Mar 31, 2022
1. Corporate information
Jamna Auto Industries Limited (âthe Companyâ) is engaged in manufacturing and selling of Tapered Leaf, Parabolic Springs and Lift Axles. The Company has its manufacturing facilities at Malanpur, Chennai, Yamuna Nagar, Jamshedpur, Hosur, Pillaipakkam and Pune.
The Company is public company domiciled in India and is incorporated under the provisions of the Companies Act. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is located at Jai Spring RoadYamuna Nagar, Haryana -135001.
Information on related party relationships of the Company is provided in Note 37.
The financial statements were approved for issue in accordance with a resolution of the board of directors on May 21, 2022.
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value as referred in the accounting policies:
(a) Certain financial assets and liabilities measured at fair value and
(b) Derivative financial instruments.
The Financial Statements are presented in Indian Rupees (INR) and all values are rounded to the nearest lakhs (INR 00,000), except wherever otherwise stated.
2.1 Significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these Indian Accounting Standards (Ind-AS) financial statements. These policies have been consistently applied to all the years except where newly issued accounting standard is initially adopted.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An 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 the 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.
A liability is 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 the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
b) Foreign currencies
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currency''). The financial statements are presented in Indian Rupee (INR), which is the Company''s functional and presentation currency.
Foreign currency transactions are recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. 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.
Capital work in progress, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost comprises the purchase price (net of Input Tax Credit) and any directly attributable cost to bring assets to working condition. When significant parts of property, plant and equipment are required to be replaced at intervals, Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
⢠Gains or losses arising from de-recognition of tangible assets are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
⢠The Company identifies any particular component embedded in the main asset having significant value to total cost of asset and also a different life as compared to the main asset.
⢠The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
⢠Machinery spares which are specific to a particular item of fixed asset and whose use is expected to be irregular are capitalized as fixed assets when they meet the definition of Property Plant Equipment, i.e., when the Company intends to use these during more than a period of 12 months.
Cost of leasehold improvements on property, plant and equipment are amortized on a straight-line basis over the period of lease or their useful lives, whichever is shorter.
Depreciation on other property, plant and equipment is calculated on a straight-line basis using rates arrived at based on the useful lives estimated by the management. The Company identifies and determines cost of each component/ part of the asset separately, if the Component/part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining components of the asset. These components are depreciated separately over their useful lives and the remaining components are depreciated over the useful life of the principal assets. The Company has used following estimated useful life to provide depreciation on its property, plant and equipment:
Particulars |
Estimated Useful Life (Years) |
Factory buildings |
30 |
Other buildings |
60 |
Plant and machinery 1 |
15-20 |
Research and development equipment |
1 |
Furniture and fixtures 2 |
4 |
Vehicles 2 |
4 |
Office equipment 2 |
3 |
Computers |
3 |
1. The management has estimated, supported by independent assessment, the useful life of certain plant and machinery as 20 years, which is higher than those indicated in schedule II of the Companies Act 2013.
2. The management has estimated, based on its internal assessment and past experience, the useful life of these blocks of assets as lower than the life indicated for respective block of assets in schedule II of the Companies Act 2013.
Residual value of plant and machinery is considered at 5%.
Property, plant and equipment individually costing up to INR
0.05 are depreciated at the rate of 100 percent.
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at cost less accumulated amortization. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.
The useful lives of the intangible assets are assessed as either finite or infinite.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and amortization method of the intangible asset with a useful finite life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the assets are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another assets.
Software is amortized on a straight-line basis over the period of five years.
An intangible asset is derecognized upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company''s lease asset classes primarily comprise of lease for Land & Building. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the underlying assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section âImpairment of non-financial assets''.
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting
from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.
âLease liabilitiesâ and âRight of Use Assetsâ have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing cost includes interest and other costs that an entity incurs in connection with the borrowing of funds and charged to Statement of Profit & Loss. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing cost.
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating units'' (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into
account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of four to five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the forecast period. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the Company operates, or for the market in which the asset is used.
For assets excluding goodwill and intangible assets having indefinite life, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Impairment losses on non-financial asset, including impairment on inventories, are recognized in the statement of profit and loss.
Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. If an
investment is acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued. If an investment is acquired in exchange for another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident.
Investments in quoted and unquoted equity instruments are recognized at fair value through Other Comprehensive income.
Raw materials, components and stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on moving weighted average basis.
Stores and spares which do not meet the definition of Property, plant and equipment are accounted as inventories.
Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on moving weighted average basis.
Traded goods are valued at cost.
Scrap is valued at net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. Obsolete and nonmoving inventory are determined on the basis of regular review and are valued at net realizable value or cost whichever is lower.
The Company manufactures and sells a range of automobile suspension products. Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods before transferring them to the customer.
The specific recognition criteria described below must also be met before revenue is recognized:
Revenue from sale of goods is recognized at the point in time when control of the inventory is transferred to the customer, generally on delivery of the equipment. The normal credit term is 30 to 90 days upon delivery.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of goods, the Company allocated a portion of the transaction price to goods bases on its relative standalone prices and also considers the following:
The Company generally provides for warranties for general repair of defects. These warranties are assurance-type warranties under Ind AS 115, which are accounted for under Ind AS 37 (Provisions, Contingent Liabilities and Contingent Assets), consistent with its current practice. The Company adjust the transaction price for the time value of money where the period between the transfer of the promised goods or services to the customer and payment by customer exceed one year.
In respect of short-term advances from its customers, using the practical expedient in Ind AS 115, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be within normal operating cycle.
(iii) Schemes
The Company operates several sales incentive programs wherein the customers are eligible for several benefits on achievement of underlying conditions as prescribed in the scheme program such as credit notes, tours, reimbursement etc. Revenue from contract with customer is presented deducting cost of all these schemes.
Job work charges are accrued, as and when services are performed.
For all debt instruments measured at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instruments or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected estimated cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit loss. Interest income is included under the head âother incomeâ in the statement of profit and loss.
Interest income on bank deposits and advances to vendors is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head âFinance incomeâ in the statement of profit and loss.
Share of profit from LLP is recognized when the right to receive share of profit is established.
Export incentives are accrued in the underlying period of export sales in accordance with the terms of the export benefit scheme, provided that there is no significant uncertainty regarding the entitlement to the credit and the amount thereof.
Contract balances
A receivable is recognized if an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (x) Financial instruments -initial recognition and subsequent measurement.
(ii) Contract Assets
Contract assets relates to revenue accrued during the year but not billed to the customer at the period end
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Company transfers the related goods or services. Contract liabilities are recognised as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer).
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
The Company operates three defined benefit plans for its employees i.e. gratuity, long service award and benevolent fund. The costs of providing benefits under these plans are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out for these plans using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of:
⢠The date of the plan amendment or curtailment, and
⢠The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
⢠Service costs comprising current service costs, past-service costs, gains and losses on curtailments and nonroutine settlements; and
⢠Net interest expense or income
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
Tax expense for the year comprises of current tax and deferred tax.
Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date
Current income tax relating to item recognized outside the statement of profit and loss is recognized outside profit or loss (either in other comprehensive income or equity).Current tax items are recognized in correlation to the underlying transactions either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for all deductible
timing differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
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 the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as âMAT Credit Entitlementâ under the head deferred tax assets. The Company reviews the âMAT credit entitlementâ asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments which are classified as equity-settled transactions.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised as an employee benefit expense with a corresponding increase in âShare Based Payment Reserve'' in other equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company best estimate of the number of equity instruments that will ultimately vest.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be nonvesting conditions.
Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or nonvesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through the Statement of Profit and Loss.
Identification of segments - The Company''s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers
different products and serves different markets. The analysis of geographical segments is based on the geographical location of the customers.
Segment accounting policies - The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
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 the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.
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 favorable 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 the accounting policy applicable to financial liabilities.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Provision for warranty related costs are recognized when the product is sold. Provision is based on historical experience. The estimate of such warranty related costs is revised annually.
The Company recognizes the price difference payable to parties, where settlement is pending for final negotiation. It is provided on the basis of best estimates and management''s assessment, considering the past trend and various other factors. These provisions are reviewed on a regular basis and adjusted with respective element with statement of profit and loss from the adequacy and reasonability point of view.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposit held at call with financial institutions, other short - term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
The Company recognizes a liability to make the payment of dividend to owners of equity, when the distribution is authorized, and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
The Company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Company does not include depreciation and amortization expense, interest income, finance costs and tax expense.
v) Suppliers Credit / Vendor Bill Discounting
The Company enters into deferred payment arrangements (acceptances) whereby banks/financial institutions initially make payment to Company''s suppliers for raw materials, goods and services directly, while the Company continues to recognize the liability till settlement with the bank/financial institution at a later date, which is normally effected within a period of 90 days. The arrangement provides working capital timing benefits and the economic substance of the transaction is determined to be operating in nature. These arrangements are in the nature of credit extended in normal operating cycle and these arrangements are recognized as âAcceptances'' under Trade Payables. Interest borne by the Company on such arrangements is accounted under the head âFinance Cost''.
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
⢠Disclosures for valuation methods, significant estimates and assumptions
⢠Financial guarantee
⢠Financial instruments (including those carried at amortized cost)
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
For the purpose of subsequent measurement, financial assets are only classified as debt instruments at amortized cost.
A âdebt instrument'' is measured at the amortized cost if both the following conditions are met:
a) Business Model Test: The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Cash Flow Characteristics Test: Contractual terms of the asset give rise on specified dates to cash flows that are
solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the balance sheet) when:
⢠The rights to receive cash flows from the asset have expired, or
⢠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securities, deposits, trade receivables and bank balance.
The Company follows âsimplified approach'' for recognition of impairment loss allowance on Trade receivables or contract revenue receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. The credit risk of the Company has not increased significantly, 12-month ECL is used to provide for impairment loss.
The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, the Company considers
⢠All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss (P&L). This amount is reflected under the head âother expenses'' in the P&L. The balance sheet presentation for various financial instruments is described below:
⢠Financial assets measured as at amortized cost and contractual revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets writeoff criteria, the Company does not reduce impairment allowance from the gross carrying amount.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
⢠Financial liabilities at fair value through profit or loss
⢠Financial liabilities at amortised cost (loans and borrowings)
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognized in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ losses are not subsequently transferred to statement of profit and loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the statement of profit and loss. The Company has not designated any financial liability as at fair value through profit and loss.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss. This category generally applies to borrowings. For more information refer Note 17.
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are generally unsecured. Trade and other payable are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using effective interest method.
Financial guarantee contracts obtained by the Company are those contracts that require a payment to be made by the issuer to reimburse the holder fo
Mar 31, 2018
1.1 Significant accounting policies
a) Use of estimates
The preparation of financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
b. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised 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.
A liability is 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 the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
c. Foreign currencies
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The financial statements are presented in Indian Rupee (INR), which is the Companyâs functional and presentation currency.
Transactions and balances
Foreign currency transactions are recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. 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 is recognised in profit or loss are also recognised in profit or loss).
d. Property, plant and equipment (PPE)
Under the previous GAAP (Indian GAAP), Property, plant and equipment comprising of leasehold land, freehold land, factory building, office building, plant and machinery, office equipment, furniture and fixtures, vehicle and computer were carried in the balance sheet at their respective carrying value. Using the deemed cost exemption available as per Ind AS 101, the Company has elected to carry forward the carrying value of Property, plant and equipment under Indian GAAP as on 31 March 2016 as book value of such assets under Ind AS as at the transition date i.e. April 01, 2016.
Capital work in progress, plant and equipment is stated at cost, net of accumulated depreciation. and accumulated impairment losses, if any. Cost comprises the purchase price (net of cenvat) and any directly attributable cost to bring assets to working condition. When significant parts of property, plant and equipment are required to be replaced at intervals, Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
- Gains or losses arising from de-recognition of tangible assets are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
- The Company identifies any particular component embedded in the main asset having significant value to total cost of asset and also a different life as compared to the main asset.
- The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
- Machinery spares which are specific to a particular item of fixed asset and whose use is expected to be irregular are capitalized as fixed assets when they meet the definition of Property Plant Equipment, i.e., when the Company intends to use these during more than a period of 12 months.
Depreciation on property, plant and equipment
Leasehold land is amortised over the period of lease on a straight line basis. Cost of leasehold improvements on property, plant and equipment are amortised on a straight line basis over the period of lease or their useful lives, whichever is shorter.
Depreciation on other property, plant and equipment is calculated on a straight-line basis using the rates arrived at, based on the useful lives estimated by the management. The Company identifies and determines cost of each component/part of the asset separately, if the Component/part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining components of the asset. These components are depreciated separately over their useful lives and the remaining components are depreciated over the useful life of the principle assets. The company has used following estimated useful life to provide depreciation on its property, plant and equipment.
(1) The management has estimated, supported by independent assessment, the useful life of certain plant and machinery as 20 years, which is higher than those indicated in schedule II of the Companies Act 2013.
(2) The management has estimated, based on past experience, the useful life of these blocks of assets as lower than the life indicated for respective block of assets in schedule II of the Companies Act 2013.
Residual value of property, plant and equipment is considered at 5%.
Property, plant and equipment individually costing up to Rs. 0.05 are depreciated at the rate of 100 percent.
e) Intangible assets
Under the previous GAAP (Indian GAAP), Intangible assets comprising of software was carried in the balance sheet at their respective carrying value. Using the deemed cost exemption available as per Ind AS 101, the Company has elected to carry forward the carrying value of Intangible assets under Indian GAAP as on March 31, 2016 as book value of such assets under Ind AS as at the transition date i.e. April 01, 2016.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.
The useful life of the intangible assets are assessed as either finite or infinite.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and amortization method of the intangible asset with a useful finite life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the assets are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another assets.
Software is amortised on a straight-line basis over the period of five years.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
f) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to April 01, 2016, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
A lease is classified at the inception date as a finance lease or an operating lease.
Operating Lease
Leases, where the lessor effectively retains substantially, all the risks and benefits of ownership of the leased item, are classified as Operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Finance Lease
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. Finance leases are capitalised at the commencement of the lease at the inception date at fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Lands under finance lease
The Company has lands allotted by authorities for a lease term of ninety-nine years. These lands were acquired by paying the consideration, which reflected the prevalent market price and upfront payment of all future lease rentals. There are no further lease rental obligations upon the Company to be paid to the Authority. There are no restrictions on usage or transfer of the land to any party by the Company. In view of aforesaid facts and circumstances, the Company has classified these lands as finance lease.
g) Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing cost includes interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing cost.
h) Impairment of non-financial asset
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitsâ (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
Impairment losses on non-financial asset, including impairment on inventories, are recognised in the statement of profit and loss.
i) Investments
Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. If an investment is acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued. If an investment is acquired in exchange for another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident.
Investments in quoted and unquoted equity instruments are recognized at fair value through profit and loss.
j) Inventories
Raw materials, components and stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on weighted average basis.
Stores and spares which do not meet the definition of Property, plant and equipment are accounted as inventories.
Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. Obsolete and non-moving inventory are determined on the basis of regular review and are valued at net realizable value or cost whichever is lower.
k) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Based on the Educational Material on Ind AS 18 issued by the ICAI, the Company has assumed that recovery of excise duty flows to the Company on its own account. This is for the reason that it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not. Since the recovery of excise duty flows to the Company on its own account, revenue includes excise duty.
However, sales tax/ value added tax (VAT) , Goods and service tax is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognized:
1) Sales of goods
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discount and volume rebates..
2) Service income
Job work charges are accrued, as and when services are performed.
3) Interest income
For all debt instruments measured at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instruments or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected estimated cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit loss. Interest income is included under the head âother incomeâ in the statement of profit and loss. Interest income on bank deposits and advances to vendors is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head âother incomeâ in the statement of profit and loss.
4) Share of profit from LLP
Share of profit from LLP is recognised when the right to receive share of profit is established.
5) Export incentive
Export incentives are accrued in the underlying period of export sales in accordance with the terms of the export benefit scheme, provided that there is no significant uncertainty regarding the entitlement to the credit and the amount thereof.
6) Dividend Income
Dividend Income is recognised when the Companyâs right to receive dividend is established which is generally when shareholders approves the dividend.
l) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.
The Company operates three defined benefit plan for its employees i.e. gratuity, long service award and benevolent fund. The costs of providing benefits under this plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out for this plan using the projected unit credit method.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
- Net interest expense or income
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as longterm employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
m) Taxes
Current Income tax
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in
India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for all deductible timing differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The
Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as âMAT Credit Entitlementâ under the head deferred tax assets. The Company reviews the âMAT credit entitlementâ asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
n) Share Based payments
In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and Ind AS 102 Share based Payments, the cost of equity-settled transactions is measured using the intrinsic value method and recognized. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the companyâs best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognized in the statement of profit and loss for a period represents the movement in cumulative expense recoginized as at the beginning and end of that period and is recognized in employee benefits expense.
o) Segment reporting
Identification of segments - The Companyâs operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the geographical location of the customers.
Segment accounting policies - The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
p) Government grants
Government grants are recognised 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 recognised 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 recognised as income in equal amounts over the expected useful life of the related asset.
When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.
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 recognised 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 the accounting policy applicable to financial liabilities.
q) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
r) Provisions
A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
Warranty Provision
Provision for warranty related costs are recongnised when the product is sold. Provision is based on historical experience. The estimate of such warranty related costs are revised annually.
Provision for Price Difference
The Company recognises the price difference payable to parties, where settlement is pending for final negotiation. It is provided on the basis of best estimates and managementâs assessment, considering the past trend and various other factors. These provisions are reviewed on a regular basis and adjusted with respective element with statement of profit and loss from the adequacy and reasonability point of view.
s) Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
t) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less, which are subject to an insignificant risk of change in value.
u) Measurement of EBITDA
The Company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Company does not include depreciation and amortization expense, interest income, finance costs and tax expense.
v) Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
- Disclosures for valuation methods, significant estimates and assumptions (note 40 and note 42)
- Financial guarantee (note 38 and note 41)
- Financial instruments (including those carried at amortised cost) (note 5, 6, 7, 8, 11, 12, 15, 16, 19, 20, 41 and 42)
w) Financial instrument:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For the purpose of subsequent measurement, financial assets are only classified as debt instruments at amortised cost.
Debt instruments at amortised cost
A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpassthroughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets:
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Trade receivables or contract revenue receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. The credit risk of the Company has not increased significantly, 12-month ECL is used to provide for impairment loss.
The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, the Company considers:
- All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss (P&L). This amount is reflected under the head âother expensesâ in the P&L. The balance sheet presentation for various financial instruments is described below:
- Financial assets measured as at amortised cost and contractual revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to statement of profit and loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss. The Company has not designated any financial liability as at fair value through profit and loss. Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss. This category generally applies to borrowings. For more information refer Note 15.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are generally unsecured. Trade and other payable are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using effective interest method.
Financial guarantee contracts
Financial guarantee contracts obtained by the Company are those contracts that require a payment to be made by the issuer to reimburse the holder for a loss it incurs because the Company fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the financial guarantee is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
Derecognition
A financial liability is derecognised 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 derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
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 is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Mar 31, 2017
1 Corporate information
Jamna Auto Industries Limited (hereinafter referred to as âthe Company'' or âJAI'') is engaged in manufacturing and selling of Tapered Leaf, Parabolic Springs and Lift Axles. The Company''s manufacturing facilities are located at Malanpur, Chennai, Yamuna Nagar, Jamshedpur, Hosur, Pillaipakkam and Pune.
2 Basis of preparation
The financial statements of the company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and Companies (Accounting Standards) Amendment Rules, 2016. The financial statements have been prepared on accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.
2.1 Summary of significant accounting policies
Change in accounting policy
I. Pre-revised AS 10 required that stand-by and servicing equipment should normally be capitalized as property, plant and equipment. It required that machinery spares are usually treated as inventory and charged to profit or loss on consumption. However, spares parts that can be only used in connection with a particular item of property, plant and equipment, and whose use is expected to be irregular, are capitalized. Such spare parts are depreciated over a period, not exceeding the remaining useful life of the principal asset.
According to AS 10 (R), all spare parts, stand-by and servicing equipment qualify as property, plant and equipment (PPE) if they meet the definition of PPE i.e. if the company intends to use these during more than a period of 12 months. The spare parts capitalized in this manner are depreciated as per AS 10 (R)
The company has changed its accounting policy of property, plant and equipment to comply with AS 10 (R). The company has applied transitional provisions, which requires previously recognized stores and spares as inventory should be capitalized as a PPE at its carrying amount and depreciated prospectively over its remaining useful life.
Had the company continued to use the earlier policy of classifying stores and spares as inventories, Inventories at the year end would have been higher by Rs. 77.13, property, plant and equipment would have been lower by Rs 77.13, depreciation for the year would have been lower by Rs 29.39, and other expense would have been higher by Rs 43.70. Profit for the current period would have been lower by Rs 9.35 (net of tax impact of Rs 4.96).
II. Accounting for Proposed Dividend
As per the requirements of pre-revised AS 4, the Company used to create a liability for dividend proposed/ declared after the balance sheet date if dividend related to periods covered by the financial statements. Going forward, as per AS 4(R), the company cannot create provision for dividend proposed/ declared after the balance sheet date unless a statute requires otherwise. Rather, company will need to disclose the same in notes to the financial statements. Accordingly, the company has disclosed dividend proposed by board of directors after the balance sheet date in the notes.
Had the Company continued with creation of provision for proposed dividend, its surplus in the statement of profit and loss account would have been lower by Rs 1,917.35 and current provision would have been higher by Rs 1,917.35 ( including dividend distribution tax of Rs 324.31).
2.2 Summary of significant accounting policies
a) Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
b) Property, Plant and Equipment
Property, plant and equipment, capital work in progress are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use and initial estimate of decommissioning, restoring and similar liabilities. Any trade discounts and rebates are deducted in arriving at the purchase price. Such cost includes the cost of replacing part of the plant and equipment. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
Items of stores and spares that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Otherwise, such items are classified as inventories.
Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
c) Depreciation
Leasehold land is amortized over the period of lease. Cost of leasehold improvements on property, plant and equipment are amortized over the period of lease or their useful lives, whichever is shorter.
Depreciation on property, plant and equipment is calculated on a straight-line basis using the rates arrived at, based on the useful lives estimated by the management. The Company identifies and determines cost of each component/part of the asset separately, if the Component/part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining components of the asset. These components are depreciated separately over their useful lives and the remaining components are depreciated over the useful life of the principle assets. The company has used the following rates to provide depreciation on its property, plant and equipment.
(1) The management has estimated, supported by independent assessment, the useful life of certain plant and machinery as 20 years, which is higher than those indicated in schedule II of the Companies Act 2013.
(2) The management has estimated, based on past experience, the useful life of these blocks of assets as lower than the life indicated for respective block of assets in schedule II of the Companies Act 2013.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Residual value of fixed assets is considered at 5%
Fixed assets of Research and Development (Pune-unit) are fully depreciated in the year of purchase.
Fixed assets individually costing up to Rs. 0.05 are depreciated at the rate of 100 percent.
d) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.
âIntangible assets are amortized on a straight line basis over the estimated useful economic life. The Company uses a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. Intangible assets are amortized over the following estimated useful life:
-Software: 5 years
-Copyrights: 5 years
e) Impairment
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
f) Borrowing costs
Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.
g) Leases
Where the Company is lessee
Leases, where the lessor effectively retains substantially all the rights and benefits of ownership of the leased item, are classified as operating leases. Operating leases payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
h) Government grants and subsidies
Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the company will comply with the conditions attached to them, and (ii) the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset.
Government grants of the nature of promoters'' contribution are credited to capital reserve and treated as a part of the shareholders'' funds.
i) Investments
Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
j) Inventories
Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis. Stores and spares which do not meet the definition of property, plant and equipment are accounted as inventories
Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
k) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:
1) Sales of goods
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.
2) Service income
Revenue from services is recognized on completion of services.
3) Interest income
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
4) Share of profit from LLP
Share of profit from LLP is recognized when the right to receive share of profit is established.
5) Export incentive
Export incentive are accrued in the period of underlying export sales in accordance with the terms of export benefits scheme, provided that there is no significant uncertainity regarding the entitlement of the credit and the amount thereof.
6) Cash discount
Cash discount represents the amount recovered from suppliers on payment of amounts due to them before the due date. Cash discount is recognized when the right to receive the same is established usually on early payment of dues.
l) Foreign exchange transactions
i) Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
ii) Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
iii) Exchange differences
Exchange differences arising on the settlement of monetary items or on retranslation of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses.
iv) Forward exchange contracts entered into hedge foreign currency risk of existing asset/liability
The premium or discount arising at the inception of forward contract is amortized and recognized as an expense/income over the life of the contract. Exchange differences on such contracts are recognized in statement of profit and loss in the period in which exchange rates change. Any profit or loss arising on cancellation or renewal of such forward contract is also recognized as income or expense for the period.
m) Retirement and other employee benefits
i) Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service.
ii) The Company operates three defined benefit plan for its employees i.e. gratuity, long service award and benevolent fund. The cost of providing benefits under these plans are determined and recognized on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gains and losses for both defined benefit plans are recognized in full in the period in which they occur in the statement of profit and loss.
iii) Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
n) Income taxes
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as âMAT Credit Entitlement.â The Company reviews the âMAT credit entitlementâ asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
o) Employee stock compensation cost
Employees (including senior executives) of the Company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions). In accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 2014 and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method and recognized. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognized in the statement of profit and loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.
p) Segment reporting
Identification of segments
The Company''s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the geographical location of the customers.
Segment accounting policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
q) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
r) Provisions
A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
Warranty Provision
Provision for warranty related costs are recognized when the product is sold. Provision is based on historical experience. The estimate of such warranty related costs are revised annually.
s) Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
t) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
u) Measurement of EBITDA
The Company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Company does not include depreciation and amortization expense, interest income, finance costs and tax expense
v) Derivative instruments and hedge accounting
The Company uses derivative financial instruments, such as, foreign currency forward contracts to hedge foreign currency risk arising from future transactions in respect of which firm commitments are made. It also uses interest rate swaps to hedge interest risk arising from variable rate loans. Derivative contracts, other than foreign currency forward contracts covered under AS11, are marked to market and the net gain or loss, is recognized as income or expenses to the statement of profit and loss.
Mar 31, 2016
1 Corporate information
Jamna Auto Industries Limited (hereinafter referred to as ''the Company'' or ''JAI'') is engaged in manufacturing and selling of
Tapered Leaf, Parabolic Springs and Lift Axles. The Company''s manufacturing facilities are located at Malanpur, Chennai, Yamuna
Nagar, Jamshedpur Hosur and Pillaipakkam.
2 Basis of preparation
The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP).
The Company has prepared there financial statements to comply in all material aspect of the Accounting Standard (AS) notifed by
Section 133 of the Companies Act 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial
statements have been prepared on an accrual basis and under historical cost convention. The accounting policies have been
consistently applied by the Company and are consistent with those used in the previous year.
2.1 Summary of significant accounting policies
a) Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent
liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current
events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material
adjustment to the carrying amounts of assets or liabilities in future periods.
b) Tangible fixed assets
Fixed Assets are stated at cost net of accumulated depreciation. The cost comprises purchase price, borrowing costs if
capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended
use. Any trade discounts and rebates are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from
the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets,
including day- to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of Profit and
loss for the year during which such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and
the carrying amount of the asset and are recognized in the statement of Profit and loss when the asset is derecognized.
If a component/part of an asset has a cost which is significant to the total cost of the asset and has useful life that is
materially different from that of the remaining component/part of the asset, the Company identifies and determines cost of such
component/ part of the asset separately.
c) Depreciation
Leasehold land is amortized over the period of lease. Cost of leasehold improvements on tangible fixed assets are amortized over
the period of lease or their useful lives, whichever is shorter.
Depreciation on other fixed assets is calculated on a straight line basis using rates arrived at based on the useful lives
estimated by the management. The Company has used following estimated useful life to provide depreciation on its fixed assets:
(1) The management has estimated, supported by independent assessment, the useful life of certain plant and machinery as 20
years, which is higher than those indicated in schedule II of the Companies Act 2013.
(2) The management has estimated, based on past experience, the useful life of these blocks of assets as lower than the life
indicated for respective block of assets in schedule II of the Companies Act 2013.
Fixed assets individually costing up to Rs. 0.05 are depreciated at the rate of 100 percent.
Residual value of fixed assets is considered at 5%.
Due to application of schedule II of the Companies Act 2013, the Company has changed manner of depreciation for its fixed assets.
Now the Company identifies and determines cost of each component/ part of the asset separately, if the Component/part has a cost
which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining
components of the asset. These components are depreciated separately over their useful lives and the remaining components are
depreciated over the useful life of the principle assets. The Company has not used transitional provision of schedule II to
adjust the impact of first time application of component accounting. The carrying value of identified components on the date of
component accounting coming into effect i.e. April 1, 2015 has been depreciated over remaining useful life of the respective
component.
d) intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible
assets are carried at cost less accumulated amortization. Internally generated intangible assets, excluding capitalized
development costs, are not capitalized and expenditure is reflected in the statement of Profit and loss in the year in which the
expenditure is incurred.
Intangible assets are amortized on a straight line basis over the estimated useful economic life. The Company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for
use. Intangible assets are mortised over the following estimated useful life:
- Software: 5 years
- Copyrights: 5 years.
e) impairment
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An
asset''s recoverable amount is the higher of an asset''s or cash-generating units (CGU) net selling price and its value in use. The
recoverable amount is determined for an individual asset, unless the asset does not generate cash infows that are largely
independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated
future cash fows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are
taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
f) Borrowing costs
Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset.
All other borrowing costs are expensed in the period they occur.
g) Leases
Where the Company is lessee Leases, where the less or effectively retains substantially all the rights and benefits of ownership
of the leased item, are classified as operating leases. Operating leases payments are recognized as an expense in the statement
of Profit and loss on a straight-line basis over the lease term.
h) investments
Investments, which are readily realizable and intended to be held for not more than one year from the date on which such
investments are made, are classified as current investments. All other investments are classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable
acquisition charges such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the
statement of Profit and loss.
i) inventories
Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written down below cost if the finished products in which they will
be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined
on a weighted average basis.
Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and
labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise
duty. Cost is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
estimated costs necessary to make the sale.
j) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will fow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is recognized:
1) Sales of goods
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to
the buyer, usually on delivery of the goods. The Company collects sales taxes and value added taxes (VAT) on behalf of the
government and, therefore, these are not economic benefits fowing to the Company. Hence, they are excluded from revenue. Excise
duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability
arising during the year.
2) Service income
Revenue from services is recognized on completion of services.
3) Interest income
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest
rate.
4) Share of Profit from LLP
Share of Profit from LLP is recognized when the right to receive share of Profit is established.
5) Export incentive
Export incentive are accrued in the period of underlying export sales in accordance with the terms of export benefits scheme,
provided that there is no significant uncertainty regarding the entitlement of the credit and the amount thereof.
6) Cash discount
Cash discount is represents the amount recovered from suppliers on payment of amounts due to them before the due date. Cash
discount is recognized when the right to receive the same is established usually on early payment of dues.
k) Foreign exchange transactions
i) initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign currency at the date of the transaction.
ii) Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items,
which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the
date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a
foreign currency, are translated using the exchange rate at the date when such value was determined.
iii) exchange differences
Exchange differences arising on the settlement of monetary items or on retranslation of monetary items at rates different from
those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as
income or as expenses.
(iv) Forward exchange contracts entered into hedge foreign currency risk of existing asset/liability
The premium or discount arising at the inception of forward contract is mortised and recognized as an expense/income over the
life of the contract. Exchange differences on such contracts are recognized in statement of Profit and loss in the period in
which exchange rates change. Any Profit or loss arising on cancellation or renewal of such forward contract is also recognized as
income or expense for the period.
l) Retirement and other employee benefits
i) Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than
contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an
expenditure, when an employee renders the related service.
ii) The Company operates two defined benefit plan for its employees i.e. gratuity and long service award. The cost of providing
benefits under these plans are determined and recognized on the basis of actuarial valuation at each year-end using the projected
unit credit method. Actuarial gains and losses for both defined benefit plans are recognized in full in the period in which they
occur in the statement of Profit and loss.
iii) Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit.
The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long- term employee benefit for
measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected
unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of Profit and loss and are not
deferred.
m) income taxes
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax
jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during
the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the
tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible
timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence
that they can be realized against future taxable Profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset
to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable
income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes- down the carrying amount of
deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is
reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future
taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets
against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same
taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement of Profit and loss as current tax. The Company recognizes
MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax
during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the
Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of
Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of Profit and
loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT credit entitlement" asset at each reporting date and
writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the
specified period.
n) Employee stock compensation cost
Employees (including senior executives) of the Company receive remuneration in the form of share based payment transactions,
whereby employees render services as consideration for equity instruments (equity-settled transactions).
In accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 2014 and the Guidance
Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic
value method and recognized. The cumulative expense recognized for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity
instruments that will ultimately vest. The expense or credit recognized in the statement of Profit and loss for a period
represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee
benefits expense.
o) Segment reporting
i) Identification of segments
The Company''s operating businesses are organized and managed separately according to the nature of products and services
provided, with each segment representing a strategic business unit that offers different products and serves different markets.
The analysis of geographical segments is based on the geographical location of the customers.
ii) Segment accounting policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the
financial statements of the Company as a whole.
p) earnings per share
Basic earnings per share are calculated by dividing the net Profit or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction
of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during
the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as
bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed
the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net Profit or loss for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive
potential equity shares.
q) Provisions
Provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outfow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount
of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required
to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to refect the
current best estimates.
Warranty Provision
Provision for warranty related costs are recognized when the product is sold. Provision is based on historical experience. The
estimate of such warranty related costs are revised annually.
r) Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not
recognized because it is not probable that an outfow of resources will be required to settle the obligation. A contingent
liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured
reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
s) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash fow statement comprise cash at bank and in hand and short-term investments
with an original maturity of three months or less.
t) Measurement of eBiTDA
The Company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item
on the face of the statement of Profit and loss. The Company measures EBITDA on the basis of Profit/ (loss) from continuing
operations. In its measurement, the Company does not include depreciation and amortization expense, interest income, finance
costs and tax expense.
u) Derivative instruments and hedge accounting
The Company uses derivative financial instruments, such as, foreign currency forward contracts to hedge foreign currency risk
arising from future transactions in respect of which firm commitments are made. It also uses interest rate swaps to hedge
interest risk arising from variable rate loans.
Derivative contracts, other than foreign currency forward contracts covered under AS11, are marked to market and the net loss,
after considering the offsetting effect of gain on underlying hedged item, if any, is charged to the statement of Profit and
loss. Net gain, if any, after considering the offsetting effect of loss on underlying hedged items is ignored.
Mar 31, 2015
1 Corporate information
Jamna Auto Industries Limited (hereinafter referred to as 'the Company'
or 'JAI') is a manufacturer of Tapered Leaf and Parabolic Springs. The
Company's manufacturing facilities are located at Malanpur, Chennai,
Yamuna Nagar, Jamshedpur and Hosur.
2 Basis of preparation
The financial statements have been prepared in accordance with generally
accepted accounting principles in India (Indian GAAP). The Company has
prepared there financial statements to comply in all material aspect of
the Accounting Standard (AS) notified by Section 133 of the Companies
Act 2013 read together with paragraph 7 of the Companies (Accounts)
Rules 2014. The accounting policies have been consistently applied by
the Company and are consistent with those used in the previous year
except for the change in accounting policy explained below. The
financial statements have been prepared on an accrual basis and under
historical cost convention.
a) Change in accounting policy
Depreciation on fixed assets
Till the year ended March 31, 2014, Schedule XIV to the Companies Act,
1956, prescribed requirements concerning depreciation of fixed assets.
From the current year, Schedule XIV has been replaced by Schedule II to
the Companies Act, 2013. The applicability of Schedule II has resulted
in the following changes related to depreciation of fixed assets.
Unless stated otherwise, the impact mentioned for the current year is
likely to hold good for future years also.
Till the year ended March 31, 2014, depreciation rates prescribed under
Schedule XIV were treated as minimum rates and the Company was not
allowed to charge depreciation at lower rates even if such lower rates
were justified by the estimated useful life of the asset. Schedule II to
the Companies Act 2013 prescribes useful lives for fixed assets which,
in many cases, are different from lives prescribed under the erstwhile
Schedule XIV. However, Schedule II allows companies to use higher/
lower useful lives and residual values if such useful lives and
residual values can be technically supported and justification for
difference is disclosed in the financial statements.
Considering the applicability of Schedule II, the management has
re-estimated useful lives and residual values of all its fixed assets
and accordingly as per the transitional provision given in Schedule
II of the Companies Act 2013, an amount of Rs. 284.62 (Net of tax
impact of Rs. 146.54) has been adjusted with opening reserve and
surplus. Further, had the Company continued using earlier estimated
useful life and residual value, current year profits before tax would
have been higher by Rs. 250.52. The management believes that new
depreciation rates reflect its estimate of the useful lives and residual
values of fixed assets, though these rates in certain cases are
different from lives prescribed under Schedule II.
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
c) Tangible fixed assets
Fixed Assets are stated at cost net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to its
book value only if it increases the future benefits from the existing
asset beyond its previously assessed standard of performance. All other
expenses on existing fixed assets, including day- to-day repair and
maintenance expenditure and cost of replacing parts, are charged to the
statement of profit and loss for the year during which such expenses are
incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of proof and
loss when the asset is derecognized..
d) Depreciation / amortization
Leasehold land and cost of leasehold improvements are amortized over
the period of lease or their useful lives, whichever is shorter.
Depreciation on other fixed assets is calculated on a straight line
basis using rates arrived at based on the useful lives estimated by the
management. The Company has used following estimated useful life to
provide depreciation on its fixed assets:.
(1) The management has estimated, supported by independent assessment,
the useful life of certain plant and machinery as 20 years, which is
higher than those indicated in schedule II of the Companies Act 2013.
(2) The management has estimated, based on past experience, the useful
life of these blocks of assets as lower than the life indicated for
respective block of assets in schedule II of the Companies Act 2013.
Fixed assets individually costing up to Rs. 0.05 are depreciated at the
rate of 100 percent.
Residual value of fixed assets is considered at 5%.
e) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization. Internally generated
intangible assets, excluding capitalized development costs, are not
capitalized and expenditure is rejected in the statement of profit and
loss in the year in which the expenditure is incurred.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life. The Company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use. Intangible
assets are amortized over the following estimated useful life:
- Software: 5 years
- Copyrights: 5 years.
f) Impairment
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment
testing for an asset is required, the Company estimates the asset's
recoverable amount. An asset's recoverable amount is the higher of an
asset's or cash-generating units (CGU) net selling price and its value
in use. The recoverable amount is determined for an individual asset,
unless the asset does not generate cash infows that are largely
independent of those from other assets or groups of assets. Where the
carrying amount of an asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable
amount. In assessing value in use, the estimated future cash fows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset. In determining net selling price, recent
market transactions are taken into account, if available. If no such
transactions can be identified, an appropriate valuation model is used.
g) Borrowing costs
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur..
h) Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss..
i) Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realizable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be
incorporated are expected to be sold at or above cost. Cost of raw
materials, components and stores and spares is determined on a weighted
average basis.
Work-in-progress and finished goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labour and a
proportion of manufacturing overheads based on normal operating
capacity. Cost of finished goods includes excise duty. Cost is
determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will fow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must also
be met before revenue is recognized:
i) Sales of goods
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. The Company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are
excluded from revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the year.
ii) Service income
Revenue from job work services is recognized on completion of services.
iii) Interest income
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
iv) Share of profit from LLP
Share of profit from LLP is recognized when the right to receive share
of profit is established.
k) Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as operating
lease. Operating lease charges are recognized as an expense in the
statement of profit and loss on a straight-line basis over the lease
term.
l) Foreign exchange transactions
i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
iii) Exchange differences
Exchange differences arising on the settlement of monetary items or on
retranslation of monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognized as income or as expenses.
m) Retirement and other employee benefits
i) Retirement benefit in the form of provident fund is a defend
contribution scheme. The Company has no obligation, other than
contribution payable to the provident fund. The Company recognizes
contribution payable to the provident fund scheme as an expenditure,
when an employee renders the related service.
ii) The Company operates two defend benefit plan for its employees i.e.
gratuity and long service award. The cost of providing benefits under
these plans are determined and recognized on the basis of actuarial
valuation at each year-end using the projected unit credit method.
Actuarial gains and losses for both defend benefit plans are recognized
in full in the period in which they occur in the statement of profit and
loss.
iii) Accumulated leaves, which are expected to be utilized within the
next 12 months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long- term employee benefit for measurement
purposes.
Such long-term compensated absences are provided
for based on the actuarial valuation using the projected unit credit
method at the year-end. Actuarial gains/losses are immediately taken to
the statement of profit and loss and are not deferred.
n) Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the Company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years.
Deferred tax is measured using the tax rates and the tax laws enacted
or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes- down the carrying amount of
deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient future
taxable income will be available against which deferred tax asset can
be realized. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes
relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to be
carried forward. In the year in which the Company recognizes MAT credit
as an asset in accordance with the Guidance Note on Accounting for
Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
o) Employee stock compensation cost
Employees (including senior executives) of the Company receive
remuneration in the form of share based payment transactions, whereby
employees render services as consideration for equity instruments
(equity-settled transactions).
In accordance with the SEBI (Share Based Employee Benefits) Regulations,
2014 and the Guidance Note on Accounting for Employee Share-based
Payments, the cost of equity-settled transactions is measured using the
intrinsic value method and recognized. The cumulative expense
recognized for equity-settled transactions at each reporting date until
the vesting date reflects the extent to which the vesting period has
expired and the Company's best estimate of the number of equity
instruments that will ultimately vest. The expense or credit
recognized in the statement of profit and loss for a period represents
the movement in cumulative expense recognized as at the beginning and
end of that period and is recognized in employee benefits expense.
p) Segment reporting
i) Identification of segments
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the geographical location of the customers.
ii) Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
q) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
proft or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
r) Provisions
A provision is recognized when the Company has a present obligation as
a result of past event, it is probable that an outfow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
s) Contingent liabilities
A contingent liability is a possible obligation that
arises from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain future events
beyond the control of the Company or a present obligation that is not
recognized because it is not probable that an outflow of resources will
be required to settle the obligation. A contingent liability also
arises in extremely rare cases where there is a liability that cannot
be recognized because it cannot be measured reliably. The Company does
not recognize a contingent liability but discloses its existence in the
financial statements.
t) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash fow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
u) Measurement of EBITDA
The Company has elected to present earnings before interest, tax,
depreciation and amortization (EBITDA) as a separate line item on the
face of the statement of profit and loss. The Company measures EBITDA on
the basis of profit/ (loss) from continuing operations. In its
measurement, the Company does not include depreciation and amortization
expense, finance costs, exceptional items, prior period items and tax
expense.
v) Derivative instruments and hedge accounting
The Company uses derivative financial instruments, such as, foreign
currency forward contracts to hedge foreign currency risk arising from
future transactions in respect of which form commitments are made. It
also uses interest rate swaps to hedge interest risk arising from
variable rate loans. Derivative contracts, other than foreign currency
forward contracts covered under AS11, are marked to market and the net
loan, after considering the offsetting effect of gain on underlying
hedged item, if any, is charged to the statement of profit and loss. Net
gain, if any, after considering the offsetting effect of loss on
underlying hedged items is ignored.
Mar 31, 2014
A) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b) Tangible fixed assets
Fixed Assets are stated at cost net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to its
booked value only if it increases the future benefits from the existing
asset beyond its previously assessed standard of performance. All other
expenses on existing fixed assets, including day-to-day repair and
maintenance expenditure and cost of replacing parts, are charged to the
statement of Profit and loss for the period during which such expenses
are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of Profit and
loss when the asset is derecognized.
c) Depreciation / amortisation
Leasehold land and cost of leasehold improvements are amortised over
the period of lease or their useful lives, whichever is shorter.
Depreciation on other fixed assets is calculated on a straight line
basis using rates arrived at based on the useful lives estimated by the
management which are same as under Schedule XIV to the Companies Act,
1956.
Fixed assets individually costing up to Rs. 0.05 are depreciated at the
rate of 100 percent.
d) Intangible fixed assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortisation. Internally generated
intangible assets, excluding capitalized development costs, are not
capitalized and expenditure is refected in the statement of Profit and
loss in the year in which the expenditure is incurred.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life. The Company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use.
e) Impairment
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the company
estimates the asset''s recoverable amount. An asset''s recoverable amount
is the higher of an asset''s or cash-generating unit''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that refects current market assessments of the time value
of money and the risks Specific to the asset. In determining net selling
price, recent market transactions are taken into account, if available.
If no such transactions can be identified, an appropriate valuation
model is used.
The company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
company''s cash- generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth
rate is calculated and applied to project future cash flows after the
ffth year.
f) Borrowing costs
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
g) Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classifed as current investments. All other investments are
classifed as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of Profit and loss.
h) Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realizable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the fnished products in which they will be incorporated are
expected to be sold at or above cost. Cost of raw materials, components
and stores and spares is determined on a weighted average basis.
Work-in-progress and fnished goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labour and a
proportion of manufacturing overheads based on normal operating
capacity. Cost of fnished goods includes excise duty. Cost is
determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
i) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will fow to the company and the revenue can be
reliably measured. The following Specific recognition criteria must also
be met before revenue is recognized:
1) Sales of goods
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. The company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic benefits fowing to the company. Hence, they are
excluded from revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the year.
2) Service income
Revenue from job work services is recognised on completion of services
to be rendered.
3) Interest income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
4) Share of Profit from LLP
Share of Profit from LLP is recognised when the right to receive share
of Profit is established.
j) Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classifed as operating
lease. Operating lease charges are recognised as an expense in the
statement of Profit and loss on a straight-line basis over the lease
term.
k) Foreign exchange transactions
i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
iii) Exchange differences
Exchange differences arising on the settlement of monetary items or on
retranslation of monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognised as income or as expenses.
l) Employee benefits
i) Retirement benefit in the form of provident fund is a Defined
contribution scheme. The Company has no obligation, other than
contribution payable to the provident fund. The Company recognizes
contribution payable to the provident fund scheme as an expenditure,
when an employee renders the related service.
ii) The Company operates one Defined benefit plan for its employees i.e.
gratuity. The cost of providing benefits under the plan are determined
and recognised on the basis of actuarial valuation at each year-end
using the projected unit credit method. Actuarial gains and losses for
both Defined benefit plans are recognized in full in the period in which
they occur in the statement of Profit and loss.
iii) Accumulated leave, which is expected to be utilized within the
next 12 months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year-end. Actuarial gains/ losses are immediately taken to the
statement of Profit and loss and are not deferred.
m) Income taxation
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes refect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years.
Deferred tax is measured using the tax rates and the tax laws enacted
or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
suffcient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
Profits.
At each reporting date, the company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that suffcient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The company writes- down the carrying amount of
deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that suffcient future
taxable income will be available against which deferred tax asset can
be realized. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that suffcient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes
relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of Profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to be
carried forward. In the year in which the company recognizes MAT credit
as an asset in accordance with the Guidance Note on Accounting for
Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of Profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
n) Employee stock compensation cost
Employees (including senior executives) of the company receive
remuneration in the form of share based payment transactions, whereby
employees render services as consideration for equity instruments
(equity-settled transactions).
In accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, the cost of
equity-settled transactions is measured using the intrinsic value
method and recognized, together with a corresponding increase in the
"Stock options outstanding account" in reserves. The cumulative expense
recognized for equity-settled transactions at each reporting date until
the vesting date refects the extent to which the vesting period has
expired and the company''s best estimate of the number of equity
instruments that will ultimately vest. The expense or credit recognized
in the statement of Profit and loss for a period represents the movement
in cumulative expense recognized as at the beginning and end of that
period and is recognized in employee benefits expense.
o) Segment reporting
Identifcation of segments
The Company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the geographical location of the customers.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
p) Earnings per share
Basic earnings per share are calculated by dividing the net Profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
Profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
q) Provisions
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to refect the current best estimates.
r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be required
to settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
financial statements.
s) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash fow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
t) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of Profit and loss. The company
measures EBITDA on the basis of Profit/ (loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, interest income, finance costs
and tax expense.
b. Term and Rights attached to equity shares
The Company has only one type of equity shares having par value of Rs.
10 (absolute amount) each per share. Each shareholder is entitled to
one vote per share. The Company pays and declares dividends in Indian
rupees. The dividend proposed, if any, by the Board of Directors is
subject to approval of shareholders in the ensuing Annual General
Meeting, except in case of interim dividend. The repayment of equity
share capital in the event of liquidation and buy back of shares are
possible subject to prevalent regulations. In the event of liquidation,
normally the equity shareholders are eligible to receive the remaining
assets of the Company after distribution of all preferential amounts,
in proportion to their shareholding. During the year ended March 31,
2014, the Company has declared final dividends of Rs. 1 (absolute
amount) (previous year Rs.2 (absolute amount)) per share.
c. Terms and rights of Preference shares including the terms of
conversion/redemption
The preference shares were issued to IFCI pursuant to the debt
restructuring scheme entered between erstwhile Jai Parabolic Springs
Limited and IFCI Limited. The Company declares and pays dividend in
Indian rupees. The dividend proposed by the Board of Directors is
subject to approval of the shareholders in the ensuing Annual General
Meeting. The preference share are redeemable in two instalments of Rs.
175 each, out of which frst instalment was redeemed during the year on
October 1, 2013 and second instalment is due for redemption on October
1, 2014.The preference shares are not entitled to any voting rights.
e. Shares reserved for issue under Options and contracts/commitments
for the sale of shares/ disinvestment, including the terms and amounts
The Company provides shares based payment schemes to its employees.
During the year ended March 31, 2014, an employee stock option scheme
was in existence and 324,785 stock options (Previous year: 621,500) can
be exercised by the employees as per their vesting and in accordance
with the terms of issue of stock option. Refer note on ESOP 39.
(a) Includes Rs. 150 representing 10% of the issued price of 2,083,333
convertible warrants as application money received towards the
subscription of such warrants by the promoters in erstwhile Jai
Parabolic Springs Limited. Such application money was forfeited in
accordance with SEBI guidelines on the expiry of 18 months from the
date of issue. It also includes Rs. 97 representing application money
received towards the subscription of 1,343,210 convertible warrants
allotted to MAP Auto Limited. Such application money was forfeited on
27 June 2007.
(b) The Board of Directors have recommended preference dividend
amounting to Rs. 32.81 relating to the year ended March 31, 2014
(Previous year: Rs. 43.75) in the Board meeting held on May 29, 2014.
The same is subject to approval of shareholders.
(c) The Company has declared a final dividend of Re. 1 (absolute amount)
(previous year Rs. 2 (absolute amount)) per equity share for the year,
subject to the approval of shareholders.
^ Represents reserves created on account of redemption of Preference
shares during the year.
Mar 31, 2013
1.1 Basis of preparation
The fnancial statements are prepared on accrual basis under the
historical cost convention, modifed to include revaluation of certain
assets, in accordance with applicable Accounting Standards (AS)
specifed in the Companies (Accounting Standards) Rules, 2006 and
presentational requirements of the Companies Act, 1956.
1.2 Use of estimates
The preparation of fnancial statements in conformity with generally
accepted accounting principles in India (GAAP) requires management to
make estimates and assumptions that afect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities on
the date of the fnancial statements and the result of operations during
the year. Diferences between actual results and estimates are
recognized in the year in which the results are known or materialized
examples of such estimates are estimated useful life of assets,
classifcation of assets/liabilities as current or non-current in
certain circumstances, provision for doubtful receivables and
retirement benefts, etc. Actual results could difer from those
estimates. Any revision to accounting estimates is recognized
prospectively in current and future periods.
1.3 Current-non-current classifcation
All assets and liabilities are classifed into current and non-current
Assets
An asset is classifed as current when it satisfes any of the following
criteria:
(a) it is expected to be realized in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realized within 12 months after the reporting
date; or
(d) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current fnancial
assets. All other assets are classifed as non-current.
Liabilities
A Liability is classifed as current when it satisfes any of the
following criteria;
(a) it is expected to be settled in the Company''s normal operating
cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date;
or
(d) the Company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option, of the counter
party, results in its settlement by the issue of equity instruments do
not afect its classifcation.
Current liabilities include current portion of non-current fnancial
liabilities All other liabilities are classifed as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents.
The Company''s normal operating cycle is 12 months.
1.4 Fixed assets
Fixed assets are stated at cost or at revalued amounts less accumulated
depreciation. Cost of fxed assets includes all incidental expenses and
interest costs on borrowings, attributable to the acquisition of
qualifying assets, upto the date of commissioning of assets.
Foreign currency exchange diferences to the extent covered under AS-11
are capitalized as per the policy stated in note 2.12 below.
1.5 Depreciation / amortization
Tangible
Leasehold land and cost of leasehold improvements are amortized over
the period of lease or their useful lives, whichever is shorter.
Depreciation on other fxed assets is provided using the straight line
method at the rates prescribed under Schedule XIV to the Companies Act,
1956.
Fixed assets individually costing up to Rupees fve thousand are
depreciated at the rate of 100%.
Intangible
Intangible assets are being depreciated over a period of fve year.
1.6 Impairment
The carrying amounts of the Company''s assets are reviewed at each
Balance Sheet date to determine whether there is any indication of
impairment. If any such indication exists, the asset''s recoverable
amount is estimated as higher of its net selling price and value in
use. An impairment loss is recognized whenever the carrying amount of
an asset or its cash generating unit exceeds its recoverable amount.
Impairment losses are recognized in the Statement of Proft and Loss. An
impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset''s carrying amount does not
exceed the carrying amount that would have been determined net of
depreciation or amortization, had no impairment loss been recognized.
1.7 Borrowing costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets to the extent that they relate to the period till such
assets are ready to be put to use. 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 Statement of
Proft and Loss.
1.8 Investments
Current investments are carried at the lower of cost and fair value.
Long-term investments are carried at cost less diminution, other than
temporary in value.
1.9 Inventories
Stores and spares parts are valued at cost or under, computed on
weighted average basis. Raw materials, work in progress and fnished
goods are valued at the lower of cost and net realisable value. Cost
includes purchase price, taxes (excluding those subsequently
recoverable by the enterprise from the concerned revenue authorities),
freight inwards and other expenditure incurred in bringing such
inventories to their present location and condition. Finished goods and
work in progress include material cost and appropriate portion of
manufacturing and other overheads. Cost is ascertained on a weighted
average basis.
1.10 Revenue recognition
a) Sales of goods
Revenue from sale of products is recognized when the products are
delivered against orders from customers in accordance with the contract
terms, which coincides with the transfer of risks and rewards. Sales
are stated inclusive of excise duty and net of rebates, trade
discounts, sales tax and sales returns.
b) Dividend/Share of Proft from LLP
Dividend/Share of proft from LLP from investments is recognized when
the right to receive dividend/share of proft is established.
c) Interest income
Interest income is recognized using the time-proportion method, based
on interest rates implicit in the transaction.
d) Service income
Revenue from jobwork services is recognized on completion of services
to be rendered.
1.11 Operating leases
Leases where the lessor efectively retains substantially all the risks
and benefts of ownership of the leased asset are classifed as operating
lease. Operating lease charges are recognized as an expense in the
Statement of Proft and Loss on a straight-line basis over the lease
term.
1.12 Foreign exchange transactions and forward contracts
Foreign exchange transactions
i) Foreign currency transactions are accounted for at the exchange rate
prevailing on the date of the transaction. All monetary foreign
currency assets and liabilities are converted at the exchange rates
prevailing at the date of the Balance Sheet. All exchange diferences
other than in relation to acquisition of fxed assets and other long
term foreign currency monetary liabilities are dealt with in the
Statement of Proft and Loss.
ii) In accordance with Accounting Standard 11, "Accounting for the
efects of changes in foreign exchange rates", exchange diferences
arising in respect of long term foreign currency monetary items used
for acquisition of depreciable capital asset, are added to or deducted
from the cost of asset and are depreciated over the balance life of
asset.
iii) In case of foreign exchange forward contracts taken for underlying
transactions, and covered by Accounting Standard 11, "Accounting for
the efects of changes in foreign exchange rates", the premium or
discount is amortized as income or expense over the life of the
contract. The exchange diference is calculated as the diference between
the foreign currency amount of the contract translated at the exchange
rate at the reporting date, or the settlement date where the
transaction is settled during the reporting period, and the
corresponding foreign currency amount translated at the later of the
date of inception of the forward exchange contract and the last
reporting date. Such exchange diferences are recognized in the
Statement of Proft and Loss in the reporting period in which the
exchange rates change. Any proft or loss arising on the cancellation or
renewal of such contracts is recognized as income or expense for the
year.
1.13 Employee benefts
a) Short-term employee benefts
All employee benefts payable wholly within twelve months of rendering
the service are classifed as short term employee benefts. Benefts such
as salaries, wages and bonus, etc., are recognized in the Statement of
Proft and Loss in the period in which the employee renders the related
service.
b) Post employment beneft
Defned contribution plan : The Company deposits the contributions for
provident fund to the appropriate government authorities and these
contributions are recognized in the Statement of Proft and Loss in the
fnancial year to which they relate.
Defned beneft plan : The Company''s gratuity scheme is a defned beneft
plan. The present value of the obligation under such defned beneft plan
is determined based on an actuarial valuation carried out by an
independent actuary, using the Projected Unit Credit Method, which
recognizes each period of service as giving rise to additional unit of
employee beneft entitlement and measures each unit separately to build
up the fnal obligation. The obligation is measured at the present value
of the estimated future cash fows. The discount rates used for
determining the present value of the obligation under defned beneft
plans, is based on the market yields on Government securities as at the
Balance Sheet date. Actuarial gains and losses are recognized
immediately in the Statement of Proft and Loss.
c) Other long-term employee benefts
Entitlements to annual leave are recognized when they accrue to
employees. Leave entitlements can be availed while in service or
en-cashed at the time of retirement/ termination of employment, subject
to a restriction on the maximum number of accumulation. The Company
determines the liability for such accumulated leave entitlements on the
basis of an actuarial valuation carried out by an independent actuary
at the year end.
1.14 Taxation
Income tax expense comprises current tax, deferred tax charge or
credit. Current tax provision is made based on the tax liability
computed after considering tax allowances and exemptions under the
Income tax Act, 1961.
The deferred tax charge or credit and the corresponding deferred tax
liability and assets are recognized using the tax rates that have been
enacted or substantively enacted by the Balance Sheet date. Deferred
tax assets are recognized only to the extent where there is reasonable
certainty that the assets can be realized in future; however, where
there is unabsorbed depreciation or carried forward business loss under
taxation laws, deferred tax assets are recognized only if there is a
virtual certainty of realization of such assets. Deferred tax assets
are reviewed at each Balance Sheet date to reassess their
realisability.
In accordance with the provisions of Section 115 JAA of the Income-tax
Act, 1961, the Company is allowed to avail credit equal to the excess
of Minimum Alternate Tax (MAT) over normal income tax for the
assessment year for which MAT is paid. MAT credit so determined can be
carried forward for set-of for ten succeeding assessment years from the
year in which such credit becomes allowable. MAT credit can be set-of
only in the year in which the Company is liable to pay tax as per the
normal provisions of the Income-tax Act, 1961 and such tax is in excess
of MAT for that year. Accordingly, MAT credit entitlement is recognized
only to the extent there is convincing evidence that the Company will
pay normal tax during the specifed period.
1.15 Earnings per share
Basic earnings per share are calculated by dividing the net proft or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. For the
purpose of calculating diluted earnings per share, the net proft or
loss for the year attributable to equity shareholders and the weighted
average number of shares outstanding during the year are adjusted for
the efects of all dilutive potential equity shares.
1.16 Provisions and contingent liabilities
The Company recognizes a provision when there is a present obligation
as a result of a past event and it is more likely than not that there
will be a outfow of resources embodying economic benefts to settle such
obligations and the amount of such obligation can be reliably
estimated. Provisions are not discounted to their present value and are
determined based on the management''s estimation of the outfow required
to settle the obligation at the Balance Sheet date. These are reviewed
at each Balance Sheet date and adjusted to refect current management
estimates. Contingent liabilities are disclosed in respect of possible
obligations that have arisen from past events and the existence of
which will be confrmed only by the occurrence or non-occurrence of
future events, not wholly within the control of the Company. When there
is an obligation in respect of which the likelihood of outfow of
resources is remote, no provision or disclosure is made.
1.17 Cash and cash equivalent
Cash and cash equivalents comprise cash at bank and in hand and fxed
deposits with banks with an original maturity of three months or less.
Mar 31, 2012
1.1 Basis of preparation
The financial statements are prepared on accrual basis under the
historical cost convention, modified to include revaluation of certain
assets, in accordance with applicable Accounting Standards (AS)
specified in the Companies (Accounting Standards) Rules, 2006 and
presentational requirements of the Companies Act, 1956. All assets and
liabilities have been classified as current or non-current as per the
Company's normal operating cycle and other criteria set out in the
revised Schedule VI to the Companies Act, 1956. Based on the nature of
products and the time between the acquisition of assets for processing
and their realisation in cash and cash equivalents, the Company has
ascertained its operating cycle being a period within 12 months for the
purposes of classification of assets and liabilities as current and
non-current.
1.2 Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities on
the date of the financial statements and the result of operations
during the year. Differences between actual results and estimates are
recognised in the year in which the results are known or materialised.
Examples of such estimates are estimated useful life of assets,
classification of assets/liabilities as current or non-current in
certain circumstances, provision for doubtful receivables and
retirement benefits, etc. Actual results could differ from those
estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.
1.3 Fixed assets
Fixed Assets are stated at cost or at revalued amounts less accumulated
depreciation. Cost of fixed assets includes all incidental expenses and
interest costs on borrowings, attributable to the acquisition of
qualifying assets, upto the date of commissioning of assets.
Foreign currency exchange differences to the extent covered under AS-11
are capitalised as per the policy stated in note 2.11 below.
1.4 Depreciation / amortisation
Leasehold land and cost of leasehold improvements are amortised over
the period of lease or their useful lives, whichever is shorter.
Depreciation on other fixed assets is provided using the straight line
method at the rates prescribed under Schedule XIV to the Companies Act,
1956.
Fixed assets individually costing up to rupees five thousand are
depreciated at the rate of 100 percent.
1.5 Impairment
The carrying amounts of the Company's assets are reviewed at each
Balance Sheet date to determine whether there is any indication of
impairment. If any such indication exists, the asset's recoverable
amount is estimated as higher of its net selling price and value in
use. An impairment loss is recognised whenever the carrying amount of
an asset or its cash generating unit exceeds its recoverable amount.
Impairment losses are recognised in the Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset's carrying amount does
not exceed the carrying amount that would have been determined net of
depreciation or amortisation, had no impairment loss been recognised.
1.6 Borrowing costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets to the extent that they relate to the period till such
assets are ready to be put to use. 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 Statement of
Profit and Loss.
1.7 Investments
Current investments are carried at the lower of cost and fair value.
Long-term investments are carried at cost less diminution, other than
temporary in value.
1.8 Inventories
Stores and spares parts are valued at cost or under, computed on
weighted average basis Raw materials, work in progress and finished
goods are valued at the lower of cost and net realisable value.
Finished goods and work in progress include material cost and
appropriate portion of manufacturing and other overheads. Cost is
ascertained on a weighted average basis.
1.9 Revenue recognition
a) Sales of goods
Revenue from sale of products is recognised when the products are
delivered against orders from customers in accordance with the contract
terms, which coincides with the transfer of risks and rewards. Sales
are stated inclusive of excise duty and net of rebates, trade
discounts, sales tax and sales returns.
b) Dividend/Share of Profit from LLP
Dividend/Share of profit from LLP from investments is recognised when
the right to receive dividend/share of profit is established.
c) Interest income
Interest income is recognised using the time-proportion method, based
on interest rates implicit in the transaction.
d) Service income
Revenue from jobwork services is recognised on completion of services
to be rendered.
1.10 Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating lease. Operating lease charges are recognised as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
1.11 Foreign exc8ange transactions and forward contracts
Foreign exchange transactions
i) Foreign currency transactions are accounted for at the exchange rate
prevailing on the date of the transaction. All monetary foreign
currency assets and liabilities are converted at the exchange rates
prevailing at the date of the balance sheet. All exchange differences
other than in relation to acquisition of fixed assets and other long
term foreign currency monetary liabilities are dealt with in the
Statement of Profit and Loss.
ii) In accordance with Accounting Standard 11, "Accounting for the
effects of changes in foreign exchange rates", exchange differences
arising in respect of long term foreign currency monetary items used
for acquisition of depreciable capital asset, are added to or deducted
from the cost of asset and are depreciated over the balance life of
asset.
iii) In case of foreign exchange forward contracts taken for underlying
transactions, and covered by Accounting Standard 11, "Accounting for
the effects of changes in foreign exchange rates", the premium or
discount is amortised as income or expense over the life of the
contract. The exchange difference is calculated as the difference
between the foreign currency amount of the contract translated at the
exchange rate at the reporting date, or the settlement date where the
transaction is settled during the reporting period, and the
corresponding foreign currency amount translated at the later of the
date of inception of the forward exchange contract and the last
reporting date. Such exchange differences are recognised in the
Statement of Profit and Loss in the reporting period in which the
exchange rates change. Any profit or loss arising on the cancellation
or renewal of such contracts is recognised as income or expense for the
year.
1.12 Employee benefits
a) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages and bonus, etc., are recognised in the
Statement of Profit and Loss in the period in which the employee
renders the related service.
b) Post employment benefit
Defined contribution plan : The Company deposits the contributions for
provident fund to the appropriate government authorities and these
contributions are recognised in the Statement of Profit and Loss in the
financial year to which they relate. Defined benefit plan : The
Company's gratuity scheme is a defined benefit plan. The present
value of the obligation under such defined benefit plan is determined
based on actuarial valuation carried out by an independent actuary,
using the Projected unit Credit Method, which recognises each period of
service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation. The obligation is measured at the present value of the
estimated future cash flows. The discount rates used for determining
the present value of the obligation under defined benefit plans, is
based on the market yields on Government securities as at the balance
sheet date. Actuarial gains and losses are recognised immediately in
the Statement of Profit and Loss.
c) Other long-term employee benefits
Entitlements to annual leave are recognised when they accrue to
employees. Leave entitlements can be availed while in service or
en-cashed at the time of retirement/ termination of employment, subject
to a restriction on the maximum number of accumulation. The Company
determines the liability for such accumulated leave entitlements on the
basis of actuarial valuation carried out by an independent actuary at
the year end.
1.13 Taxation
Income tax expense comprises current tax, deferred tax charge or
credit. Current tax provision is made based on the tax liability
computed after considering tax allowances and exemptions under the
Income tax Act, 1961. The deferred tax charge or credit and the
corresponding deferred tax liability and assets are recognised using
the tax rates that have been enacted or substantively enacted on the
balance sheet date. Deferred tax assets are recognised only to the
extent where there is reasonable certainty that the assets can be
realised in future; however, where there is unabsorbed depreciation or
carried forward business loss under taxation laws, deferred tax assets
are recognised only if there is a virtual certainty of realisation of
such assets. Deferred tax assets are reviewed at each balance sheet
date to reassess their realisability In accordance with the provisions
of Section 115JAA of the Income-tax Act, 1961, the Company is allowed
to avail credit equal to the excess of Minimum Alternate Tax (MAT) over
normal income tax for the assessment year for which MAT is paid. MAT
credit so determined can be carried forward for set-off for ten
succeeding assessment years from the year in which such credit becomes
allowable. MAT credit can be set-off only in the year in which the
Company is liable to pay tax as per the normal provisions of the
Income-tax Act, 1961 and such tax is in excess of MAT for that year.
Accordingly, MAT credit entitlement is recognised only to the extent
there is convincing evidence that the Company will pay normal tax
during the specified period.
1.14 Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. For the
purpose of calculating diluted earnings per share, the net profit or
loss for the year attributable to equity shareholders and the weighted
average number of shares outstanding during the year are adjusted for
the effects of all dilutive potential equity shares.
1.15 Provisions and contingent liabilities
The Company recognises a provision when there is a present obligation
as a result of a past event and it is more likely than not that there
will be a outflow of resources embodying economic benefits to settle
such obligations and the amount of such obligation can be reliably
estimated. Provisions are not discounted to their present value and are
determined based on the management's estimation of the outflow
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect current
management estimates. Contingent liabilities are disclosed in respect
of possible obligations that have arisen from past events and the
existence of which will be confirmed only by the occurrence or
non-occurrence of future events, not wholly within the control of the
Company. When there is an obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2011
A. Basis of Accounting
The financial statements are prepared under the historical cost
convention in accordance with applicable mandatory accounting standards
and presentation requirements of the Companies Act, 1956. Accounting
policies not specifically referred to otherwise are consistent with
generally accepted accounting principles are followed by the company.
b. Fixed Assets
Fixed assets are stated at cost less accumulated depreciation. Cost of
acquisition or construction is inclusive of freight and taxes. The
capital expenditure is inclusive of direct expenses and proportionate
indirect expenses attributable to the project and is inclusive of
modification expenditure of plant and machinery. The expenses have been
capitalised proportionately till the date of installation of plant and
machinery and capital work in progress. Capital work in progress
includes advances for capital equipments.
c. Depreciation
Depreciation is provided on straight line method at the applicable
rates prescribed in Schedule XIV of the Companies Act, 1956. Except for
items for which 100% depreciation rates are applicable, depreciation on
assets added/disposed off during the year is provided on pro rata basis
with reference to the date of addition/disposal.
d. Borrowing Cost
Borrowing cost attributable to acquisition, construction or production
of qualifying assets (assets which require substantial period of time
to get ready for its intended use) are capitalised as part of the cost
of such assets. All other borrowing costs are charged to the revenue.
e. Investments
All Investments are considered as long term and are stated at cost.
Provision for permanent diminution in value, in the perceptions of the
Management, will only be considered at the appropriate time.
f. Inventories
Inventories are valued as under:
a) Raw Material At Weighted Average Cost
(Including stores & components)
b) Finished Goods
Valued at cost inclusive of manufacturing and other overhead or at
realisable value whichever is lower.
c) Work in Progress
Valued at cost inclusive of manufacturing and other overhead or at
realisable value whichever is lower.
d) Scrap
At Realisable Value
g. Foreign Currency Transaction
Foreign currency transactions are converted into Indian rupees at the
rate of exchange prevailing on the date of the transaction. All
exchange differences in respect of the foreign currency transactions
are dealt with in the Profit & Loss Account. All foreign currency
assets and liabilities, if any, as at the Balance Sheet date are
restated at the applicable exchange rates prevailing at that date and
difference is dealt with the Profit & Loss Account. All liabilities in
foreign currency, for which forward cover has been taken, have been
stated at the forward value i.e. the value at which the liability will
be settled in future.
h. Employees Retirement Benefits
Contribution made towards Provident Fund (under the Employees Provident
Fund and Miscellaneous Provisions Act, 1952) is charged to the Profit &
Loss Account.
Gratuity Liability is charged to the Profit & Loss Account on the basis
of actuarial valuation carried out by an approved Actuary as on 31st
March of each Accounting Year.
Provision is made in Accounts for unutilized leaves due to the
employees at the year end as per the leave encashment policy of the
company.
i. Excise Duty
Excise Duty is accounted for when paid on the clearance of goods from
bonded premises but is accounted for on accrual basis. Accordingly,
provision for excise duty is made in the accounts for goods
manufactured and lying in the bonded warehouse within the factory.
j. Revenue Recognition
Sale of goods is recognised at the point of dispatch of fnished goods
to the customers. All expenses and revenue are accounted for on accrual
basis .All export benefits are accounted for on accrual basis. Sale is
accounted for net of returns. Returns are accounted for on receipt of
the rejected material. Services include excise duty. Price escalation
claims from customers and discounts from suppliers are accounted for in
the year under audit only. Leave Travel Assistance to employees are
accounted on payment basis.
k. Lease
i) Finance Lease
Finance lease, which effectively transfer substantially all the risks
and benefits incidental to ownership of the leased assets to the
company are capitalized at the fair market value. Lease payments are
apportioned between the finance charges and reduction of lease
liabilities so as to reflect a constant rate of interest on the
remaining balance of the liability. Finance charges are charged to the
Profit & Loss Account.
ii) Operating Lease
Operating lease payments are recognized as an expense in the Profit &
Loss Account.
l. Research & Development
Expenditures of capital nature are debited to the respective Fixed
Assets and depreciation at applicable rate and revenue expenditures are
charged to Profit & Loss Account.
m. Miscellaneous Expenditure
The cost of development of new samples and other Deferred Revenue
Expenditures are amortised over a period of five years.
Upto 31 March 2010, revenue expenses incurred on sample development
were recognized as deferred revenue expenses which were written off in
5 equal yearly instalments (On pro-rata basis). However with effect
from 1 April 2010, the policy has been reviewed and revenue expenditure
on sample development incurred during the year has been charged to
Profit & Loss Account.
The amount of deferred revenue expenditure recognized on account of
Present Value of Interest differential due to
resetting of interest rates in terms of restructuring package approved
by IFCI Limited shall be written off and charged to Profit & Loss
Account to the extent of 6.25% p.a., as the same shall be amortized
over a period of 16 years i.e. the total number of years stipulated by
IFCI Limited for payment of Present Value of interest differential.
n. Taxation
i) Provision for current tax is made in accordance with and at the
rates specified under the Income Tax Act, 1961 as amended.
ii) In accordance with Accounting Standard 22 - 'Accounting for taxes
on Income', issued by the Institute of Chartered Accountants of India,
the deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and law that
have been enacted or substantively enacted as on the Balance Sheet
date.
Deferred tax assets arising from the timing differences are recognized
to the extent there is virtual certainty that the assets can be
realized in future.
Net outstanding balance in deferred tax account is recognized as
deferred tax liability/asset. The deferred tax account is used solely
for reversing timing difference as and when crystallized.
o. Impairment of Assets
The carrying amount of assets, other than inventories, is reviewed at
each Balance Sheet date to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount of
the asset is estimated.
An impairment loss is recognized whenever the carrying amount of an
asset or its cash generating units exceeds its recoverable amount. The
recoverable amount is greater of the assets net selling price and the
value in use which is determined based on the estimated future cash
flow discounted to their present values. All impairment losses are
recognized in compliance with Accounting Standard- 28.
An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount and recognized in
compliance with Accounting Standard-28.
p Intangible Assets (Goodwill & Software)
Acquisition cost of Goodwill and Software is being amortised over a
period of five years.
q. Expansion Project Expenses
All items of direct expenditures in relation to the expansion project
being implemented by the company are treated as preoperative
expenditure pending capitalization. Such expenditures are capitalized
to various assets in the year of the commencement of the production of
the expansion project. Depreciation on assets put to use for expansion
as also on capitalized assets is charged in the year of commencement of
commercial production.
Mar 31, 2010
(A) BASIS OF ACCOUNTING:
The financial statements are prepared under the historical cost
convention in accordance with applicable mandatory accounting standards
and presentation requirements of the Companies Act, 1956. Accounting
policies not specifically referred to otherwise are consistent with
generally accepted accounting principles are followed by the company.
(B) FIXED ASSETS:
Fixed assets are stated at cost less accumulated depreciation. Cost of
acquisition or construction is inclusive of freight and taxes. The
capital expenditure is inclusive of direct expenses and proportionate
indirect expenses attributable to the project and is inclusive of
modification expenditure of plant and machinery. The expenses have been
capitalised proportionately till the date of installation of plant and
machinery and capital work in progress. Capital work in progress
includes advances for capital equipments.
(C) DEPRECIATION:
Depreciation is provided on straight line method at the applicable
rates prescribed in Schedule XIV of the Companies Act, 1956. Except for
items for which 100% depreciation rates are applicable, depreciation on
assets added/disposed of during the year is provided on pro rate basis
with reference to the date of addition/disposal.
(D) BORROWING COST:
Borrowing cost attributable to acquisition, construction or production
of qualifying assets (assets which require substantial period of time
to get ready for its intended use) are capitalised as part of the cost
of such assets. All other borrowing costs are charged to the revenue.
(E) INVESTMENTS:
All Investments are considered as long term and are stated at cost.
Provision for permanent diminution in value, in the perceptions of the
Management, will only be considered at the appropriate time.
(F) INVENTORIES:
Inventories are valued as under:
a) Raw Material : At Weighted Average Cost
(Including stores&components)
b) Finished Goods
Valued at cost inclusive of manufacturing and other overhead or at
realisable value whichever is lower.
c) Work in Progress
: Valued at cost inclusive of manufacturing and other overhead or at
realisable value whichever is lower.
d) Scrap
: At Realisable Value
(G) FOREIGN CURRENCY TRANSACTION:
Foreign currency transactions are converted into Indian rupees at the
rate of exchange prevailing on the date of the transaction. All
exchange differences in respect of the foreign currency transactions
are dealt with in the Profit & Loss Account. All foreign currency
assets and liabilities, if any, as at the Balance Sheet date are
restated at the applicable exchange rates prevailing at that date and
difference is dealt with the Profit & Loss Account. All liabilities in
foreign currency, for which forward cover has been taken, have been
stated at the forward value i.e. the value at which the liability will
be settled in future.
(H) EMPLOYEES RETIREMENT BENEFITS:
Contribution made towards Provident Fund (under the Employees Provident
Fund and Miscellaneous Provisions Act, 1952) is charged to the Profit &
Loss Account.
Gratuity Liability is charged to the Profit & Loss Account on the basis
of actuarial valuation carried out by an approved Actuary as on 1st
March of each Accounting Year.
Provision is made in Accounts for unutilized leaves due to the
employees at the year end as per the leave encashment policy of the
company.
(I) EXCISE DUTY:
Excise Duty is accounted for when paid on the clearance of goods from
bonded premises but is accounted for on accrual basis. Accordingly,
provision for excise duty is made in the accounts for goods
manufactured and lying in the bonded warehouse within the factory.
(J) REVENUE RECOGNITION:
Sale of Goods is recognised at the point of dispatch of finished goods
to the customers. All expenses and revenue are accounted for on accrual
basis. All export benefits are accounted for on accrual basis. Sale is
accounted for net of returns. Returns are accounted for on receipt of
the rejected material. Services include excise duty. Price escalation
claims from customers and discounts from suppliers are accounted for in
the year under audit only. Leave Travel Assistance to employees are
accounted on payment basis.
(K) LEASE:
a) Finance Lease:
Finance lease, which effectively transfer substantially all the risks
and benefits incidental to ownership of the leased assets to the
company are capitalized at the fair market value. Lease payments are
apportioned between the finance charges and reduction of lease
liabilities so as to reflect a constant rate of interest on the
remaining balance of the liability. Finance charges are charged to the
Profit & Loss account.
b) Operating Lease:
Operating lease payments are recognized as an expense in the Profit &
Loss account.
(L) RESEARCH & DEVELOPMENT:
Expenditures of capital nature are debited to the respective Fixed
Assets and depreciation at applicable rate and revenue expenditures are
charged to the Profit & Loss Account.
(M) MISCELLANEOUS EXPENDITURE:
The cost of development of new samples and other Deferred Revenue
Expenditures are amortised over a period of five years.
The amount of deferred revenue expenditure recognized on account of
Present Value of Interest differential due to resetting of interest
rates in terms of restructuring package approved by IFCI Limited shall
be written off and charged to the Profit & Loss account to the extent
of 6.25% p.a., as the same shall be amortized over a period of 16 years
i.e. the total number of years stipulated by IFCI Limited for payment
of Present Value of interest differential.
(N) TAXATION:
i) Provision for current tax is made in accordance with and at the
rates specified under the Income Tax Act, 1961 as amended.
ii) In accordance with Accounting Standard 22 - Accounting for taxes
on Income, issued by the Institute of Chartered Accountants of India,
the deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and law that
have been enacted or substantively enacted as on the balance sheet
date.
Deferred tax assets arising from the timing differences are recognized
to the extent there is virtual certainty that the assets can be
realized in future.
Net outstanding balance in deferred tax account is recognized as
deferred tax liability/asset. The deferred tax account is used solely
for reversing timing difference as and when crystallized.
(O) IMPAIRMENT OF ASSETS
The carrying amount of assets, other than inventories, is reviewed at
each Balance Sheet date to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount of
the asset is estimated.
An impairment loss is recognized whenever the carrying of an asset or
its cash generating units exceeds its recoverable amount. The
recoverable amount is greater of the assets net selling price and the
value in use which is determined based on the estimated future cash
flow discounted to their present values. All impairment losses are
recognized in compliance with Accounting Standard-28.
An impairment loss is reversed if there has been a charge in the
estimates used to determine the recoverable amount and recognized in
compliance with Accounting Standard-28.
(P) INENGIBLE ASSETS (GOODWILL/SOFTWARE)
Acquisition cost of Goodwill and software is being amortised over a
period of five years.
(Q) EXPANSION PROJECT EXPENSES
All items of direct expenditures in relation to the expansion project
being implemented by the company are treated as preoperative
expenditure pending capitalization. Such expenditures are capitalized
to various assets in the year of the commencement of the production of
the expansion project. Depreciation on assets put to use for expansion
as also on capitalized assets is charged in the year of commencement of
commercial production.