the statement of profit and loss in the year in which they are incurred.
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset. When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per accounting policy applicable to financial liabilities.
2.14 Cash and cash equivalents:
Cash and cash equivalents comprises cash on hand and at bank and demand deposits with banks which are short-term,
highly liquid investments with original maturities of three months or less, that are readily convertible into a known amounts of cash and which are subject to an insignificant risk of changes in value.
2.15 Fair Value Measurement:
The Company measures certain financial instruments at fair value at each balance sheet date. Certain 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 and the valuation team regularly reviews significant unobservable inputs and valuation adjustments.
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 â quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. as derived from prices)
Level 3 -inputs for the asset or liability that are not based on observable market data (unobservable inputs)
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into a different level of the fair value hierarchy, then the fair value measurement is categorised in its entirely in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
2.16 Financial instruments:
A Company recognizes financial assets and financial liabilities when it becomes party to the contractual provisions of the instrument.
I. Financial Assets:
(a) Initial recognition and measurement:
Financial assets are initially measured at its 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 or deducted from the fair value of the concerned financial assets, as appropriate, on initial recognition. Transaction costs directly attributable to acquisition of financial assets at fair value through profit or loss are recognized immediately in statement of profit and loss. However, trade receivable that do not contain a significant financing component are measured at transaction price.
(b) Subsequent measurement:
For subsequent measurement, the Company classifies financial asset in following broad categories:
i. Financial asset carried at amortized cost (net of any write down for impairment, if any):
Financial assets are measured at amortized cost when asset is held within a business model, whose objective is to hold assets for collecting contractual cash flows and contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest. Such financial assets are subsequently measured at amortized costs using Effective Interest Rate (EIR) method less impairment, if any. The losses arising from impairment are recognized in the statement of profit and loss. Cash and bank balances, trade receivables, loans and other financial asset of the Company are covered under this category.
ii. Financial asset carried at fair value through other comprehensive income (FVTOCI):
Financial asset under this category are measured initially as well as at each reporting date at fair value, when asset is held with a business model whose objective is to hold asset for both collecting contractual cash flows and selling financial assets. Fair value movements are recognized in the other comprehensive income.
iii. Financial asset carried at fair value through profit or loss (FVTPL):
Financial asset under this category are measured initially as well as at each reporting date at fair value. Changes in fair value are recognized in the statement of profit and loss.
(c) Investment in subsidiaries:
Investments in Subsidiaries are recorded at cost and reviewed for impairment at each reporting date.
(d) Other equity instruments:
All other equity instruments are measured as fair value, with value changes recognized in statement of profit and loss, except for those equity instruments for which the Company has elected to present the value changes in âOther Comprehensive Incomeâ.
(e) De-recognition of Financial Assets:
A financial asset is primarily derecognized when rights to receive cash flows from the asset have expired or the Company has transferred its contractual rights to receive cash flows of the financial asset and has substantially transferred all the risk and reward of the ownership of the financial asset.
(f) Impairment of financial asset:
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit or loss (FVTPL).
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset. 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months from the reporting date.
For trade receivables the Company applies âsimplified approachâ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed. For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss under the head âOther expensesâ
II. Financial Liabilities:
a) Initial recognition and measurement:
The Company recognizes a financial liability in its Balance Sheet when it becomes party to the contractual provisions of the instrument. The Company classifies all financial liabilities as subsequently measured at amortised cost or FVTPL.
All financial liabilities are recognized initially at fair value and in the case of loans, borrowings and payables, net of directly attributable transaction costs. Financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
b) Subsequent measurement:
Financial liabilities are carried at amortized cost using the Effective Interest Rate (EIR) method. For trade and other payable maturing within one year from balance sheet date, the carrying amount approximate fair value due to short maturity of these instruments.
c) De-recognition of financial liabilities:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.
III. Offsetting of Financial Instruments:
Financial assets and Financial Liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
The Companyâs operating segments are established on the basis of those components of the Company that are evaluated regularly by the Executive Committee, the âChief Operating Decision Makerâ as defined in Ind AS 108 - âOperating Segmentsâ, in deciding how to allocate resources and in assessing performance. These have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems.
Basic earnings per share is calculated by dividing the net profit for the year attributable to the shareholders of the Company and weighted average number of shares outstanding during the year.
Diluted earnings per share is calculated by dividing the net profit for the year attributable to the shareholders of the Company and weighted average number of equity and potential equity shares outstanding during the year
including share options, convertible preference shares and debentures, except where the result would be anti-dilutive. Potential equity shares that are converted during the year are included in the calculation of diluted earnings per share, from the beginning of the year or date of issuance of such potential equity shares, to the date of conversion.
2.19 Provision for Current and Deferred Tax:
The tax expense for the period comprises current and deferred tax. Taxes are recognised in the statement of profit and loss, except to the extent that it relates to the items recognised in the other comprehensive income or in Equity. In which case, the tax is also recognised in the other comprehensive income or in Equity.
Provision for Current tax is made on the basis of relevant provision of The Income Tax Act, 1961 as applicable to the financial year.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all taxable temporary timing difference. Deferred tax assets are recognized for deductible temporary differences. to the extent that they are probable that taxable profit will be available against which the deductible temporary difference can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted on the reporting date.
2.20 Impairment of non-financial Assets:
The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
An impairment loss is recognized in the statement of profit and loss to the extent, assetâs carrying amount exceeds its recoverable amount. The recoverable amount is higher of
an assetâs fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
2.21 Provision and Contingencies:
Provisions are recognized when the Company has present obligation (legal or constructive) as a result of past event and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense related to a provision is presented in the statement of profit and loss net of any reimbursement/ contribution towards provision made.
If the effect of the time value of money is material, estimate for the provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Contingent Liabilities:
Contingent Liabilities are not provided and are disclosed in Notes on Accounts. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent Assets
Contingent assets are not recognised but disclosed when the inflow of economic benefits is probable. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.
Exceptional items are those items that management considers, by virtue of their size or incidence (including but not limited to impairment charges and acquisition and restructuring related costs), should be disclosed separately to ensure that the financial information allows an understanding of the underlying performance of the business in the year, so as to facilitate comparison with prior periods. Such items are material by nature or amount to the yearâs result and require separate disclosure in accordance with Ind AS.
2.23 Events occurring after the Balance Sheet Date:
Events occurring after the Balance Sheet date and till the date on which the standalone financial statements are approved, which are material in the nature and indicate the need for adjustments in the financial statements have been considered
2.24 Standards issued but not yet effective:
Ministry of Corporate Affairs (âMCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022 and amendments were made in Ind AS 103, Ind AS 16, Ind AS 37, Ind AS 109 and Ind AS 106. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022, although early adoption is permitted. The Company has evaluated these amendments and in the opinion of the Company management the impact on these amendments, are not expected to be material.
2.25 Key accounting judgments, estimates and assumptions:
The preparation of the Companyâs standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to
the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information.
In particular, information about significant areas of estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the standalone financial statements are as below:
a. Assessment of functional currency (Refer Note No: 2.2);
b. Financial instruments (Refer Note No 2.16);
c. Estimates of useful lives and residual value of PPE and intangible assets (Refer Note No. 2.5 and 2.6);
d. Impairment of financial and non-financial assets (Refer Note No. 2.16 and 2.20);
e. Valuation of inventories (Refer Note No. 2.8);
f. Measurement of Defined Benefit Obligations and actuarial assumptions (Refer Note No. 2.9);
g. Allowances for uncollected trade receivable and advances (Refer Note No. 2.16):
h. Evaluation of recoverability of deferred tax assets (Refer Note No. 2.19); and
i. Contingencies and Provisions (Refer Note No. 2.21). Revisions to accounting estimates are recognized prospectively in the statement of profit and loss in the period in which the estimates are revised and in any future periods affected.
Mar 31, 2018
1. Significant Accounting Policies :
1.1 Statement of compliance:
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS), including the rules notified under the relevant provisions of the Companies Act 2013. For periods up to and including the year ended March 31, 2017, the Company prepared its standalone financial statements in accordance with accounting standards notified under section 133 of the Act read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). Refer Note No. 3.24 for the explanation of transition from previous GAAP to Ind AS.
These financial statements are the Companyâs first Standalone Ind AS financial statements.
1.2 Basis of Preparation :
The Ind AS financial statements have been prepared on a historical cost basis except for certain financial assets and financial liabilities (including financial instruments) which have been measured at fair value at the end of each reporting period as explained in the accounting policies stated below.
1.3 Functional and presentation currency and Rounding off of the amounts:
The functional and presentation currency of the company is Indian rupees. These standalone financial statements are presented in Indian rupees and all values are stated in Crore of Rupees except otherwise indicated. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.
1.4 Current versus non-current classification :
The company has classified all its assets and liabilities under current and non-current as required by Ind AS 1-Presentation of Financial Statements. The asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle;
- Held primarily for purpose of trading;
- Expected to be realized within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current
All liabilities are current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
1.5 Revenue Recognition:
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment including excise duty collected which flows to the company on its own account but excluding taxes or duties collected on behalf of the government.
The Company follows specific recognition criteria as described below before the revenue is recognized.
i Sales :
a) Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated cost can be estimated reliably, there is no continuing effective control or managerial involvement with the goods, and the amount of revenue can be measured reliably.
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
b) Inter Division Transfer represents transfer of finished / semi-finished products within the Segment for further processing and sale.
ii Other Operating Revenue :
Other Operating revenue comprises of following items:
- Export incentives
- Sale of scrap
Export Incentives are recognized when right to receive credit as per prevalent scheme is established in respect of the exports made and when there is no significant uncertainty regarding realization of such claim.
iii Interest Income:
Interest income from financial assets is recognized using effective interest rate method.
1.6 Property, Plant and Equipment (PPE):
i Property, plant and equipment are stated at their original cost of acquisition including taxes, duties, freight, other incidental expenses related to acquisition and installation of the concerned assets and exclude refundable taxes and duties.
ii Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably. When significant parts of plant and equipment are required to be replaced at intervals, the company depreciates them separately based on their specific useful lives. All other repairs and maintenance costs are recognized as expense in profit and loss statement as and when incurred.
iii All incidental expenses incurred during project implementation, for the project as well as trial run expenses are treated as expenditure during construction and are capitalized.
iv The Company has elected to use the exemption available under Ind AS 101 to continue the carrying value for all of its PPE as recognised in the financial statement as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition (April 01,2016).
1.7 Depreciation:
i Leasehold Land is amortized over lease period.
ii Depreciation on Plant & Machinery other than Captive Power Plant is provided on its useful life estimated by the management on Written Down Value method. For these classes of assets, based on the technical evaluation carried out by the external experts, the management has estimated the useful lives in the range of 8 years to 65 years.
iii Deprecation on Furniture & Fixtures, Office Equipment and vehicle is provided as per the useful life specified Part âCâ of Schedule II of the Companies Act, 2013 on Written Down Value Method.
iv The management believes that the estimated useful lives are realistic and reflects fair approximation of the period over which the assets are likely to be used. At each financial year end, management reviews the residual values, useful lives and method of depreciation of property, plant and equipment and values of the same are adjusted prospectively where needed.
1.8 Leases:
Leases are classified as finance leases whenever the terms of the lease, transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The determination of whether an arrangement is a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is considered as a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where another systematic basis is more representative of time pattern in which economic benefits from the leased assets are consumed.
1.9 Inventories:
i. Classification: Scrap generated from Tube Segment is classified as raw material as the same is mostly used by Steel Segment.
ii. Valuation
a) Raw Materials are valued at lower of cost or net realisable value. Cost is determined on weighted average basis.
b) Semi-finished and finished goods are valued at lower of cost or net realisable value. The cost includes raw material on weighted average basis, labour cost, manufacturing expenses, production overheads and depreciation.
c) Stores, Spares and Coal are valued at cost determined on weighted average basis except for those which have a longer usable life, which are valued on the basis of their remaining useful life.
iii. Inventories include goods in transit under the appropriate heads.
1.10 Employee Benefits:
i. Defined Contribution Plan
The Company makes defined contribution to Provident Fund and Superannuation Schemes, which are recognized in the Statement of Profit and Loss on accrual basis.
ii. Defined Benefit Plan
- Superannuation Plan:
Some employees of the Company are entitled to superannuation, a defined contribution plan which is administrated through Life Insurance Corporation of India (âLICâ). Superannuation benefits are recognized in the Profit and loss account.
- Leave Encashment:
The Company provides for the liability at year end on account of unavailed earned leave as per the actuarial valuation.
Gratuity:
The Company provides for gratuity obligations through a Defined Benefits Retirement plan (âThe Gratuity Planâ) covering all employees. The present value of the obligation under such Defined benefits plan is determined based on actuarial valuation using the Project Unit Credit method with actuarial valuations being carried out at the end of each reporting period.
Re-measurements, comprising of actuarial gains and losses, are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re-measurements are not reclassified to Statement of Profit or Loss in subsequent periods.
The Company operates a defined benefit plan for gratuity, which requires contributions to be made to a separately administered fund.
1.11 Research and Development:
Research and Development costs (other than costs of fixed assets acquired) are charged to Statement of Profit and Loss in the year in which they are incurred.
1.12 Foreign Currency Transactions:
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities at the Balance Sheet date are translated at the exchange rate prevailing on the date of Balance Sheet.
Exchange rate differences resulting from foreign currency transactions settled during the period including year-end translation of assets and liabilities are recognized in the Statement of Profit and Loss.
Non-monetary assets, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss are also recognized in OCI or Statement of Profit and Loss, respectively).
The Company has availed the exemption available in Ind AS 101, to continue capitalisation of foreign currency fluctuation on long term foreign currency monetary liabilities outstanding on transition date, Refer Note No 3.24(b).
1.13 Borrowing Costs:
Borrowing Costs directly attributed to the acquisition of fixed assets are capitalized as a part of the cost of asset up to the date the asset is put to use. Other Borrowing Costs are charged to the profit and loss account in the year in which they are incurred.
1.14 Government Incentives:
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per accounting policy applicable to financial liabilities.
1.15 Cash and cash equivalents:
Cash and cash equivalents comprises cash on hand and at bank and demand deposits with banks which are short-term, highly liquid investments with original maturities of three months or less, that are readily convertible into a known amounts of cash and which are subject to an insignificant risk of changes in value.
1.16 Non-current assets held for sale:
Non-current assets are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset available for immediate sale in its present condition subject to only terms are usual and costomary for sale of such assets.
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
Property, Plant and Equipment and intangible assets classified as held for sales are not depreciated or amortized.
1.17 Fair Value Measurement:
The Company measures certain financial instruments at fair value at each balance sheet date. Certain 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 and the valuation team regularly reviews significant unobservable inputs and valuation adjustments.
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 â quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. as derived from prices)
Level 3 -inputs for the asset or liability that are not based on observable market data (unobservable inputs)
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into a different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirely in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
1.18 Financial instruments:
A Company recognizes financial assets and financial liabilities when it becomes party to the contractual provision of the instrument.
I. Financial Assets:
a) Initial recognition and measurement:
Financial assets are initially measured at its 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 or deducted from the fair value of the concerned financial assets, as appropriate, on initial recognition. Transaction costs directly attributable to acquisition of financial assets at fair value through profit or loss are recognized immediately in profit and loss. However, trade receivable that do not contain a significant financing component are measured at transaction price.
b) Subsequent measurement:
For subsequent measurement, the company classifies financial asset in following broad categories:
i. Financial asset carried at amortized cost (net of any write down for impairment, if any):
Financial assets are measured at amortized cost when asset is held within a business model, whose objective is to hold assets for collecting contractual cash flows and contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest. Such financial assets are subsequently measured at amortized costs using Effective Interest Rate (EIR) method less impairment, if any. The losses arising from impairment are recognized in the statement of profit or loss. Cash and bank balances, trade receivables, loans and other financial asset of the company are covered under this category.
ii. Financial asset carried at fair value through other comprehensive income (FVTOCI):
Financial asset under this category are measured initially as well as at each reporting date at fair value, when asset is held with a business model whose objective is to hold asset for both collecting contractual cash flows and selling financial assets. Fair value movements are recognized in the other comprehensive income.
iii. Financial asset carried at fair value through profit or loss (FVTPL):
Financial asset under this category are measured initially as well as at each reporting date at fair value. Changes in fair value are recognized in the statement of profit or loss.
c) Investment in subsidiaries:
Investments in Subsidiaries are recorded at cost and reviewed for impairment at each reporting date.
d) Other equity instruments:
All other equity instruments are measured as fair value, with value changes recognized in Statement of Profit and Loss, except for those equity instrument for which the Company has elected to present the value changes in âOther Comprehensive Incomeâ.
e) De-recognition of Financial Assets:
A financial asset is primarily derecognized when rights to receive cash flows from the asset have expired or the Company has transferred its contractual rights to receive cash flows of the financial asset and has substantially transferred all the risk and reward of the ownership of the financial asset.
f) Impairment of financial asset:
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset. 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months from the reporting date.
For trade receivables Company applies âsimplified approachâ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the Statement of Profit and Loss under the head âOther expensesâ
II. Financial Liabilities:
a) Initial recognition and measurement:
The Company recognizes a financial liability in its Balance Sheet when it becomes party to the contractual provisions of the instrument. Company classifies all financial liabilities as subsequently measured at amortised cost or FVTPL.
All financial liabilities are recognized initially at fair value and in the case of loans, borrowings and payables, net of directly attributable transaction costs. Financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
b) Subsequent measurement:
Financial liabilities are carried at amortized cost using the Effective Interest Rate (EIR) method. For trade and other payable maturing within one year from balance sheet date, the carrying amount approximate fair value due to short maturity of these instruments.
c) De-recognition of financial liabilities:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
III. Offsetting of Financial Instruments:
Financial assets and Financial Liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
1.19 Segment accounting:
The Companyâs operating segments are established on the basis of those components of the Company that are evaluated regularly by the Executive Committee, the âChief Operating Decision Makerâ as defined in Ind AS 108 - âOperating Segmentsâ, in deciding how to allocate resources and in assessing performance. These have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems.
1.20 Earnings per share:
Basic earnings per share is calculated by dividing the net profit for the year attributable to the shareholders of the Company and weighted average number of shares outstanding during the year.
Diluted earnings per share is calculated by dividing the net profit for the year attributable to the shareholders of the Company and weighted average number of equity and potential equity shares outstanding during the year including share options, convertible preference shares and debentures, except where the result would be anti-dilutive. Potential equity shares that are converted during the year are included in the calculation of diluted earnings per share, from the beginning of the year or date of issuance of such potential equity shares, to the date of conversion.
1.21 Provision for Current and Deferred Tax:
The tax expense for the period comprises current and deferred tax. Taxes are recognised in the statement of profit and loss, except to the extent that it relates to the items recognised in the other comprehensive income or in Equity. In which case, the tax is also recognised in the other comprehensive income or in Equity.
Current tax:
Provision for Current tax is made on the basis of relevant provision of The Income Tax Act, 1961 as applicable to the financial year.
Deferred tax:
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all taxable temporary timing difference. Deferred tax assets are recognized for deductible temporary differences. to the extent that they are probable that taxable profit will be available against which the deductible temporary difference can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted on the reporting date.
Minimum Alternate Tax (MAT) Credit:
MAT credit is recognized as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.
1.22 Impairment of non-financial Assets:
The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
An impairment loss is recognized in the Statement of Profit and Loss to the extent, assetâs carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assetâs fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
1.23 Provision and Contingencies:
Provisions are recognized when the company has present obligation (legal or constructive) as a result of past event and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense related to a provision is presented in the statement of profit and loss net of any reimbursement/ contribution towards provision made.
If the effect of the time value of money is material, estimate for the provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Contingent Liabilities:
Contingent Liabilities are not provided and are disclosed in Notes on Accounts. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
1.24 Events occurring after the Balance Sheet Date:
Events occurring after the Balance Sheet date and till the date on which the financial statements are approved, which are material in the nature and indicate the need for adjustments in the financial statements have been considered
1.25 Standards Issued but not yet Effective:
On March 28, 2018, the Ministry of Corporate Affairs (MCA) has notified Ind AS 115 - Revenue from Contract with Customers and certain amendment to existing Ind AS. These amendments shall be applicable to the Company from April 01, 2018.
- Ind AS 115 - Revenue from Contracts with Customers :
Ind AS 115 will supersede the current revenue recognition guidance including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and the related interpretations. Ind AS 115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and satisfaction of performance obligations.
- Amendment to Existing issued Ind AS:
The MCA has also carried out amendments of the following accounting standards:
i. Ind AS 21 - The Effects of Changes in Foreign Exchange Rates
ii. Ind AS 40 - Investment Property
iii. Ind AS 12 - Income Taxes
iv. Ind AS 28 - Investments in Associates and Joint Ventures and
v. Ind AS 112 - Disclosure of Interests in Other Entities
Application of above standards are not expected to have any significant impact on the Companyâs Ind AS Financial Statements.
1.26 Key accounting judgments, estimates and assumptions:
The preparation of the Companyâs standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information.
In particular, information about significant areas of estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the standalone financial statements are as below:
a. Assessment of functional currency;
b. Financial instruments;
c. Estimates of useful lives and residual value of PPE and intangible assets;
d. Impairment of financial and non-financial assets;
e. Valuation of inventories;
f. Measurement of recoverable amounts of cash-generating units;
g. Measurement of Defined Benefit Obligations and actuarial assumptions;
h. Allowances for uncollected trade receivable and advances
i. Provisions;
j. Evaluation of recoverability of deferred tax assets; and
k. Contingencies.
Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods affected.
Mar 31, 2016
NOTE NO. 2 : SIGNIFICANT ACCOUNTING POLICIES
2.1 General
i) The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India and comply in all material respects with the Accounting Standards specified under Section 133 of the Companies Act 2013, read with Rule 7 of the Companies (Accounts)Rules,2014 and the relevant provision of the Companies Act, 2013.
ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.
2.2 Revenue Recognition
i) Sales
a) Sales are recognized when the significant risks and rewards of ownership of goods have been passed to the buyer. Sales are net of sales tax and sales returns.
b) Inter Division Transfer represents transfer of finished I semi-finished products within the Segment for further processing and sale.
ii) Export Incentives
Export Incentives are recognized when right to receive credit as per prevalent scheme is established in respect of the exports made and when there is no significant uncertainty regarding realization of such claim.
2.3 Fixed Assets: Tangible
i) Fixed Assets are stated at their original cost of acquisition including taxes, duties, freight, other incidental expenses related to acquisition and installation of the concerned assets and excludes refundable taxes and duties.
ii) All incidental expenses incurred during project implementation, for the project as well as trial run expenses are treated as expenditure during construction and are capitalized.
2.4 Depreciation
i) Leasehold Land - Cost of Leasehold Land I Revalued cost of Leasehold Land is amortized over lease period.
ii) Depreciation on Plant & Machinery other than Captive Power Plant is provided on its useful life estimated by the management on Written Down Value method. For these classes of assets, based on the technical evaluation carried out by the external experts, the management has estimated the useful lives in the range of 8 years to65 years.
iii) Depreciation on Building and Plant & Machinery of Captive Power Plant is provided as per the useful life specified in Part ''C'' of Schedule II of the Companies Act, 2013 on Straight Line Method.
iv) Deprecation on Furniture & Fixtures, Office Equipment and Vehicle is provided as per the useful life specified Part '' C '' of Schedule II of the Companies Act, 2013 on Written Down Value Method.
2.5 Intangibles
Intangible assets are stated at costs less accumulated amortization.
The cost relating to intangible assets are capitalized and amortized over the period of 5 years which is based on their estimated useful life.
2.6 Leased Assets
i) Finance Lease
Lease rentals in respect of finance lease are segregated into cost of the Assets and Finance Components by applying an implicit internal rate of return. The cost component is amortized over the useful life of the Asset and the Finance Component is recognized in the Statement of Profit and Loss.
ii) Operating Lease
Lease rentals in respect of operating lease are charged to Statement of Profit and Loss as per the terms of the lease agreement.
2.7 Inventories
i) Classification: Scrap generated from Tube Segment is classified as raw material as the same is mostly used by Steel Segment.
ii) Valuation
a) Raw Materials are valued at lower of cost or net realizable value. Cost is determined on weighted average basis.
b) Semi finished and finished goods are valued at lower of cost or net realizable value. The cost includes raw material on weighted average basis, labour cost, manufacturing expenses, production overheads and depreciation.
c) Stores, Spares and Coal are valued at cost determined on weighted average basis except for those which have a longer usable life, which are valued on the basis of their remaining useful life.
iii) Inventories include goods in transit under the appropriate heads.
2.8 Employee Benefits
i) Defined Contribution Plan
The Company makes defined contribution to Provident Fund and Superannuation Schemes, which are recognized in the Statement of Profit and Losson accrual basis.
ii) Defined Benefit Plan
The Company''s liabilities under Payment of Gratuity Act (funded), long term compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method except for short term compensated absences, which are provided on actual basis. Actuarial gain and losses are recognized immediately in the statement of Profit and Loss as income or expense. Obligations is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.
2.9 Research & Development
Research and Development costs (other than costs of fixed assets acquired) are charged to Statement of Profit and Lossin the year in which they are incurred.
2.10 Long Term Investments
Long Term Investments are valued at cost of acquisition. Provision for diminution in value of Long Term Investments is made only if such a decline is other than temporary in the opinion of the Management.
2.11 Foreign Currency Transactions
i) All transactions in foreign currency are recorded by applying the exchange rate prevailing at the time of the transaction.
ii) The Company designates borrowing in foreign currency, other than those utilized for capital expenditure and identified Long Term Loans, as hedge instrument to hedge its foreign currency risk of its firm commitment and highly probable or forecasted revenue transaction to be accounted as cash flow hedge. The unrealized exchange gains or losses on transactions related to foreign currency borrowing which qualify as effective hedge are recognized in the Hedging Reserve Account.
iii) Monetary foreign currency assets and liabilities (monetary items) are reported at the exchange rate prevailing on the balance sheet date. Pursuant to the notification of the Companies (Accounting Standards) (Second Amendments) Rules, 2011 on December 29, 2011, which amended Accounting Standard 11 on The Effects of Changes in Foreign Exchange Rates, the exchange differences relating to long term monetary items are dealt with in the following manner:
a) Exchange differences relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of depreciable capital asset are add to I deducted from the cost of the asset.
b) Exchange differences relating to long term monetary items, arising during the year, in so far as they relate to identified Long Term Loans, are accumulated in the "Foreign Currency Monetary Item Translation Difference Account" and amortized to the Statement of Profit and Loss over balance life of the long term monetary item, however the period of amortization does not extend beyond March 31, 2020.
iv) All other exchange differences are dealt with in the Statement ofProfit and Loss.
v) In respect of forward exchange contracts, the difference between the forward rate and the spot rate is recognized income or expense over the contract period. Gains or losses on cancellation or renewal of forward exchange contracts are recognized as income or expenses.
vi) Non-monetary items such as investments are carried at the historical cost using the exchange rate on the date of the transaction.
2.12 Miscellaneous Expenditure
i) Preliminary Expenses in the nature of public issue expenses and expenses in respect of increase in authorized capital are amortized over a period of ten years.
iii) Loan Processing Fees are amortized over the Loan period.
2.13 Borrowing Costs
Borrowing Costs that are directly attributable to the acquisition of qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
2.14 Income Tax
i) Tax expenses comprise of current and deferred tax.
ii) Provision for current income tax is made on the basis of relevant provisions of the Income Tax Act, 1961 as applicable to the financial year.
iii) Deferred Tax on timing differences is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred Tax Assets are recognized only to the extent that there is virtual certainty with convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.
iv) Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.
2.15 Government Incentives
Mega Project Incentives are recognized in the Statement of Profit and Loss in accordance with the provisions of the Package Scheme of Incentives 2007 and the eligibility certificate issued by the Government of Maharashtra.
2.16 Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable amount if any, is estimated and the impairment loss is recognized to the extent carrying amount exceeds recoverable amount.
2.17 Contingent Liabilities
Contingent Liabilities are not provided and are disclosed in Notes on Accounts. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2015
2.1 General
i) The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India and
comply in all material respects with the Accounting Standards specified
under Section 133 of the Companies Act 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provision of the
Companies Act, 2013.
ii) Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
principles.
2.2 Revenue Recognition
i) Sales
a) Sales are recognized when the significant risks and rewards of
ownership of goods have been passed to the buyer. Sales are net of
sales tax and sales returns.
b) Inter Division Transfer represents transfer of finished /
semi-finished products within the Segment for further processing and
sale.
ii) Export Incentives
Export Incentives are recognized when right to receive credit as per
prevalent scheme is established in respect of the exports made and when
there is no significant uncertainty regarding realization of such
claim.
2.3 Fixed Assets Tangible
i) Fixed Assets are stated at their original cost of acquisition
including taxes, duties, freight, other incidental expenses related to
acquisition and installation of the concerned assets and excludes
refundable taxes and duties.
ii) All incidental expenses incurred during project implementation, for
the project as well as trial run expenses are treated as expenditure
during construction and are capitalized.
2.4 Depreciation
i) Leasehold Land - Cost of Leasehold Land / Revalued cost of Leasehold
Land is amortized over lease period.
ii) Depreciation on Plant & Machinery other than Captive Power Plant is
provided on its useful life estimated by the management on Written Down
Value method. For these classes of assets, based on the technical
evaluation carried out by the external experts, the management has
estimated the useful lives in the range of 8 years to 65 years.
iii) Depreciation on Building and Plant & Machinery of Captive Power
Plant is provided as per the useful life specified in Part ÂCÂ of
Schedule II of the Companies Act, 2013 on Straight Line Method.
iv) Deprecation on Furniture & Fixtures, Office Equipment and Vehicle
is provided as per the useful life specified Part  C  of Schedule
II of the Companies Act, 2013 on Written Down Value Method.
2.5 Intangibles
Intangible assets are stated at costs less accumulated amortisation.
The cost relating to intangible assets are capitalised and amortised
over the period of 5 years which is based on their estimated useful
life.
2.6 Leased Assets
i) Finance Lease
Lease rentals in respect of finance lease are segregated into cost of
the Assets and Finance Components by applying an implicit internal rate
of return. The cost component is amortized over the useful life of the
Asset and the Finance Component is recognized in the Statement of
Profit and Loss.
ii) Operating Lease
Lease rentals in respect of operating lease are charged to the
Statement of Profit and Loss as per the terms of the lease agreement.
2.7 Inventories
i) Classification: Scrap generated from Tube Segment is classified as
raw material as the same is mostly used by Steel Segment.
ii) Valuation
a) Raw Materials are valued at lower of cost or net realisable value.
Cost is determined on weighted average basis.
b) Semi finished and finished goods are valued at lower of cost or net
realisable value. The cost includes raw material on weighted average
basis, labour cost, manufacturing expenses, production overheads and
depreciation.
c) Stores, Spares and Coal are valued at cost determined on weighted
average basis except for those which have a longer usable life, which
are valued on the basis of their remaining useful life.
iii) Inventories include goods in transit under the appropriate heads.
2.8 Employee Benefits
i) Defined Contribution Plan
The Company makes defined contribution to Provident Fund and
Superannuation Schemes, which are recognized in the Statement of Profit
and Loss on accrual basis.
ii) Defined Benefit Plan
The CompanyÂs liabilities under Payment of Gratuity Act (funded),
long term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on actual basis. Actuarial gain and losses are recognized
immediately in the statement of the Profit and Loss as income or
expense. Obligations is measured at the present value of estimated
future cash flows using a discounted rate that is determined by
reference to market yields at the Balance Sheet date on Government
bonds where the currency and terms of the Government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
2.9 Research & Development
Research and Development costs (other than costs of fixed assets
acquired) are charged to the Statement of Profit and Loss in the year
in which they are incurred.
2.10 Long Term Investments
Long Term Investments are valued at cost of acquisition. Provision for
diminution in value of Long Term Investments is made only if such a
decline is other than temporary in the opinion of the Management.
2.11 Foreign Currency Transactions
i) All transactions in foreign currency are recorded by applying the
exchange rate prevailing at the time of the transaction.
ii) The Company designates borrowing in foreign currency, other than
those utilized for capital expenditure and identified Long Term Loans,
as hedge instrument to hedge its foreign currency risk of its firm
commitment and highly probable or forecasted revenue transaction to be
accounted as cash flow hedge. The unrealized exchange gains or losses
on transactions related to foreign currency borrowing which qualify as
effective hedge are recognized in the Hedging Reserve Account.
iii) Monetary foreign currency assets and liabilities (monetary items)
are reported at the exchange rate prevailing on the balance sheet date.
Pursuant to the notification of the Companies (Accounting Standards)
(Second Amendments) Rules, 2011 on December 29, 2011, which amended
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, the exchange differences relating to long term monetary items
are dealt with in the following manner:
a) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to the acquisition of
depreciable capital asset are add to / deducted from the cost of the
asset.
b) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to identified Long Term
Loans, are accumulated in the ÂForeign Currency Monetary Item
Translation Difference Account and amortized to the Statement of
Profit and Loss over balance life of the long term monetary item,
however the period of amortization does not extend beyond March 31,
2020.
iv) All other exchange differences are dealt with in the Statement of
Profit and Loss.
v) In respect of forward exchange contracts, the difference between the
forward rate and the spot rate is recognized income or expense over the
contract period. Gains or losses on cancellation or renewal of forward
exchange contracts are recognized as income or expenses.
vi) Non-monetary items such as investments are carried at the
historical cost using the exchange rate on the date of the transaction.
2.12 Miscellaneous Expenditure
i) Preliminary Expenses in the nature of public issue expenses and
expenses in respect of increase in authorized capital are amortized
over a period of ten years.
ii) Loan Processing Fees are amortised over the Loan period.
2.13 Borrowing Costs
Borrowing Costs that are directly attributable to the acquisition of
qualifying assets are capitalized as a part of the cost of such assets.
A qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
charged to revenue.
2.14 Income Tax
i) Tax expenses comprise of current and deferred tax.
ii) Provision for current income tax is made on the basis of relevant
provisions of the Income Tax Act, 1961 as applicable to the financial
year.
iii) Deferred Tax on timing differences is measured based on the tax
rates and the tax laws enacted or substantively enacted at the Balance
Sheet date. Deferred Tax Assets are recognised only to the extent that
there is virtual certainty with convincing evidence that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
iv) Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period.
2.15 Government Incentives
Mega Project Incentives are recognized in the Statement of Profit and
Loss in accordance with the provisions of the Package Scheme of
Incentives 2007 and the eligibility certificate issued by the
Government of Maharashtra.
2.16 Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable
amount if any, is estimated and the impairment loss is recognized to
the extent carrying amount exceeds recoverable amount.
2.17 Contingent Liabilities
Contingent Liabilities are not provided and are disclosed in Notes on
Accounts. A disclosure for a contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources.When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2014
General
i) These accounts are prepared under the historical cost convention on
accrual basis and comply with Accounting Standards referred to in
Section 211 (3C) of the Companies Act, 1956.
ii) Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
principles.
Revenue Recognition
i) Sales
a) Sales are recognized when the significant risks and rewards of
ownership of goods have been passed to the buyer. Sales are net of
sales tax and sales returns.
b) Inter Division Transfer represents transfer of finished /
semi-finished products within the Segment for further processing and
sale.
ii) Export Incentives
Export Incentives are recognized when right to receive credit as per
prevalent scheme is established in respect of the exports made and when
there is no significant uncertainty regarding realization of such
claim.
Fixed Assets
i) Fixed Assets are stated at their original cost of acquisition
including taxes, duties, freight, other incidental expenses related to
acquisition and installation of the concerned assets and excludes
refundable taxes and duties.
ii) All incidental expenses incurred during project implementation, for
the project as well as trial run expenses are treated as expenditure
during construction and are capitalized.
Depreciation
i) Leasehold land - Cost of leasehold land is amortised over lease
period.
ii) Depreciation on Building and Plant & Machinery is provided on
straight line method in the manner and at the rates specified in
Schedule XIV of the Companies Act, 1956.
iii) Deprecation on Furniture & Fixtures, Office Equipment and vehicle
is provided on written down value method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
Intangibles
Intangible assets are stated at costs less accumulated amortisation.
The cost relating to intangible assets are capitalised and amortised
over the period of 5 years which is based on their estimated useful
life.
Leased Assets
i) Finance Lease
Lease rentals in respect of finance lease are segregated into cost of
the Assets and Finance Components by applying an implicit internal rate
of return. The cost component is amortized over the useful life of the
Asset and the Finance Component is recognized in the Statement of
Profit and Loss.
ii) Operating Lease
Lease rentals in respect of operating lease are charged to the
Statement of Profit and Loss as per the terms of the lease agreement.
Inventories
i) Classification: Scrap generated from Tube Segment is classified as
raw material as the same is mostly used by Steel Segment.
ii) Valuation
a) Raw Materials are valued at lower of cost or net realisable value.
Cost is determined on weighted average basis.
b) Semi finished and finished goods are valued at lower of cost or net
realisable value. The cost includes raw material, labour cost,
manufacturing expenses, production overheads and depreciation.
c) Stores, Spares and Coal are valued at cost determined on weighted
average basis except for those which have a longer usable life, which
are valued on the basis of their remaining useful life.
iii) Inventories include goods in transit under the appropriate heads.
Employee Benefits
i) Defined Contribution Plan
The Company makes defined contribution to Provident Fund and
Superannuation Schemes, which are recognized in the Statement of Profit
and Loss on accrual basis.
ii) Defined Benefit Plan
The Company''s liabilities under Payment of Gratuity Act (funded), long
term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on actual basis. Actuarial gain and losses are recognized
immediately in the Statement of Profit and Loss as income or expense.
Obligations is measured at the present value of estimated future cash
flows using a discounted rate that is determined by reference to market
yields at the Balance Sheet date on Government bonds where the currency
and terms of the Government bonds are consistent with the currency and
estimated terms of the defined benefit obligation.
Research & Development
Research and Development costs (other than costs of fixed assets
acquired) are charged to the Statement of Profit and Loss in the year
in which they are incurred.
Long Term Investments
Long Term Investments are valued at cost of acquisition. Provision for
diminution in value of Long Term Investments is made only if such a
decline is other than temporary in the opinion of the Management.
Foreign Currency Transactions
i) All transactions in foreign currency are recorded by applying the
exchange rate prevailing at the time of the transaction.
ii) The Company designates borrowing in foreign currency other than
those utilized for capital expenditure and identified Long Term Loans
as hedge instrument to hedge its foreign currency risk of its firm
commitment and highly probable or forecasted revenue transaction to be
accounted as cash flow hedge. The unrealized exchange gains or losses
on transactions related to foreign currency borrowing which qualify as
effective hedge are recognized in the Hedging Reserve Account.
iii) Monetary foreign currency assets and liabilities (monetary items)
are reported at the exchange rate prevailing on the Balance Sheet date.
Pursuant to the notification of the Companies (Accounting Standards)
(Second Amendments) Rules, 2011 on December 29, 2011, which amended
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, the exchange differences relating to long term monetary items
are dealt with in the following manner:
a) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to the acquisition of capital
asset are add to / deducted from the cost of the asset.
b) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to identified Long Term
Loans, are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized to the Statement of
Profit and Loss over balance life of the long term monetary item,
however the period of amortization does not extend beyond March 31,
2020.
iv) All other exchange differences are dealt with in the Statement of
Profit and Loss.
v) In respect of forward exchange contracts, the difference between the
forward rate and the spot rate is recognized income or expense over the
contract period. Gains or losses on cancellation or renewal of forward
exchange contracts are recognized as income or expenses.
vi) Non-monetary items such as investments are carried at the
historical cost using the exchange rate on the date of the transaction.
Miscellaneous Expenditure
i) Preliminary Expenses in the nature of public issue expenses and
expenses in respect of increase in authorized capital are amortized
over a period of ten years.
ii) Loan Processing Fees are amortised over the Loan period.
Borrowing Costs
Borrowing Costs that are directly attributable to the acquisition of
qualifying assets are capitalized as a part of the cost of such assets.
A qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
charged to revenue.
Income Tax
i) Tax expenses comprise of current and deferred tax.
ii) Provision for current income tax is made on the basis of relevant
provisions of the Income Tax Act, 1961 as applicable to the financial
year.
iii) Deferred Tax on timing differences is measured based on the tax
rates and the tax laws enacted or substantively enacted at the Balance
Sheet date. Deferred Tax Assets are recognised only to the extent that
there is virtual certainty with convincing evidence that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
iv) Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period.
Government Incentives
Mega Project Incentives are recognized in the Statement of Profit and
Loss in accordance with the provisions of the Package Scheme of
Incentives 2007 and the eligibility certificate issued by the
Government of Maharashtra.
Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable
amount if any, is estimated and the impairment loss is recognized to
the extent carrying amount exceeds recoverable amount.
Contingent Liabilities
Contingent Liabilities are not provided and are disclosed in Notes on
Accounts. A disclosure for a contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2013
1.1 General
i) These accounts are prepared under the historical cost convention on
accrual basis and comply with Accounting Standards referred to in
Section 211 (3C) of the Companies Act, 1956.
ii) Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
principles.
1.2 Revenue Recognition i) Sales
a) Sales are recognized when the significant risks and rewards of
ownership of goods have been passed to the buyer. Sales are net of
sales tax and sales returns.
b) Inter Division Transfer represents transfer of finished /
semi-finished products within the Segment for further processing and
sale.
ii) Export Incentives
Export Incentives are recognized when right to receive credit as per
prevalent scheme is established in respect of the exports made and when
there is no significant uncertainty regarding realization of such
claim.
1.3 Fixed Assets
i) Fixed Assets are stated at their original cost of acquisition
including taxes, duties, freight, other incidental expenses related to
acquisition and installation of the concerned assets and excludes
refundable taxes and duties.
ii) All incidental expenses incurred during project implementation, for
the project as well as trial run expenses are treated as expenditure
during construction and are capitalized.
1.4 Depreciation
i) Leasehold land - Cost of leasehold land is amortised over lease
period.
ii) Depreciation on Building and Plant & Machinery is provided on
straight line method in the manner and at the rates specified in
Schedule XIV of the Companies Act, 1956.
iii) Deprecation on Furniture & Fixtures, Office Equipment and vehicle
is provided on written down value method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
1.5 Intangibles
Intangible assets are stated at costs less accumulated amortisation.
The cost relating to intangible assets are capitalised and amortised
over the period of 5 years which is based on their estimated useful
life.
1.6 Leased Assets
i) Finance Lease
Lease rentals in respect of finance lease are segregated into cost of
the Assets and Finance Components by applying an implicit internal rate
of return. The cost component is amortized over the useful life of the
Asset and the Finance Component is recognized in the Statement of
Profit and Loss.
ii) Operating Lease
Lease rentals in respect of operating lease are charged to Statement of
Profit and Loss as per the terms of the lease agreement.
1.7 Inventories
i) Classification: Scrap generated from Tube Segment is classified as
raw material as the same is mostly used by Steel Segment.
ii) Valuation
a) Raw Materials are valued at lower of cost or net realisable value.
Cost is determined on weighted average basis.
b) Semi finished and finished goods are valued at lower of cost or net
realisable value. The cost includes raw material, labour cost,
manufacturing expenses, production overheads and depreciation.
c) Stores, Spares and Coal are valued at cost determined on weighted
average basis except for those which have a longer usable Me, which are
valued on the basis of their remaining useful life.
iii) Inventories include goods in transit under the appropriate heads.
1.8 Employee Benefits
i) Defined Contribution Plan
The Company makes defined contribution to Provident Fund and
Superannuation Schemes, which are recognized in the Statement of Profit
and Loss on accrual basis.
ii) Defined Benefit Plan
The Company''s liabilities under Payment of Gratuity Act (funded), long
term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on actual basis. Actuarial gain and losses are recognized
immediately in the statement of the Profit and Loss as income or
expense. Obligations is measured at the present value of estimated
future cash flows using a discounted rate that is determined by
reference to market yields at the Balance Sheet date on Government
bonds where the currency and terms of the Government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
1.9 Research & Development
Research and Development costs (other than costs of fixed assets
acquired) are charged to Statement of Profit and Loss in the year in
which they are incurred.
1.10 Long Term Investments
Long Term Investments are valued at cost of acquisition. Provision for
diminution in value of Long Term Investments is made only if such a
decline is other than temporary in the opinion of the Management.
1.11 Foreign Currency Transactions
i) All transactions in foreign currency are recorded by applying the
exchange rate pre vailing at the time of the transaction.
ii) The Company designates borrowing in foreign currency other than
those utilized for capital expenditure and identified Long Term Loans
as hedge instrument to hedge its foreign currency risk of its firm
commitment and highly probable or forecasted revenue transaction to be
accounted as cash flow hedge. The unrealized exchange gains or losses
on transactions related to foreign currency borrowing which qualify as
effective hedge are recognized in the Hedging Reserve Account.
iii) Monetary foreign currency assets and liabilities (monetary items)
are reported at the exchange rate prevailing on the balance sheet date.
Pursuant to the notification of the Companies (Accounting Standards)
(Second Amendments) Rules, 2011 on December 29, 2011, which amended
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, the exchange differences relating to long term monetary items
are dealt with in the following manner:
a) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to the acquisition of.
capital asset are add to / deducted from the cost of the asset.
b) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to identified Long Term
Loans, are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized to Statement of Profit
and Loss over balance life of the long term monetary item, however the
period of amortization does not extend beyond March 31, 2020.
iv) All other exchange differences are dealt with in the Statement of
Profit and Loss. .
v) In respect of forward exchange contracts, the difference between the
forward rate and the spot rate is recognized income or expense over the
contract period. Gains or losses on cancellation or renewal of forward
exchange contracts are recognized as income or expenses. vi)
Non-monetary items such as investments are carried at the historical
cost using the exchange rate on the date of the transaction.
1.12 Miscellaneous Expenditure
i) Preliminary Expenses in the nature of public issue expenses and
expenses in respect of increase in authorized capital are amortized
over a period of ten years.
ii) Loan Processing Fees are amortised over the Loan period.
1.13 Borrowing Costs
Borrowing Costs that are directly attributable to the acquisition of
qualifying assets are capitalized as a part of the cost of such assets.
A qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
charged to revenue.
1.14 Income Tax
i) Tax expenses comprise of current and deferred tax.
ii) Provision for current income tax is made on the basis of relevant
provisions of the Income Tax Act, 1961 as applicable to the financial
year.
iii) Deferred Tax on timing differences is measured based on the tax
rates and the tax laws enacted or substantively enacted at the Balance
Sheet date. Deferred Tax Assets are recognised only to the extent that
there is virtual certainty with convincing evidence that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
iv) Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period.
1.15 Government Incentives
Mega Project Incentives are recognized in the Statement of Profit and
Loss in accordance with the provisions of the Package Scheme of
Incentives 2007 and the eligibility certificate issued by the
Government of Maharashtra.
1.16 Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable
amount if any, is estimated and the impairment loss is recognized to
the extent carrying amount exceeds recoverable amount.
1.17 Contingent Liabilities
Contingent Liabilities are not provided and are disclosed in Notes on
Accounts. A disclosure for a contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2012
1.1 General
i) These accounts are prepared under the historical cost convention on
accrual basis and comply with Accounting Standards referred to in
Section 211 (3C) of the Companies Act, 1956.
ii) Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
principles.
1.2 Revenue Recognition
i) Sales
a) Sales are recognized when the significant risks and rewards of
ownership of goods have been passed to the buyer. Sales are net of
sales tax and sales returns.
b) Inter Division Transfer represents transfer of finished /
semi-finished products within the Segment for further processing and
sale.
ii) Export Incentives
Export Incentives are recognized when right to receive credit as per
prevalent scheme is established in respect of the exports made and when
there is no significant uncertainty regarding realization of such
claim.
1.3 Fixed Assets
i) Fixed Assets are stated at their original cost of acquisition
including taxes, duties, freight, other incidental expenses related to
acquisition and installation of the concerned assets and excludes
refundable taxes and duties.
ii) All incidental expenses incurred during project implementation, for
the project as well as trial run expenses are treated as expenditure
during construction and are capitalized.
1.4 Depreciation
i) Leasehold land - Cost of leasehold land is amortised over lease
period.
ii) Depreciation on Building and Plant & Machinery is provided on
straight line method in the manner and at the rates specified in
Schedule XIV of the Companies Act, 1956.
iii) Deprecation on Furniture & Fixtures, Office Equipment and vehicle
is provided on written down value method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
1.5 Intangibles
Intangible Assets are stated at costs less accumulated amortisation.
The cost relating to intangible assets are capitalised and amortised
over the period of 5 years which is based on their estimated useful
life.
1.6 Leased Assets
i) Finance Lease
Lease rentals in respect of finance lease are segregated into cost of
the Assets and Finance Components by applying an implicit internal rate
of return. The cost component is amortized over the useful life of the
Asset and the Finance Component is recognized in the Statement of
Profit and Loss.
ii) Operating Lease
Lease rentals in respect of operating lease are charged to Statement of
Profit and Loss as per the terms of the lease agreement.
1.7 Inventories
i) Classification: Scrap generated from Tube Segment is classified as
raw material as the same is mostly used by Steel Segment.
ii) Valuation
a) Raw Materials are valued at lower of cost or net realisable value.
Cost is determined on weighted average basis.
b) Semi finished and finished goods are valued at lower of cost or net
realisable value. The cost includes raw material, labour cost,
manufacturing expenses, production overheads and depreciation.
c) Stores and Spares are valued at cost determined on weighted average
basis except for those which have a longer usable life, which are
valued on the basis of their remaining useful life.
iii) Inventories include goods in transit under the appropriate heads.
1.8 Employee Benefits
i) Defined Contribution Plan
The Company makes defined contribution to Provident
Fund and Superannuation Schemes, which are recognized in the Statement
of Profit and Loss on accrual basis.
ii) Defined Benefit Plan
The Company's liabilities under Payment of Gratuity Act (funded),
long term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on actual basis. Actuarial gain and losses are recognized
immediately in the Statement of Profit and Loss as income or expense.
Obligations is measured at the present value of estimated future cash
flows using a discounted rate that is determined by reference to market
yields at the Balance Sheet date on Government bonds where the currency
and terms of the Government bonds are consistent with the currency and
estimated terms of the defined benefit obligation.
1.9 Research & Development
Research and Development costs (other than costs of fixed assets
acquired) are charged to Statement of Profit and Loss in the year in
which they are incurred.
1.10 Long Term Investments
Long Term Investments are valued at cost of acquisition. Provision for
diminution in value of Long Term Investments is made only if such a
decline is other than temporary in the opinion of the Management.
1.11 Foreign Currency Transactions
i) All transactions in foreign currency are recorded by applying the
exchange rate prevailing at the time of the transaction.
ii) The Company designates borrowing in foreign currency other than
those utilized for capital expenditure and identified Long Term Loans
as hedge instrument to hedge its foreign currency risk of its firm
commitment and highly probable or forecasted revenue transaction to be
accounted as cash flow hedge. The unrealized exchange gains or losses
on transactions related to foreign currency borrowing which qualify as
effective hedge are recognized in the Hedging Reserve Account.
iii) Monetary foreign currency assets and liabilities (monetary items)
are reported at the exchange rate prevailing on the Balance Sheet date.
Pursuant to the notification of the Companies (Accounting Standards)
(Second Amendments) Rules, 2011 on December 29, 2011, which amended
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, the exchange differences relating to long term monetary items
are dealt with in the following manner:
a) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to the acquisition of capital
asset are add to / deducted from the cost of the asset.
b) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to identified Long Term
Loans, are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized to the Statement of Profit
and Loss over balance life of the long term monetary item, however the
period of amortization does not extend beyond March 31,2020.
iv) All other exchange differences are dealt with in the Statement
of Profit and Loss.
v) In respect of forward exchange contracts, the difference between the
forward rate and the spot rate is recognized income or expense over the
contract period. Gains or losses on cancellation or renewal of forward
exchange contracts are recognized as income or expenses.
vi) Non-monetary items such as investments are carried at the
historical cost using the exchange rate on the date of the transaction.
1.12 Miscellaneous Expenditure
i) Preliminary expenses in the nature of public issue expenses and
expenses in respect of increase in authorized capital are amortized
over a period of ten years.
ii) Loan Processing Fees are amortised over the Loan period.
1.13 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition of
qualifying assets are capitalized as a part of the cost of such assets.
A qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
charged to revenue.
1.14 Income Tax
i) Tax expenses comprise of current and deferred tax.
ii) Provision for current income tax is made on the basis of relevant
provisions of the Income Tax Act, 1961 as applicable to the financial
year.
iii) Deferred Tax on timing differences is measured based on the tax
rates and the tax laws enacted or substantively enacted at the Balance
Sheet date. Deferred Tax Assets are recognised only to the extent that
there is virtual certainty with convincing evidence that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
iv) Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period.
1.15 Government Incentives
Mega Project Incentives are recognized in the Statement of Profit and
Loss in accordance with the provisions of the Package Scheme of
Incentives 2007 and the eligibility certificate issued by the
Government of Maharashtra.
1.16 Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable
amount if any, is estimated and the impairment loss is recognized to
the extent carrying amount exceeds recoverable amount.
1.17 Contingent Liabilities
Contingent Liabilities are not provided and are disclosed in Notes to
Accounts. A disclosure for a contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2011
1) General
i) These accounts are prepared under the historical cost convention on
accrual basis and comply with Accounting Standards referred to in
section 211 (3C) of the Companies Act, 1956.
ii) Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
principles.
2) Revenue Recognition
a) Sales
i) Sales are recognized when the significant risks and rewards of
ownership of goods have been passed to the buyer. Sales are net of
sales tax and sales returns.
ii) Inter Division Transfer represents transfer of finished /
semi-finished products within the Segment for further processing and
sale.
b) Export Incentives
Export Incentives are recognized when right to receive credit as per
prevalent scheme is established in respect of the exports made and when
there is no significant uncertainty regarding realization of such
claim.
3) Fixed Assets
i) Fixed assets are stated at their original cost of acquisition
including taxes, duties, freight, other incidental expenses related to
acquisition and installation of the concerned assets and excludes
refundable taxes and duties.
ii) All incidental expenses incurred during project implementation, for
the project as well as trial run expenses are treated as expenditure
during construction and are capitalized.
4) Depreciation
i) Leasehold land - Cost of leasehold land is amortised over lease
period.
ii) Depreciation on Building and Plant & Machinery is provided on
straight line method in the manner and at the rates specified in
Schedule XIV of the Companies Act, 1956.
iii) Deprecation on Furniture & Fixtures, Office Equipment and vehicle
is provided on written down value method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
5) Intangibles
Intangible assets are stated at costs less accumulated amortisation.
The cost relating to intangible assets are capitalised and amortised
over the period of 5 years which is based on their estimated useful
life.
6) Leased assets
i) Finance Lease
Lease rentals in respect of finance lease are segregated into cost of
the Assets and Finance Components by applying an implicit internal rate
of return. The cost component is amortized over the useful life of the
Asset and the Finance Component is recognized in the Profit and Loss
Account.
ii) Operating Lease
Lease rentals in respect of operating lease are charged to profit and
loss account as per the terms of the lease agreement.
7) Inventories
i) Classification: Scrap generated from Tube Segment is classified as
raw material as the same is mostly used by Steel Segment.
ii) Valuation
a) Raw Materials are valued at lower of cost or net realisable value.
Cost is determined on weighted average basis.
b) Semi finished and finished goods are valued at lower of cost or net
realisable value. The cost includes raw material, labour cost,
manufacturing expenses, production overheads and depreciation.
c) Stores and Spares are valued at cost determined on weighted average
basis except for those which have a longer usable life, which are
valued on the basis of their remaining useful life.
iii) Inventories include goods in transit under the appropriate heads.
8) Employee Benefits
(i) Defined Contribution Plan
The Company makes defined contribution to Provident Fund and
Superannuation Schemes, which are recognized in the Profit and Loss
Account on accrual basis.
(ii) Defined Benefit Plan
The Company's liabilities under Payment of Gratuity Act (funded), long
term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on actual basis. Actuarial gain and losses are recognized
immediately in the statement of the Profit and Loss Account as income
or expense. Obligations is measured at the present value of estimated
future cash flows using a discounted rate that is determined by
reference to market yields at the Balance Sheet date on Government
bonds where the currency and terms of the Government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
9) Research & Development
Research and Development costs (other than costs of fixed assets
acquired) are charged to Profit & Loss Account in the year in which
they are incurred.
10) Long Term Investments
Long Term investments are valued at cost of acquisition. Provision for
diminution in value of Long Term investments is made only if such a
decline is other than temporary in the opinion of the Management.
11) Foreign Currency transactions
i) All transactions in foreign currency are recorded by applying the
exchange rate prevailing at the time of the transaction.
ii) Monetary foreign currency assets and liabilities (monetary items)
are reported at the exchange rate prevailing on the balance sheet date.
Pursuant to the notification of the Companies (Accounting Standards)
Amendment Rules 2011 on 11th May, 2011, which amended Accounting
Standard 11 on The Effects of Changes in Foreign Exchange Rates,
exchange differences relating to long term monetary items are dealt
with in the following manner:
a) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to the acquisition of capital
asset are add to / deducted from the cost of the asset.
b) In Other cases such differences were accumulated in the "Foreign
Currency Monetary Item Translation Difference Account" and amortized to
the profit and loss account over balance life of the long term monetary
item, however that the period of amortization does not extend beyond
31st march 2011.
iii) All other exchange differences are dealt with in the profit and
loss account.
iv) In respect of forward exchange contracts, the difference between
the forward rate and the spot rate is recognised as income or expense
over the contract period. Gains or losses on cancellation or renewal of
forward exchange contracts are recognized as income or expenses.
v) Non-monetary items such as investments are carried at historical
cost using the exchange rate on the date of transaction.
12) Miscellaneous Expenditure
i) Preliminary expenses in the nature of public issue expenses and
expenses in respect of increase in authorized capital are amortized
over a period of ten years.
ii) Loan processing fees are amortised over the Loan period.
13) Borrowing Costs
Borrowing costs that are directly attributable to the acquisition of
qualifying assets are capitalized as a part of the cost of such assets.
A qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
charged to revenue.
14) Income Tax
i) Tax expenses comprise of current and deferred tax.
ii) Provision for current income tax is made on the basis of relevant
provisions of the Income Tax Act, 1961 as applicable to the financial
year.
iii) Deferred tax on timing differences is measured based on the tax
rates and the tax laws enacted or substantively enacted at the balance
sheet date. Deferred tax assets are recognised only to the extent that
there is virtual certainty with convincing evidence that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
iv) Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period.
15) Government Incentives
Mega Project Incentives are recognised in the Profit and Loss Account
in accordance with the provisions of the Package Scheme of Incentives
2007 and the eligibility certificate issued by the Government of
Maharashtra.
16) Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable
amount if any, is estimated and the impairment loss is recognized to
the extent carrying amount exceeds recoverable amount.
17) Contingent Liabilities
Contingent Liabilities are not provided and are disclosed in notes on
accounts. A disclosure for a contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2010
1) General
i) These accounts are prepared under the historical cost convention on
accrual basis and comply with Accounting Standards referred to in
section 211 (3C) of the Companies Act, 1956.
ii) Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
principles.
2) Revenue Recognition
Expenses and income are accounted for on accrual basis.
3) Sales
i) Sales are net of sales tax and sales returns.
ii) Inter Division Transfer represents transfer of finished /
semi-finished products within the Segment for further processing and
sale.
4) Import Entitlement
The Company is entitled to import duty free raw material under Advance
Licences issued to the Company under the Duty Exemption Scheme or Claim
duty drawbacks on Exports of the goods manufactured by it. In respect
of Export Sales made by the Company or goods produced exclusively for
export, pending receipt of imported duty- free raw materials, the
higher cost of domestic raw materials actually consumed for the purpose
of such export/production is adjusting by accruing the value of
companys entitlement to import duty-free raw materials.
5) Fixed Assets
i) Fixed assets are stated at their original cost of acquisition
including taxes, duties, freight, other incidental expenses related to
acquisition & installation of the concerned assets and excludes
refundable taxes.
ii) All incidental expenses incurred during project implementation, for
the project as well as trial run expenses are treated as expenditure
during construction and subsequently capitalised.
6) Depreciation
i) Leasehold land à Cost of leasehold land is amortised over lease
period.
ii) Depreciation on Building and Plant & Machinery is provided on
straight line method in the manner and at the rates specified in
Schedule XIV of the Companies Act, 1956.
iii) Deprecation on Furniture & Fixtures, Office Equipment and vehicle
is provided on written down value method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
7) Intangibles
Intangible assets are stated at costs less accumulated amortisation.
The cost relating to intangible assets are capitalised and amortised
over the period of 5 years which is based on their estimated useful
life.
8) Leased assets
i) Finance Lease
Lease rentals in respect of finance lease are segregated into cost of
the Assets and finance components by applying an implicit internal rate
of return. The cost component is amortised over the useful life of the
Asset and the finance component is recognised in the Profit and Loss
Account.
ii) Operating Lease
Lease rentals in respect of operating lease are charged as per the
terms of the lease agreement.
9) Inventories
i) Classification : Scrap generated from Tube Segment is classified as
raw material as the same is mostly used by Steel Segment.
ii) Valuation
a) Raw Materials are valued at lower of cost or net realisable value.
Cost of determined on weighted average basis.
b) Semi finished and finished goods are valued at lower of cost or net
realisable value. The cost includes raw material, labour cost,
manufacturing expenses, production overheads and depreciation.
c) Stores and Spares are valued at cost determined on weighted average
basis except for those which have a longer usable life, which are
valued on the basis of their remaining useful life.
iii) Inventories include goods in transit under the appropriate heads.
10) Employee Benefits
i) Defined Contribution Plan
The Company makes defined contribution to Provident Fund and
Superannuation Schemes, which are recognized in the Profit and Loss
Account on accrual basis.
ii) Defined Benefit Plan
The CompanyÃs liabilities under Payment of Gratuity Act (funded), long
term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on actual basis. Actuarial gain and losses are recognised
immediately in the statement of the Profit and Loss Account as income
or expense. Obligations is measured at the present value of estimated
future cash flows using a discounted rate that is determined by
reference to market yields at the Balance Sheet date on Government
bonds where the currency and terms of the Government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
11) Research & Development
Research and Development costs (other than costs of fixed assets
acquired) are charged to Profit & Loss Account in the year in which
they are incurred.
12) Long Term Investments
Investments are valued at cost of acquisition. Provision for diminution
in value of investments is made only if such a decline is other than
temporary in the opinion of the Management.
13) Foreign Currency transactions
i) All transactions in foreign currency are recorded by applying the
exchange rate prevailing at the time of the transaction.
ii) Monetary foreign currency assets and liabilities (monetary items)
are reported at the exchange rate prevailing on the balance sheet date.
Pursuant to the notification of the Companies (Accounting Standards )
Amendment Rules 2006 on 31st March 2009, which amended Accounting
Standard 11 on The Effects of Changes in Foreign Exchange Rates,
exchange differences relating to long term monetary items are dealt
with in the following manner:
a) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to the acquisition of capital
asset are add to / deducted from the cost of the asset.
b) In other cases such differences are accumulated in the ÃForeign
Currency Monetary Item Translation Difference Accountà and amortized to
the profit and loss account over balance life of the long term monetary
item, however that the period of amortization does not extend beyond
March 31, 2011.
iii) All other exchange differences are dealt with in the profit and
loss account.
iv) In respect of forward exchange contracts, the difference between
the forward rate and the spot rate is recognised as income or expense
over the contract period. Gains or losses on cancellation or renewal of
forward exchange contracts are recognized as income or expenses.
v) Non-monetary items such as investments are carried at historical
cost using the exchange rate on the date of transaction.
14) Miscellaneous Expenditure
i) Preliminary expenses, public issue expenses and expenses in respect
of increase in authorised capital are amortised over a period of ten
years.
ii) Financial restructuring expenses are amortised over the period of
restructuring.
iii) Merger expenses are amortised over a period of five years.
iv) Loan processing fees are amortised over the Loan period.
15) Borrowing Costs
Borrowing costs that are directly attributable to the acquisition of
qualifying assets are capitalised as a part of the cost of such assets.
A qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to revenue.
16) Income Tax
i) Tax expenses comprise of current, deferred and fringe benefit tax.
ii) Provision for current income tax and fringe benefit tax is made on
the basis of relevant provisions of the Income Tax Act, 1961 as
applicable to the financial year.
iii) Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is virtual
certainty with convincing evidence that sufficient future taxable
income will be available against which such deferred tax assets can be
realised.
iv) Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period.
17) Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable
amount if any, is estimated and the impairment loss is recognised to
the extent-carrying amount exceeds recoverable amount.
18) Contingent Liabilities
Contingent Liabilities are not provided and are disclosed in notes on
accounts. A disclosure for a contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on ISMT Ltd.
-
ISMT Ltd. Tools
- Bulk Deals
- Block Deals
-
ISMT Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- BSE Price History
- NSE Price History
-
ISMT Ltd. Key Financial Ratios
- Ratios
-
ISMT Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
ISMT Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
ISMT Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
ISMT Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
