Accounting Policies of JK Lakshmi Cement Ltd. Company
Mar 31, 2023
I. Corporate & General Information
JK Lakshmi Cement Limited ("the Company'''') is domiciled and incorporated in India and its Shares are publicly traded on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Registered Office of the Company is situated at Jaykaypuram, Basantgarh, Distt. :Sirohi- 307 019, Rajasthan.
The Company is a leading manufacturer and supplier of Cement and Cementitious products like RMC & AAC Blocks with manufacturing facilities in the State of Rajasthan, Chattisgarh, Gujarat, Haryana, Uttar Pradesh and Odisha. The Company began its journey in 1982 by setting-up a Cement Plant with a modest Capacity of 0.50 Million Tonnes at Sirohi in the State of Rajasthan. Over the years, the Cement capacity has grown to the present level of 11.70 Million Tonnes. The Company is the first Cement Manufacturer in North India to introduce coloured bags and registered as ISO 9200. The Company''s Technical Service Cell provides construction solutions to its customers & carries out regular & innovative contact programmes with Individual House Builders, Masons and other Business Associates to keep in tune with their needs and requirements.
These Financial Statements were approved and adopted by the Board of Directors of the Company in their meeting held on May 19, 2023.
II. Basis of Preparation of Financial Statements
(i) Statement of Compliance
The Financial Statements have been prepared in accordance with Indian Accounting Standards (IND AS) as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 as amended time to time and relevant provisions of the Companies Act, 2013 and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III). The Financial Statements comply with IND AS notified by Ministry of Company Affairs ("MCA"). The Company has consistently applied all the accounting policies and applicable Ind AS used in the preparation for all periods presented.
(ii) Basis of Preparation
The significant accounting policies used in preparing the Financial Statements are set out in Note no. III of the Notes to the Standalone Financial Statements. Company''s Financial Statements are presented in Indian Rupees (''), which is also its functional currency.
(iii) Basis of Measurement
The Financial Statements have been prepared on accrual basis and under the historical cost convention except for the items that have been measured at fair value as required by relevant IND AS.
(iv) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (As per Ind AS 113) and other Fair Value measurement have been done as per its respective standards.
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 in to 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.
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 in which they fall.
(v) Current & Non-Current Classifications
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
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 terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
All other assets/ liabilities are classified 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
(vi) Significant Accounting Judgements, Estimates and Assumptions
The preparation of these Financial Statements requires management judgements, estimates and assumptions that affect the application of Accounting Policies, the Accounting disclosures made and the reports amounts of Assets, Liabilities, Income and Expenses. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to Accounting estimates are recognised in the period in which the estimates are revised and any future periods effected pursuant to such revision.
III. Significant Accounting Policies
(1) Property, Plant and Equipment
Property, Plant and Equipment (PPE) are stated at cost net of tax/duty credit availed, less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenses directly attributable to bringing the Asset to their location and conditions necessary for it to be capable of operating in the manner intended by the management. Subsequent cost are included in the asset''s carrying amount or recognized as separate asset, as appropriate, only when it is probable that is future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by the management, the cost of erection/ construction is transferred to the appropriate category of property, plant and equipment cost (net of income and including pre-operative cost / expenses) associated with the commissioning of an asset are capitalized until the period of commissioning has been completed and the asset is ready of its intended use.
Property, Plant and Equipment are eliminated from Financial Statement, either on disposal or when retired from active use. Losses arising in the case of retirement of Property, plant and equipment and gains or losses arising from disposal of property, plant and equipment are recognized in Statement of Profit and Loss in the year of occurrence.
Depreciation methods, estimated useful lives and residual value.
Deprecation is calculated using the Straight Line Method (SLM) to allocate their cost, net of their residual values, over their estimated useful lives as specified in Schedule II to Companies Act, 2013, except for Captive Power Plants, Split Grinding Units, Vehicles & Locomotives, office equipment and Furniture & Fixtures which is provided on Written Down Value Method (WDV) as per the said schedule. Depreciation on RMC is provided considering estimated useful life of 6 years on SLM basis.
The assets residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Statement of Profit or Loss within other gains / (losses).
Depreciation on impaired assets is provided on the basis of their residual useful life.
(2) Investment Properties
Property that is held for long-term rentals yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.
Investment properties are depreciated using the Straight Line Method (SLM) over their estimated useful lives. The useful live has been determined based on technical evaluation performed by the management''s expert.
The Residual value, useful lives and depreciation method of investment properties are reviewed, and adjusted on Prospective basis as appropriate, at each financial year end. The effects of any revision are included in the Statement of Profit and Loss when the changes arise.
(3) Intangible Assets
Intangibles Assets are recognized if the future economic benefits attributable to the Assets are expected to flow to the Company and the cost of the asset can be measured reliably.
Internally generated intangibles, excluding capitalized developments costs, are not capitalized and the related expenditure is refected in Statement of Profit and Loss in the period in which the expenditure is incurred.
The useful lives of Intangibles Assets are assessed as either finite or indefinite. The amortization period and the amortization method for an Intangible Asset with a finite useful life are reviewed atleast at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Intangible Asset with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the Intangible Asset may be impaired.
Intangible Assets are amortized as follows:
⢠Computer Software & Mining Right : Over a period of five years
Intangibles Assets with indefinite useful lives, if any are not amortised, but are tested for impairment annually , either individually or at the cash-generating unit level. The assessment of indefinite useful life is reviewed annually to determine whether indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite life is made on prospective basis.
Gain 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.
(4) Research and Development Cost
Revenue Expenditure on Research and Development is charged to Statement of Profit and Loss and Capital Expenditure is added to Property, Plant and Equipment.
However, Development expenditure on new product is capitalized as Intangible Asset.
(5) Inventories
Inventories are carried in the balance sheet as follows :
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a) Raw Materials, Packing Materials, construction Materials, Stores & Spares. |
: At cost, on weighted average basis. |
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b) Work-in Progress - Manufacturing |
: At Lower of Cost of Material, plus appropriate production Overheads and Net Realizable Value. |
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c) Finished Goods - Manufacturing |
: At Lower of Cost of Materials plus Appropriate Production Overheads and Net Realizable Value. |
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d) Finished goods - Trading |
: At lower of cost, on Weighted Average Basis and Net Realizable Value. |
The cost of inventories have been computed to include all cost of purchases, cost of conversion and other related costs incurred in bringing the inventories to their present location and condition. Slow and non-moving material, obsolete, defective inventories are duly provided for and valued at net realizable value. Goods and materials in transit are valued at actual cost incurred upto the date of Balance Sheet. Materials and supplies held for use in the production of inventories are not written down if the finished products in which they will be used are expected to be sold at or above cost.
Net Realisable 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.
(6) Cash and Cash Equivalents
Cash and Cash Equivalents includes cash on hand, deposits held at call with Banks / Financial Institutions, other shortterm, highly liquid investments which are subject to an insignificant risk of changes in value.
The carrying amounts of Property, Plant & Equipment, Intangible Assets and Investment Properties are reviewed at each Balance Sheet date to assess impairment, if any, based on internal / external factors. An impairment loss is recognised, as an expense in the Statement of Profit & Loss, wherever the carrying amount of the Asset or Cash Generating Unit (CGU) exceeds its recoverable amount. The impairment loss recognised in prior accounting period is reversed, if there has been an improvement in recoverable amount in subsequent years.Recoverable amount is determined:-
⢠In the case of an Individual Asset, at the higher of the Fair Value less cost to sell and the value in use; and
⢠In the case of cash generating unit (a group of assets that generates identified, independent cash flows) at the higher of cash generating unit''s fair value less cost to sell and the value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, and 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.
(8) Foreign Currency Translations & Transitions
(i) Functional and Presentation Currency
The Company''s financial statements are presented in INR, which is also the Company''s Functional and Presentation Currency.
(ii) Transaction and Balance
Foreign currency transactions are recorded at exchange rates prevailing on the date of transaction. Monetary Assets and liabilities related to foreign currency transactions are stated at exchange rate prevailing at the end of the year and exchange difference in respect thereof is recognised to Statement of Profit & Loss.
(9) Financial Instruments
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.
1. Financial Assets1.1 Definition
Financial Assets include Cash and Cash Equivalents, Trade and Other Receivables, Investments in Securities and other eligible Current and Non-Current Assets.
At initial recognition, all financial assets are measured at fair value. The classification is reviewed at the end of each reporting period.
(i) Financial Assets at Amortised Cost
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates. These financial assets are intended to be held until maturity. Therefore, they are subsequently measured at amortized cost by applying the Effective Interest Rate (EIR) method to the gross carrying amount of the financial asset. The EIR amortization is included as interest income in the statement of profit or loss. The losses arising from impairment are recognized in the Statement of Profit or Loss.
(ii) Financial Assets at Fair value through Other Comprehensive Income
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates, as well as held for selling. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognized in Other Comprehensive Income (OCI). Interest income calculated using the effective interest rate (EIR) method, impairment gain or loss and foreign exchange gain or loss are recognized in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognized in Other Comprehensive Income is reclassified from the OCI to Statement of Profit and Loss.
(iii) Financial Assets at Fair value through Profit or Loss (FVTPL)
At the date of initial recognition, Financial assets are held for trading, or which are measured neither at Amortized Cost nor at Fair Value through OCI. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognized in the Statement of Profit and Loss.
A Receivable is classified as a ''trade receivable'' if it is in respect to the amount due from customers on account of goods sold or services rendered in the ordinary course of business Trade Receivables are initially recognized at their Transaction Value as reduced by provision for impairment, if any. For some trade receivables the Company may obtain security in the form of guarantee, security deposit or letter of credit which can be called upon if the counterparty is in default under the terms of the agreement. For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
1.3 Investment in Equity Shares
Investment in Equity Securities are initially measured at cost. Any subsequent fair value gain or loss is recognized through Statement of Profit and Loss if such investments in Equity Securities are held for trading purposes. The fair value gains or losses of all other Equity Securities are recognized in Other Comprehensive Income.
1.4 Investment in Associates, Joint Ventures and Subsidiaries
The Company has accounted for its investment in subsidiaries, associates and joint venture at cost.
1.5 Derecognition of Financial Assets
A Financial Asset is primarily derecognized when:
⢠The right to receive cash flows from asset has expired, or
⢠The Company has transferred its right 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 "pass-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 right 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 refects 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.
2. Financial Liabilities2.1 Definition
Financial liabilities include Long-term and Short-term Borrowings, Trade and Other payables and Other eligible Current and Non-current Liabilities.
(a) Initial Recognition and Measurement
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, and derivative financial instruments.
(b) Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below :
i) Financial Liabilities at Fair Value through Profit or Loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading. The Company has designated any financial liabilities upon initial measurement recognition at fair value through profit or loss. Financial liabilities at fair value through profit or loss are at each reporting date at fair value with all the changes recognized in the Statement of Profit and Loss.
ii) Financial Liabilities measured at Amortized Cost
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method (''''EIR'''') except for those designated in an effective hedging relationship. The carrying value of borrowings that are designated as hedged items in fair value hedges that would otherwise be carried at amortized cost are adjusted to record changes in fair values attributable to the risks that are hedged in effective hedging relationship.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortization is included in finance costs in the Statement of Profit and Loss.
After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in Statement of Profit and Loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
2.3 Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount initially recognized less cumulative amortization.
A payable is classified as trade payable if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables 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 the effective interest method.
2.5 De-recognition of Financial Liability
A Financial Liability is derecognized when the obligation under the liability is discharged or cancelled or expires. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other income or finance costs.
3. 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 recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
4. Derivative Financial Instruments
The Company uses derivative financial instruments, such as forward contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks. Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value at the end of each period. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, on the nature of the item being hedged. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
(10) Grants
Grants from the Government are recognised when there is reasonable assurance that all underlying conditions will be complied with and that the grant will be received.
When loans or similar assistance are provided by Government 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 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. That grant is recognised in the Statement of Profit and Loss under ''other income''. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
Government grants related to assets, including non-monetary grants at fair value, are presented in the balance sheet by recording the grant as deferred income which is released to the Statement of Profit and Loss on a systematic basis over the useful life of the asset.
Grants related to income are recognised 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 and are presented as ''other income''.
(11) Equity Share Capital
Ordinary Shares are classified as Equity. Incremental costs net of taxes directly attributable to the issue of new equity shares are reduced from Retained Earnings, net of taxes.
(12) Provisions, Contingent liabilities and Contingent Assets
i) General
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
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.
ii) Contingent Liability
Contingent Liability is disclosed in the case of:
⢠A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation.
⢠A present obligation arising from past events, when no reliable estimate is possible:
⢠A possible obligation arising from past events, unless the probability of outflow of resources is remote. Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.
iii) Other Litigation Claims
Provision for litigation related obligation represents liabilities that are expected to materialize in respect of matters in appeal.
iv) Onerous Contracts
A provision for onerous contracts is measured at the present value of the lower of expected costs of terminating the contract and the expected cost of continuing with the contract. Before a provision is established, the Company recognizes impairment on the Assets with the contract.
v) Contingent Asset
A Contingent Asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent Assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
(13) Revenue Recognition
Revenue towards satisfaction of a performance obligation is measured at the amount of Transaction price (Net of variable consideration) allocated to that performance obligation. The transaction price of goods sold& services rendered is net of variable consideration on account of various discounts & schemes offered by the Company as part of the contract.
i) Sale of Goods
Revenue is recognized upon transfer of control of promised goods or services to customers at transaction price (net of taxes and duties).
Taxes collected on behalf of the government are excluded from revenue. Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably
The Company provides Non-Cash incentives at Fair Value to customers. These benefits are passed on to customers on satisfaction of various conditions of various sales schemes. Consideration received is allocated between the products sold and non-cash incentives to be issued to customers. Fair value of the non-cash incentive is determined by applying principle of Ind AS 113 i.e. at market rate. A contract liability for the non-cash incentive is recognised at the time of sale.
iii) Power Distribution
Revenue from Power Distribution business is accounted on the basis of billings to the customers and includes unbilled revenues accrued up to the end of accounting year. Customers are billed as per the tariff rates issued by Electricity Regulatory Commission.
iv) Dividend Income
Dividend income is recognized when the right to receive dividend is established, which becomes certain after shareholders'' approval.
v) Lease Income
Lease Agreements where the risk and rewards incidental to the ownership of an asset substantially vest with the lessor are recognized as operating leases. Leases rentals are recognized on straight -line basis as per the terms of the agreements in the statement of profit and loss.
vi) Interest Income
For all Financial instruments measured at amortized cost, interest income is recorded using Effective Interest Rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the Financial Instrument or a shorter period, where appropriate, to the net carrying amount of the Financial Asset. Interest income is included in other income in Statement of Profit and Loss.
vii) Renewable Energy Certificate
Renewable Energy Certificate (REC) benefits are recognized in Statement of Profit & Loss on Sale of REC. Income from Sale of RECs is recognized on the delivery to the Customers'' Account.
viii) Export Benefit
Export incentives, Duty Drawbacks and other benefits are recognized in the Statement of Profit and Loss on Accrual Basis.
(14) Employees Benefits
i) Defined Contribution Plans
Contributions to the employees'' regional Provident Fund, Superannuation Fund, Employees Pension Scheme and Employees'' State Insurance are recognized as defined contribution plan and charged as expenses during the period in which the employees perform the services. The Company has no obligation, other than the contribution payable to the respective funds. The Company recognises contribution payable to these schemes as an expense, 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 recognised 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 recognised as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
ii) Defined Benefit Plans
Retirement benefits in the form of Gratuity and Leave Encashment are considered as defined benefit plan and determined on actuarial valuation using the Projected Unit Credit Method at the balance sheet date. Actuarial Gains or Losses through re-measurement of the net obligation of a defined benefit liability or asset is recognized in Other Comprehensive Income. Such re-measurements are not reclassified to Statement of Profit and Loss in subsequent periods.
The Provident Fund Contribution other than contribution to Employees'' Regional Provident Fund, is made to trust administered by the trustees. The interest rate to the members of the trust shall not be lower than the statutory rate declared by the Central Government under Employees'' Provident Fund and Miscellaneous Provision Act, 1952. The Employer shall make good deficiency, if any.
iii) Short-term Employee Benefits
Short Term Benefits are charged off at the undiscounted amount in the year in which the related service is rendered.
iv) Long-Term Employee Benefit
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the balance sheet date. Annual Leaves can either be availed or enchased subject to restriction on the maximum accumulation of Leaves.
v) Termination Benefits
Termination Benefits are recognized as an expense in the period in which they are incurred.
The Company shall recognize a liability and expense for termination benefits at the earlier of the following dates:
(a) When the entity can no longer withdraw the offer of those benefits; and
(b) When the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits.
(15) Borrowing Costs
(1) Borrowing Costs that are specifically attributable to the acquisition, construction, or production of a Qualifying Asset are capitalized as a part of the cost of such Asset till such time the asset is ready for its intended use or sale. A Qualifying Asset is an asset that necessarily requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.
The Borrowing Cost consists of Interest & Other Incidental costs that the Company incurs in connection with the borrowing of such Funds.
(2) For general borrowing used for the purpose of obtaining a Qualifying Asset, the amount of borrowing costs eligible for capitalization is determined by applying a capitalization rate to the expenditures on that asset. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalized during a period does not exceed the amount of borrowing cost incurred during that period.
(3) Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. All other borrowing costs are recognized as expense in the period in which they are incurred.
(16) Leases
The Company assesses at contract inception whether a contract or part of 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.
a) Company as a Lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-Of-Use Assets
The Company recognises Right-Of-Use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use Assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of Right-Of-Use assets includes the amount of lease liabilities recognised, 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 from the commencement date over the shorter of the lease term and the estimated useful lives of the 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.
ii) Lease Liabilities
At the commencement date of the lease, the Company recognises Lease Liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its existing weighted average cost of capital (WACC) 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 re-measured 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.
Lease liabilities have been presented as a separate line and Right-of-use assets have been presented under Property Plant and Equipment in the balance sheet. Lease payments have been classified as cash used in financing activities.
i) Short-Term Leases and Leases of Low-Value Assets
The Company has elected not to recognise Right-of-Use Assets and Lease Liabilities for short term leases of all assets that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease.
b) Company as a Lessor
Lease income from Operating Leases where the Company is a Lessor is recognized in income on a straight-line basis over the lease term unless the recipients are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective Leased Assets are included in the Balance Sheet based on their nature.
(17) Taxes on Income
a) Current Tax
i) Tax on Income for the Current Period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals.
ii) Current Income Tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss .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.
b) Deferred Tax
Deferred Tax is provided using the Balance Sheet Approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
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 reassessed 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 the Statement of Profit and Loss is recognized outside the Statement of Profit and Loss.
Deferred Tax items are recognized in correlation to the underlying transaction either in Other Comprehensive Income or directly in Equity.
The break-up of the major components of the Deferred Tax Assets and Liabilities as at Balance Sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws.
(18) Exceptional Items
On certain non-recurring occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the
Company, such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.
(19) Earnings Per Share (EPS)
i) Basic Earnings Per Share
Basic Earnings Per Share is calculated by dividing
⢠The Profit or Loss attributable to Equity Shareholders of the Company by the Weighted Average number of Equity Shares outstanding during the Financial Year, adjusted for bonus elements in Equity Shares issued during the Year.
ii) Diluted Earnings Per Share
Diluted Earnings Per Share adjusts the figures used in the determination of basic earnings per share to take into account
⢠The after Income Tax Effect of interest and other financing costs associated with dilutive potential equity shares, and the Weighted Average number of additional Equity Shares that would have been outstanding assuming the conversion of all dilutive potential Equity Shares.
(20) Segment Accounting
The Company is engaged primarily into manufacturing of Cement. The Company has only one business segment as identified by management namely Cementious Materials.
Segments have been identified taking into account nature of product and differential risk and returns of the segment. The business segments are reviewed by the Vice Chairman & Managing Director (Chief Operating Decision Maker).
The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on each segments profit or loss and is measured consistently with profit or loss in the financial statements.
(21) Cash dividend
The Company recognises a Liability to pay dividend to Equity Holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in Other Equity. Interim Dividends are recognised as a Liability on the date of declaration by the Company''s Board of Directors.
(22) Recent Pronouncements
Recent pronouncements Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31,2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1,2023, as below:
Ind AS 1 - Presentation of Financial Statements The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
Ind AS 12 - Income Taxes The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
Mar 31, 2022
I. Corporate & General Information
JK Lakshmi Cement Limited ("the Company'''') is domiciled and incorporated in India and its Shares are publicly traded on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Registered Office of the Company is situated at Jaykaypuram, Basantgarh, Distt. : Sirohi- 307 019, Rajasthan.
The Company is a leading manufacturer and supplier of Cement and Cementitious products like RMC & AAC Blocks with manufacturing facilities in the State of Rajasthan, Chattisgarh, Gujarat, Haryana and Odisha.The Company began its journey in 1982 by setting-up a Cement Plant with a modest Capacity of 0.50 Million Tonnes at Sirohi in the State of Rajasthan. Over the years, the Cement capacity has grown to the present level of 11.70 Million Tonnes. The Company is the first Cement Manufacturer in North India to introduce coloured bags and registered as ISO 9200. The Company''s Technical Service Cell provides construction solutions to its customers & carries out regular & innovative contact programmes with Individual House Builders, Masons and other Business Associates to keep in tune with their needs and requirements.
These Financial Statements were approved and adopted by the Board of Directors of the Company in their meeting held on May18, 2022.
II. Basis of Preparation of Financial Statements
(i) Statement of Compliance
The Financial Statements have been prepared in accordance with Indian Accounting Standards (IND AS) as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 as amended time to time and relevant provisions of the Companies Act, 2013 and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III). The Financial Statements comply with IND AS notified by Ministry of Company Affairs ("MCA"). The Company has consistently applied the accounting policies used in the preparation for all periods presented.
(ii) Basis of Preparation
The significant accounting policies used in preparing the Financial Statements are set out in Note no. III of the Notes to the Financial Statements. Company''s Financial Statements are presented in Indian Rupees (''), which is also its functional currency.
(iii) Basis of Measurement
The Financial Statements have been prepared on accrual basis and under the historical cost convention except for the items that have been measured at fair value as required by relevant IND AS.
(iv) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (As per Ind AS 113) and other Fair Value measurement have been done as per its respective standards.
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 in to 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.
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 in which they fall.
(v) Current & Non-Current Classifications
All Assets and Liabilities have been classified as Current or Non-Current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of product & activities of the Company and their realisation in cash and cash equivalent, the Company has determined its operating cycle as twelve months for the purpose of Current and Non-Current classification of Assets and Liabilities. Deferred Tax Assets and Liabilities are classified as Non-Current Assets and Liabilities.
(vi) Significant Accounting Judgements, Estimates and Assumptions
The preparation of these Financial Statements requires management judgements, estimates and assumptions that affect the application of Accounting Policies, the Accounting disclosures made and the reports amounts of Assets, Liabilities, Income and Expenses. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to Accounting estimates are recognised in the period in which the estimates are revised and any future periods effected pursuant to such revision.
III. Significant Accounting Policies
(1) Property, Plant and Equipment
Property, Plant and Equipment (PPE) are stated at cost net of tax/duty credit availed, less accumulated depreciation and accumulated losses, if any. Cost includes expenses directly attributable to bringing the Asset to their location and conditions necessary for it to be capable of operating in the manner intended by the management.
Subsequent cost are included in the asset''s carrying amount or recognized as separate asset, as appropriate, only when it is probable that is future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by the management, the cost of erection/ construction is transferred to the appropriate category of property, plant and equipment cost (net of income and including pre-operative cost / expenses) associated with the commissioning of an asset are capitalized until the period of commissioning has been completed and the asset is ready of its intended use.
Property, Plant and Equipment are eliminated from Financial Statement, either on disposal or when retired from active use. Losses arising in the case of retirement of Property, plant and equipment and gains or losses arising from disposal of property, plant and equipment are recognized in Statement of Profit and Loss in the year of occurrence.
Depreciation methods, estimated useful lives and residual value.
Deprecation is calculated using the Straight Line Method (SLM) to allocate their cost, net of their residual values, over their estimated useful lives as specified in Schedule II to Companies Act, 2013, except for Captive Power Plants and Split Grinding Units which is provided on Written Down Value Method (WDV) as per the said schedule. Depreciation on RMC is provided considering estimated useful life of 6 years on SLM basis.
The assets residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Statement of Profit or Loss within other gains / (losses).
Depreciation on impaired assets is provided on the basis of their residual useful life.
(2) Investment Properties
Property that is held for long-term rentals yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.
Investment properties are depreciated using the Straight Line Method (SLM) over their estimated useful lives. The useful live has been determined based on technical evaluation performed by the management''s expert.
The Residual Life, useful lives and depreciation method of investment properties are reviewed, and adjusted on Prospective basis as appropriate, at each financial year end. The effects of any revision are included in the Statement of Profit and Loss when the changes arise.
(3) Intangible Assets
Intangibles Assets are recognized if the future economic benefits attributable to the Assets are expected to flow to the Company and the cost of the asset can be measured reliably.
Internally generated intangibles, excluding capitalized developments costs, are not capitalized and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred.
The useful lives of Intangibles Assets are assessed as either finite or indefinite. The amortization period and the amortization method for an Intangible Asset with a finite useful life are reviewed atleast at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Intangible Asset with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the Intangible Asset may be impaired.
Intangible Assets are amortized as follows:
⢠Computer Software : Over a period of five years
Intangibles Assets with indefinite useful lives, if any are not amortised, but are tested for impairment annually , either individually or at the cash-generating unit level. The assessment of indefinite useful life is reviewed annually to determine whether indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite life is made on prospective basis.
Gain 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.
(4) Research and Development Cost
Revenue Expenditure on Research and Development is charged to Statement of Profit and Loss and Capital Expenditure is added to Property, plant and equipment.
However, Development expenditure on new product is capitalized as intangible asset.
(5) Inventories
Inventories are carried in the balance sheet as follows :
|
a) Raw Materials, Packing Materials, : construction Materials, Stores & Spares. |
At cost, on weighted average basis. |
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b) Work-in Progress - Manufacturing : |
At Lower of Cost of Material, plus appropriate production Overheads and Net Realizable Value. |
|
c) Finished Goods - Manufacturing : |
At Lower of Cost of Materials plus Appropriate Production Overheads and Net Realizable Value. |
|
d) Finished goods - Trading : |
At lower of cost, on Weighted Average Basis and Net Realizable Value. |
The cost of inventories have been computed to include all cost of purchases, cost of conversion and other related costs incurred in bringing the inventories to their present location and condition. Slow and non-moving material, obsolete, defective inventories are duly provided for and valued at net realizable value. Goods and materials in transit are valued at actual cost incurred upto the date of Balance Sheet. Materials and supplies held for use in the production of inventories are not written down if the finished products in which they will be used are expected to be sold at or above cost.
Net Realisable 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.
(6) Cash and Cash Equivalents
Cash and Cash Equivalents includes cash on hand, deposits held at call with Banks / Financial Institutions, other short-term, highly liquid investments which are subject to an insignificant risk of changes in value.
(7) Impairment of Assets
The carrying amounts of Property, Plant & Equipment, Intangible Assets and Investment Properties are reviewed at each Balance Sheet date to assess impairment, if any, based on internal / external factors. An impairment loss is recognised, as an expense in the Statement of Profit & Loss, wherever the carrying amount of the Asset or Cash Generating Unit (CGU) exceeds its recoverable amount. The impairment loss recognised in prior accounting period is reversed, if there has been an improvement in recoverable amount in subsequent years.Recoverable amount is determined:-
⢠In the case of an Individual Asset, at the higher of the Fair Value less cost to sell and the value in use; and
⢠In the case of cash generating unit (a group of assets that generates identified, independent cash flows) at the higher of cash generating unit''s fair value less cost to sell and the value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, and 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.
(8) Foreign Currency Translations & Transitions
(i) Functional and Presentation Currency
The Company''s financial statements are presented in INR, which is also the Company''s Functional and Presentation Currency.
(ii) Transaction and Balance
Foreign currency transactions are recorded at exchange rates prevailing on the date of transaction. Monetary Assets and liabilities related to foreign currency transactions are stated at exchange rate prevailing at the end of the year and exchange difference in respect thereof is recognised to Statement of Profit & Loss.
(9) Financial Instruments
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.
1. Financial Assets1.1 Definition
Financial Assets include Cash and Cash Equivalents, Trade and Other Receivables,Investments in Securities and other eligible Current and Non-Current Assets.
At initial recognition, all financial assets are measured at fair value. The classification is reviewed at the end of each reporting period.
(i) Financial Assets at Amortised Cost
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates. These financial assets are intended to be held until maturity. Therefore, they are subsequently measured at amortized cost by applying the Effective Interest Rate (EIR) method to the gross carrying amount of the financial asset. The EIR amortization is included as interest income in the statement of profit or loss. The losses arising from impairment are recognized in the Statement of Profit or Loss.
(ii) Financial Assets at Fair value through Other Comprehensive Income
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates, as well as held for selling. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognized in Other Comprehensive Income (OCI). Interest income calculated using the effective interest rate (EIR) method, impairment gain or loss and foreign exchange gain or loss are recognized in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognized in Other Comprehensive Income is reclassified from the OCI to Statement of Profit and Loss.
(iii) Financial Assets at Fair value through Profit or Loss (FVTPL)
At the date of initial recognition, Financial assets are held for trading, or which are measured neither at Amortized Cost nor at Fair Value through OCI. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognized in the Statement of Profit and Loss.
A Receivable is classified as a ''trade receivable'' if it is in respect to the amount due from customers on account of goods sold or services rendered in the ordinary course of business. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. For some trade receivables the Company may obtain security in the form of guarantee, security deposit or letter of credit which can be called upon if the counterparty is in default under the terms of the agreement.
1.3 Investment in Equity Shares
Investment in Equity Securities are initially measured at cost. Any subsequent fair value gain or loss is recognized through Statement of Profit and Loss if such investments in Equity Securities are held for trading purposes. The fair value gains or losses of all other Equity Securities are recognized in Other Comprehensive Income.
1.4 Investment in Associates, Joint Ventures and Subsidiaries
The Company has accounted for its investment in subsidiaries, associates and joint venture at cost.
1.5 Derecognition of Financial Assets
A Financial Asset is primarily derecognized when:
⢠The right to receive cash flows from asset has expired, or
⢠The Company has transferred its right 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 "pass-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 right 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.
2. Financial Liabilities2.1 Definition
Financial liabilities include Long-term and Short-term Loans and Borrowings, Trade and Other payables and Other eligible Current and Non-current Liabilities.
(a) Initial Recognition and Measurement
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, and derivative financial instruments.
(b) Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below :
i) Financial Liabilities at Fair Value through Profit or Loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading. The Company has designated any financial liabilities upon initial measurement recognition at fair value through profit or loss. Financial liabilities at fair value through profit or loss are at each reporting date at fair value with all the changes recognized in the Statement of Profit and Loss.
ii) Financial Liabilities measured at Amortized Cost
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method (''''EIR'''') except for those designated in an effective hedging relationship. The carrying value of borrowings that are designated as hedged items in fair value hedges that would otherwise be carried at amortized cost are adjusted to record changes in fair values attributable to the risks that are hedged in effective hedging relationship.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortization is included in finance costs in the Statement of Profit and Loss.
After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognized in Statement of Profit and Loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
2.3 Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount initially recognized less cumulative amortization.
A payable is classified as trade payable if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables 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 the effective interest method.
2.5 De-recognition of Financial Liability
A Financial Liability is derecognized when the obligation under the liability is discharged or cancelled or expires. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other income or finance costs.
3. 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 recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
4. Derivative Financial Instruments
The Company uses derivative financial instruments, such as forward contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks. Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value at the end of each period. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, on the nature of the item being hedged. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
(10) Grants
Grants from the Government are recognised when there is reasonable assurance that all underlying conditions will be complied with and that the grant will be received.
When loans or similar assistance are provided by Government 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 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. That grant is recognised in the Statement of Profit and Loss under ''other operating revenue'' . The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
Government grants related to assets, including non-monetary grants at fair value, are presented in the balance sheet by recording the grant as deferred income which is released to the Statement of Profit and Loss on a systematic basis over the useful life of the asset.
Grants related to income are recognised 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 and are presented as ''other operating revenues''.
(11) Equity Share Capital
Ordinary Shares are classified as Equity. Incremental costs net of taxes directly attributable to the issue of new equity shares are reduced from Retained Earnings, net of taxes.
(12) Provisions, Contingent liabilities, Contingent Assets and Commitments
i) General
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
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.
ii) Contingent Liability
Contingent Liability is disclosed in the case of:
⢠A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation.
⢠A present obligation arising from past events, when no reliable estimate is possible:
⢠A possible obligation arising from past events, unless the probability of outflow of resources is remote. Commitments include the amount of Purchase Order (net of Advances) issued to parties for Completion of Assets. Provisions, Contingent Liabilities, Contingent Assets and commitments are reviewed at each Balance Sheet date.
iii) Other Litigation Claims
Provision for litigation related obligation represents liabilities that are expected to materialize in respect of matters in appeal.
iv) Onerous Contracts
A provision for onerous contracts is measured at the present value of the lower of expected costs of terminating the contract and the expected cost of continuing with the contract. Before a provision is established, the Company recognizes impairment on the Assets with the contract.
v) Contingent Asset
A Contingent Asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent Assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
(13) Revenue Recognition
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.
i) Sale of Goods
Revenue is recognized upon transfer of control of promised goods or services to customers at transaction price (net of taxes and duties), arrived at by determining the fair value of the consideration received or receivable after adjusting returns, allowances, trade discounts, volume discounts etc. in exchange of goods or services.
Taxes collected on behalf of the government are excluded from revenue. Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably
ii) Non-Cash Incentives
The Company provides Non-Cash incentives at Fair Value to customers. These benefits are passed on to customers on satisfaction of various conditions of various sales schemes. Consideration received is allocated between the products sold and non-cash incentives to be issued to customers. Fair value of the non-cash incentive is determined by applying principle of Ind AS 113 i.e. at market rate. A contract liability for the noncash incentive is recognised at the time of sale.
iii) Power Distribution
Revenue from Power Distribution business is accounted on the basis of billings to the customers and includes unbilled revenues accrued up to the end of accounting year. Customers are billed as per the tariff rates issued by Electricity Regulatory Commission.
The Company recognises a Liability to pay dividend to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders, except in case of interim dividend which is authorised when it is approved by the Board of Directors.
v) Lease Incentives
Lease Agreements where the risk and rewards incidental to the ownership of an asset substantially vest with the lessor are recognized as operating leases. Leases rentals are recognized on straight -line basis as per the terms of the agreements in the statement of profit and loss.
vi) Interest Income
For all Financial instruments measured at amortized cost, interest income is recorded using Effective Interest Rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the Financial Instrument or a shorter period, where appropriate, to the net carrying amount of the Financial Asset. Interest income is included in other income in Statement of Profit and Loss.
vii) Renewable Energy Certificate
Renewable Energy Certificate (REC) benefits are recognized in Statement of Profit & Loss on Sale of REC. Income from Sale of RECs is recognized on the delivery to the Customers'' Account.
viii) Export Benefit
Export incentives, Duty Drawbacks and other benefits are recognized in the Statement of Profit and Loss on Accrual Basis.
(14) Employees Benefits
i) Defined Contribution Plans
Contributions to the employees'' regional Provident Fund, Superannuation Fund, Employees Pension Scheme and Employees'' State Insurance are recognized as defined contribution plan and charged as expenses during the period in which the employees perform the services. The Company has no obligation, other than the contribution payable to the respective funds. The Company recognises contribution payable to these schemes as an expense, 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 recognised 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 recognised as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
ii) Defined Benefit Plans
Retirement benefits in the form of Gratuity and Leave Encashment are considered as defined benefit plan and determined on actuarial valuation using the Projected Unit Credit Method at the balance sheet date. Actuarial Gains or Losses through re-measurement of the net obligation of a defined benefit liability or asset is recognized in Other Comprehensive Income. Such re-measurements are not reclassified to Statement of Profit and Loss in subsequent periods.
The Provident Fund Contribution other than contribution to Employees'' Regional Provident Fund, is made to trust administered by the trustees. The interest rate to the members of the trust shall not be lower than the statutory rate declared by the Central Government under Employees'' Provident Fund and Miscellaneous Provision Act, 1952. The Employer shall make good deficiency, if any.
iii) Short-term Employee Benefits
Short Term Benefits are charged off at the undiscounted amount in the year in which the related service is rendered.
iv) Long-Term Employee Benefit
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the balance sheet date. Annual Leaves can either be availed or enchased subject to restriction on the maximum accumulation of Leaves.
v) Termination Benefits
Termination Benefits are recognized as an expense in the period in which they are incurred.
The Company shall recognize a liability and expense for termination benefits at the earlier of the following dates:
(a) When the entity can no longer withdraw the offer of those benefits; and
(b) When the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits.
(15) Borrowing Costs
(1) Borrowing Costs that are specifically attributable to the acquisition, construction, or production of a Qualifying Asset are capitalized as a part of the cost of such Asset till such time the asset is ready for its intended use or sale. A Qualifying Asset is an asset that necessarily requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.
The Borrowing Cost consists of Interest & Other Incidental costs that the Company incurs in connection with the borrowing of such Funds.
(2) For general borrowing used for the purpose of obtaining a Qualifying Asset, the amount of borrowing costs eligible for capitalization is determined by applying a capitalization rate to the expenditures on that asset. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalized during a period does not exceed the amount of borrowing cost incurred during that period.
(3) All other borrowing costs are recognized as expense in the period in which they are incurred.
(16) Leases
The Company assesses at contract inception whether a contract or part of 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. a) Company as a Lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-Of-Use Assets
The Company recognises Right-Of-Use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use Assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of Right-Of-Use assets includes the amount of lease liabilities recognised, 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 from the commencement date over the shorter of the lease term and the estimated useful lives of the 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.
ii) Lease Liabilities
At the commencement date of the lease, the Company recognises Lease Liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its existing weighted average cost of capital (WACC) 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 re-measured 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.
Lease liabilities and Right-of-use assets have been presented as a separate line in the balance sheet. Lease payments have been classified as cash used in financing activities.
i) Short-Term Leases and Leases of Low-Value Assets
The Company has elected not to recognise Right-of-Use Assets and Lease Liabilities for short term leases of all assets that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease.
b) Company as a Lessor
Lease income from Operating Leases where the Company is a Lessor is recognized in income on a straightline basis over the lease term unless the recipients are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective Leased Assets are included in the Balance Sheet based on their nature.
(17) Taxes on Income
a) Current Tax
i) Tax on Income for the Current Period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals.
ii) Current Income Tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss .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.
b) Deferred Tax
Deferred Tax is provided using the Balance Sheet Approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
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 reassessed 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 the Statement of Profit and Loss is recognized outside the Statement of Profit and Loss.
Deferred Tax items are recognized in correlation to the underlying transaction either in Other Comprehensive Income or directly in Equity.
The break-up of the major components of the Deferred Tax Assets and Liabilities as at Balance Sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws.
(18) Exceptional Items
On certain non-recurring occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.
(19) Earnings Per Share (EPS)
i) Basic Earnings Per Share
Basic Earnings Per Share is calculated by dividing
⢠The Profit or Loss attributable to Equity Shareholders of the Company by the Weighted Average number of Equity Shares outstanding during the Financial Year, adjusted for bonus elements in Equity Shares issued during the Year.
ii) Diluted Earnings Per Share
Diluted Earnings Per Share adjusts the figures used in the determination of basic earnings per share to take into account
⢠The after Income Tax Effect of interest and other financing costs associated with dilutive potential equity shares, and the Weighted Average number of additional Equity Shares that would have been outstanding assuming the conversion of all dilutive potential Equity Shares.
(20) Segment Accounting
The Company is engaged primarily into manufacturing of Cement. The Company has only one business segment as identified by management namely Cementious Materials.
Segments have been identified taking into account nature of product and differential risk and returns of the segment. The business segments are reviewed by the Vice Chairman & Managing Director (Chief Operating Decision Maker). The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on each segments profit or loss and is measured consistently with profit or loss in the financial statements.
(21) Cash dividend
The Company recognises a Liability to pay dividend to Equity Holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in Other Equity. Interim Dividends are recognised as a Liability on the date of declaration by the Company''s Board of Directors.
Ministry of Corporate Affairs ("MCA") notified new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 23 March 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from 01 April 2022, as below:
IND AS 103 - Reference to Conceptual Framework
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS103.The Company does not expect the amendment to have any significant impact in its Financial Statements
IND AS 16 - Proceeds before intended use
The amendments mainly prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the Company is preparing the asset for its intended use. Instead, an entity will recognise such sales proceeds and related cost in statement of profit or loss. The Company does not expect the amendments to have any impact in its recognition of its Property, Plant and Equipment in its Financial Statements.
IND AS 37 - Provisions. Contingent Liabilities and Contingent Assets
The amendment specifies that the cost fulfilling a contract comprises the cost that relate directly to the contract Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of Property, Plant and Equipment used in fulfilling the contract). The effective date for adoption of this amendment is annual periods beginning on or after April 1,2022, although early adoption is permitted. The Company has evaluated the amendment and the impact is not expected to be material On 18 June 2021, MCA through a notification has notified Companies (Indian Accounting Standards) Amendment Rules, 2021. The Notification has made amendments to various Ind AS. The Company does not expect the amendments to have any significant impact in its Financial Statements.
Mar 31, 2018
Company Overview, Basis of Preparation & Significant Accounting Policies
|Note-1
I. Corporate & General Information
JK Lakshmi Cement Limited ("the Company'') is domiciled and incorporated in India and its Shares are publicly traded on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Registered Office of the Company is situated at Jaykaypuram, Basantgarh, Distt. : Sirohi- 307 019, Rajasthan.
The Company is a leading manufacturer and supplier of Cement and Cementations products like RMC & AAC Blocks with manufacturing facilities in the State of Rajasthan, Chattisgarh, Gujarat & Haryana. The Company began its journey in 1982 by setting-up a Cement Plant with a modest Capacity of 0.50 Million Tonnes at Sirohi in the State of Rajasthan. Over the years, the Cement capacity has grown to the present level of 11 Million Tonnes. The Company is the first Cement Manufacturer in North India to introduce coloured bags and registered as ISO 9200. The Company''s Technical Service Cell provides construction solutions to its customers & carries out regular & innovative contact programmes with Individual House Builders, Masons and other Business Associates to keep in tune with their needs and requirements.
These Financial Statements were approved and adopted by the Board of Directors of the Company in their meeting held on 16th May, 2018.
II. Basis of Preparation of Financial Statements.
(i) Statement of Compliance
The Financial Statements have been prepared in accordance with Indian Accounting Standards (IND AS) as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and relevant provisions of the Companies Act, 2013. The Financial Statements comply with IND AS notified by Ministry of Company Affairs ("MCA"). The Company has consistently applied the accounting policies used in the preparation for all periods presented.
(ii) Basis of Preparation
The significant accounting policies used in preparing the Financial Statements are set out in Note no. III of the Notes to the Financial Statements. Company''s Financial Statements are presented in Indian Rupees (''), which is also its functional currency.
(iii) Basis of Measurement
The Financial Statements have been prepared on accrual basis and under the historical cost convention except for the items that have been measured at fair value as required by relevant IND AS.
(iv) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
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 in to 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.
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 in which they fall.
(v) Current & Non-Current Classifications
All Assets and Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of product & activities of the Company and their realization in cash and cash equivalent, the Company has determined its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(vi) Significant Accounting Judgments, Estimates and Assumptions
The preparation of these Financial Statements requires management judgments, estimates and assumptions that affect the application of Accounting Policies, the Accounting disclosures made and the reports amounts of Assets, Liabilities, Income and Expenses. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and any future periods effected pursuant to such revision.
III. Significant Accounting Policies
(1) Property, Plant and Equipment
Property, Plant and Equipment are stated at cost less accumulated depreciation and accumulated losses, if any. Cost includes expenses directly attributable to bringing the asset to their location and conditions necessary for it to be capable of operating in the manner intended by the management. .
Subsequent cost are included in the asset''s carrying amount or recognized as separate asset, as appropriate, only when it is probable that is future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.
Internally manufactured property, plant and equipment are capitalized at factory cost, including excise duty / GST, wherever applicable.
Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by the management, the cost of erection/ construction is transferred to the appropriate category of property, plant and equipment cost (net of income and including pre-operative cost / expenses) associated with the commissioning of an asset are capitalized until the period of commissioning has been completed and the asset is ready of its intended use.
Property, Plant and Equipment are eliminated from financial statement, either on disposal or when retired from active use. Losses arising in the case of retirement of property, plant and equipment and gains or losses arising from disposal of property, plant and equipment are recognized in Statement of Profit and Loss in the year of occurrence.
Depreciation methods, estimated useful lives and residual value.
Deprecation is calculated using the Straight Line Method (SLM) to allocate their cost, net of their residual values, over their estimated useful lives as specified in Schedule II to Companies Act, 2013, except for Captive Power Plants and Split Grinding Units which is provided on Written Down Value Method (WDV) as per the said schedule. Depreciation on Aircraft & RMC is provided considering estimated useful life of 6 years on SLM basis.
The assets residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Statement of Profit and Loss within other gains / (losses).
Depreciation on impaired assets is provided on the basis of their residual useful life.
(2) Investment Property
Property that is held for long-term rentals yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.
Investment properties are depreciated using the Straight Line Method (SLM) over their estimated useful lives. The useful live has been determined based on technical evaluation performed by the management''s expert.
The residual life, useful lives and depreciation method of investment properties are reviewed, and adjusted on prospective basis as appropriate, at each financial year end. The effects of any revision are included in the Statement of Profit and Loss when the changes arise.
(3) Intangible Assets
Intangibles Assets are recognized if the future economic benefits attributable to the assets are expected to flow to the Company and the cost of the asset can be measured reliably.
Internally generated intangibles, excluding capitalized developments costs, are not capitalized and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred.
The useful lives of Intangibles Assets are assessed as either finite or indefinite. The amortization period and the amortization method for an Intangible Asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Intangible Asset with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the Intangible Asset may be impaired.
Intangible Assets are amortized as follows:
- Computer Software : Over a period of five years
Intangibles Assets with indefinite useful lives, if any are not Amortized, but are tested for impairment annually , either individually or at the cash-generating unit level. The assessment of indefinite useful life is reviewed annually to determine whether indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite life is made on prospective basis.
Gain 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.
(4) Research and Development Cost
Revenue Expenditure on Research and Development is charged to Statement of Profit and Loss and Capital Expenditure is added to Property, plant and equipment.
However, Development expenditure on new product is capitalized as intangible asset.
(5) Inventories.
Inventories are carried in the balance sheet as follows :
a) Raw materials, packing materials, construction At lower of cost, on weighted average basis and materials, stores and spares. net realizable value.
b) Work-in Progress - Manufacturing At lower of cost of material, plus appropriate production overheads and net realizable value.
c) Finished goods - Manufacturing At lower of cost of materials plus appropriate production overheads and net realizable value.
d) Finished goods - Trading At lower of cost, on weighted average basis and net realizable value.
The cost of inventories have been computed to include all cost of purchases, cost of conversion and other related costs incurred in bringing the inventories to their present location and condition. Slow and non-moving material, obsolete, defective inventories are duly provided for and valued at net realizable value. Goods and materials in transit are valued at actual cost incurred up to the date of balance sheet. Materials and supplies held for use in the production of inventories are not written down if the finished products in which they will be used are expected to be sold at or above cost.
(6) Cash and Cash Equivalents
Cash and Cash Equivalents includes cash on hand, deposits held at call with Banks / Financial Institutions, other short-term, highly liquid investments which are subject to an insignificant risk of changes in value.
(7) Impairment of Assets
The carrying amounts of Property, Plant & Equipment, Intangible Assets and Investment Properties are reviewed at each Balance Sheet date to assess impairment, if any, based on internal / external factors. An impairment loss is recognized, as an expense in the Statement of Profit & Loss, wherever the carrying amount of the Asset or Cash Generating Unit (CGU) exceeds its recoverable amount. The impairment loss recognized in prior accounting period is reversed, if there has been an improvement in recoverable amount in subsequent years. Recoverable amount is determined:-
- In the case of an Individual Asset, at the higher of the Fair Value less cost to sell and the value in use; and
- In the case of cash generating unit (a group of assets that generates identified, independent cash flows) at the higher of cash generating unit''s fair value less cost to sell and the value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that refects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, and 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.
(8) Foreign Currency Translations & Transitions
(i) Functional and Presentation Currency
The Company''s financial statements are presented in INR, which is also the Company''s Functional and Presentation Currency.
(ii) Transaction and Balance
Foreign currency transactions are recorded at exchange rates prevailing on the date of transaction. Monetary assets and liabilities related to foreign currency transactions are stated at exchange rate prevailing at the end of the year and exchange difference in respect thereof is recognized to Statement of Profit & Loss.
(9) 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.
1. Financial Assets
1.1 Definition
Financial Assets include Cash and Cash Equivalents, Trade and Other Receivables, Investments in Securities and other eligible Current and Non-Current Assets.
At initial recognition, all financial assets are measured at fair value. The classification is reviewed at the end of each reporting period.
(i) Financial Assets at Amortized Cost
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates. These financial assets are intended to be held until maturity. Therefore, they are subsequently measured at amortized cost by applying the Effective Interest Rate (EIR) method to the gross carrying amount of the financial asset. The EIR amortization is included as interest income in the statement of profit and loss. The losses arising from impairment are recognized in the Statement of Profit and Loss.
(ii) Financial Assets at Fair value through Other Comprehensive Income
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates, as well as held for selling. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognized in Other Comprehensive Income (OCI). Interest income calculated using the effective interest rate (EIR) method, impairment gain or loss and foreign exchange gain or loss are recognized in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognized in Other Comprehensive Income is reclassified from the OCI to Statement of Profit and Loss.
(iii) Financial Assets at Fair value through Profit or Loss (FVTPL)
At the date of initial recognition, Financial assets are held for trading, or which are measured neither at Amortized Cost nor at Fair Value through OCI. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognized in the Statement of Profit and Loss.
1.2 Trade Receivables.
A Receivable is classified as a ''trade receivable'' if it is in respect to the amount due from customers on account of goods sold or services rendered in the ordinary course of business. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. For some trade receivables the Company may obtain security in the form of guarantee, security deposit or letter of credit which can be called upon if the counterparty is in default under the terms of the agreement.
1.3 Investment in Equity Shares.
Investment in Equity Securities are initially measured at cost. Any subsequent fair value gain or loss is recognized through Statement of Profit and Loss if such investments in Equity Securities are held for trading purposes. The fair value gains or losses of all other Equity Securities are recognized in Other Comprehensive Income.
1.4 Investment in Associates, Joint Ventures and Subsidiaries.
The Company has accounted for its investment in subsidiaries, associates and joint venture at cost.
1.5 Derecognition of Financial Assets
A Financial Asset is primarily derecognized when:
- The right to receive cash flows from asset has expired, or
- The Company has transferred its right 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 "pass-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 right 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 refects 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.
2. Financial Liabilities.
2.1 Definition :
Financial liabilities include Long-term and Short-term Loans and Borrowings, Trade and Other payables and Other eligible Current and Non-current Liabilities.
(a) Initial Recognition and Measurement
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, and derivative financial instruments.
(b) Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below :
i) Financial Liabilities at Fair Value through Statement of Profit and Loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading. The Company has not designated any financial liabilities upon initial measurement recognition at fair value through profit or loss. Financial liabilities at fair value through profit or loss are at each reporting date at fair value with all the changes recognized in the Statement of Profit and Loss.
ii) Financial Liabilities measured at Amortized Cost
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method (''EIR'') except for those designated in an effective hedging relationship. The carrying value of borrowings that are designated as hedged items in fair value hedges that would otherwise be carried at amortized cost are adjusted to record changes in fair values attributable to the risks that are hedged in effective hedging relationship.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortization is included in finance costs in the Statement of Profit and Loss.
2.2 Loans and Borrowings.
After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in Statement of Profit and Loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
2.3 Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount initially recognized less cumulative amortization.
2.4 Trade and Other Payables
A payable is classified as trade payable if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables 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 the effective interest method.
2.5 De-recognition of Financial Liability
A Financial Liability is derecognized when the obligation under the liability is discharged or cancelled or expires. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other income or finance costs.
3. 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 recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
4. Derivative Financial Instruments
The Company uses derivative financial instruments, such as forward contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks. Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value at the end of each period. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, on the nature of the item being hedged. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
(10) Grants
Grants and subsidies from the Government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be compiled with. Revenue grants are recognized in the Statement of Profit and Loss. Capital Grants relating to specific assets are recognized in the Balance Sheet as deferred income and credited in the statement of Profit and Loss on a systematic basis over the useful life of the related Assets.
(11) Equity Share Capital
Ordinary shares are classified as equity. Incremental costs net of taxes directly attributable to the issue of new equity shares are reduced from retained earnings, net of taxes.
(12) Provisions, Contingent liabilities, Contingent Assets and Commitments
i) General
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that refects, 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.
Contingent liability is disclosed in the case of:
- A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation.
- A present obligation arising from past events, when no reliable estimate is possible:
- A possible obligation arising from past events, unless the probability of outflow of resources is remote. Commitments include the amount of Purchase Order (net of of Advances) issued to parties for Completion of Assets.
Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
ii) Other Litigation Claims
Provision for litigation related obligation represents liabilities that are expected to materialize in respect of matters in appeal.
iii) Onerous Contracts
A provision for onerous contracts is measured at the present value of the lower of expected costs of terminating the contract and the expected cost of continuing with the contract. Before a provision is established, the Company recognizes impairment on the assets with the contract.
(13) Revenue Recognition
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.
i) Sale of Goods
Revenue is recognized when significant risk and reward of ownership have been passed on to the Customer.
ii) Power Distribution
Revenue from Power Distribution business is accounted on the basis of billings to the customers and includes unbilled revenues accrued up to the end of accounting year. Customers are billed as per the tariff rates issued by Electricity Regulatory Commission.
iii) Dividend Income
Dividend Income is accounted for when the right to receive the same is established, which is generally when shareholders approve the dividend.
iv) Lease Incentives
Lease Agreements where the risk and rewards incidental to the ownership of an asset substantially vest with the lessor are recognized as operating leases. Leases rentals are recognized on straight -line basis as per the terms of the agreements in the statement of profit and loss.
v) Interest Income
For all Financial instruments measured at amortized cost, interest income is recorded using effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. Interest income is included in other income in statement of profit and loss.
vi) Renewable Energy Certificate
Renewable Energy Certificate (REC) benefits are recognized in Statement of Profit & Loss on Sale of REC. Income from Sale of RECs is recognized on the delivery to the Customers'' account.
vii) Export Benefit
Export incentives, Duty drawbacks and other benefits are recognized in the Statement of Profit and Loss on accrual basis.
(14) Employees Benefits
i) Defined Contribution Plans
Contributions to the employees'' regional provident fund, superannuation fund, Employees Pension Scheme and Employees'' State Insurance are recognized as defined contribution plan and charged as expenses during the period in which the employees perform the services.
ii) Defined Benefit Plans
Retirement benefits in the form of Gratuity and Leave Encashment are considered as defined benefit plan and determined on actuarial valuation using the Projected Unit Credit Method at the balance sheet date. Actuarial Gains or Losses through re-measurement of the net obligation of a defined benefit liability or asset is recognized in Other Comprehensive Income. Such re-measurements are not reclassified to Statement of Profit and Loss in subsequent periods.
The Provident Fund Contribution other than contribution to Employees'' Regional Provident Fund, is made to trust administered by the trustees. The interest rate to the members of the trust shall not be lower than the statutory rate declared by the Central Government under Employees'' Provident Fund and Miscellaneous Provision Act, 1952. The Employer shall make good deficiency, if any.
iii) Short-term Employee Benefits
Short term benefits are charged off at the undiscounted amount in the year in which the related service is rendered.
iv) Long-term Employee Benefit
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the balance sheet date. Annual leaves can either be availed or enchased subject to restriction on the maximum accumulation of leaves.
v) Termination Benefits
Termination benefits are recognized as an expense in the period in which they are incurred.
The Company shall recognize a liability and expense for termination benefits at the earlier of the following dates:
(a) When the entity can no longer withdraw the offer of those benefits; and
(b) When the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits.
(15) Borrowing Costs
(1) Borrowing costs that are specifically attributable to the acquisition, construction, or production of a qualifying asset are capitalized as a part of the cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.
The Borrowing Cost consists of Interest & Other Incidental costs that the Company incurs in connection with the borrowing of such funds.
(2) For general borrowing used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by applying a capitalization rate to the expenditures on that asset. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalized during a period does not exceed the amount of borrowing cost incurred during that period.
(3) All other borrowing costs are recognized as expense in the period in which they are incurred.
(16) Leases
1. As a Lessee
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset , even if that right is not explicitly specified in an arrangement.
1.1. Finance Lease
Finance Lease that transfer substantially all of the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the 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 a reduction in the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability .Finance charges are recognized in finance costs in the statement of profit and loss unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s policy on borrowing costs.
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.
1.2. Operating Lease
Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by lessor are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset.. Payments under operating lease are recorded in the Statement of Profit and Loss on a straight line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases.
Leasehold lands are amortized over the period of lease.
2. As a Lessor
Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term unless the recipients are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
(17) Taxes on Income
a) Current Tax
i) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals.
ii) Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss .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.
b) Deferred Tax
Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
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 reassessed 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 the statement of profit and loss is recognized outside the statement of profit and loss.
Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
The break-up of the major components of the deferred tax assets and liabilities as at balance sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws.
(18) Exceptional Items
On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.
(19) Earnings Per Share (EPS)
i) Basic earnings per share
Basic earnings per share is calculated by dividing
- The Profit or Loss attributable to Equity Shareholders of the Company by the Weighted Average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year.
ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and the Weighted Average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(20) Segment Accounting
The Company is engaged primarily into manufacturing of Cement. The Company has only one business segment as identified by management namely Compendious Materials.
Segments have been identified taking into account nature of product and differential risk and returns of the segment. The business segments are reviewed by the Vice Chairman & Managing Director (Chief Operating Decision Maker).
The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on each segments profit or loss and is measured consistently with profit or loss in the financial statements.
(21) Recent Accounting Pronouncements
a) Appendix B to Ind AS 21 - Foreign Currency Transactions and Advance Consideration
Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company is evaluating the requirement of the amendment and the effect of this on the financial statements will be given in the due course
b) Appendix B to Ind AS 115 - Revenue from Contract with Customers
The Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Further it requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)
The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018 and the Company will adopt the standard on April 1, 2018 by applying Cumulative catch-up transaction method and accordingly comparatives for the year ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.
1) Freehold Land Includes Rs, 1.43 crore (previous year nil) for which mutation is pending.
2) Leasehold Land Includes Rs, 1.82 crore (previous year Rs, 1.82 crore) pending transfer of title in the name of the Company.
3) Factory & Service Buildings and Plant & Machinery at Jaykaypuram (Rajasthan) plant were revalued as at 1st April 1990. Certain fixed assets of aforesaid Plant were revalued and updated as at 1st April, 1997 and certain Buildings, Plant & Machinery and other assets of aforesaid Plant were revalued and / or updated as at 31st March, 2000. Based on report of the valuers on business valuation of Cement business, fixed assets value was re-determined at net replacement cost basis on 1st April 2005. Certain Plant and Machinery and Railway siding of aforesaid plant were revalued and up dated as at 1st April 2008 and 1st April 2011. The Gross Block as at 31st March 2018 includes aggregate revaluation / business valuation of Rs, 396.71 crore (Previous year Rs, 396.71 crore).
c. Terms/ right attached to equity shareholders :
i) The Company has only one class of Equity Shares having a par value of Rs, 5 per share. Each holder of equity shares is entitled to one vote per share.
ii) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company , after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
iii) The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.
d. The Company bought back and extinguished 7,000 and 46,81,858 equity Shares in 2011-12 and 2012-13 respectively. e Nature of Reserves :-
Capital Redemption Reserve : Represents the statutory reserve created when Preference Share Capital is redeemed.
Securities Premium Reserve : Represents the amount received in excess of Par value of Securities.
Debenture Redemption Reserve : Represents the Statutory Reserve for Non Convertibles Debentures issued by the Company.
* Due & payable within one year
1 Secured Redeemable Non-Convertible Debentures ( NCDs) are privately placed and consists of :
i) 10.35% NCDs Series B-2 of Rs, 40 crore are redeemable in two equal annual installments at the end of 9th and 10th year from the date of allotment i.e. 4th Feb, 2010.
ii) 9% NCDs of Rs, 49.79 crore are redeemable in three equal annual installments at the end of 6th, 7th and 8th year from the date of allotment, i.e. 20th July 2012.
iii) 8.70% NCDs Series A of Rs,75 crore are redeemable at the end of 3rd year from the date of allotment i.e. 6th January 2017.
iv) 8.80% NCDs Series B of Rs,75 crore are redeemable at the end of 4th year from the date of allotment i.e. 6th January 2017.
v) 8.90% NCDs Series C of Rs, 150 crore are redeemable at the end of 5th year from the date of allotment i.e. 6th January 2017.
2 All the NCDs are secured by way of a first charge on all the immovable and movable fixed assets / properties pertaining to the Company''s Cement Unit situated at Jaykaypuram, Basantgarh, Distt. Sirohi, in the State of Rajasthan, ranking pari-passu with the charges created on the said assets subject to the prior charges in favour of Banks on specified assets and Company''s Banks for working capital on specified movables assets.
3 NCDs specified in 1 (i) & 1 (ii) are also additionally secured by way of mortgage on Company''s Immovable Property located in the State of Gujarat in addition to Security specified at Sl.No. 2 above.
4 Term Loans from Banks aggregating to Rs, 123.13 crore are secured by way of a first charge on all the immovable and movable properties pertaining to the Company''s Cement Unit situated at Jaykaypuram, Basantgarh, Distt. Sirohi, in the State of Rajasthan, ranking pari-passu with the charges created on the said assets subject to the prior charges in favour of Banks on specified assets and Company''s Banks for working capital on specified movables assets. These Term Loans are repayable as under:
a) Term Loan of Rs, 13.13 crore is repayable in 12 equal quarterly installments.
b) Term Loan of Rs, 35.00 crore is repayable in 16 equal quarterly installments.
c) Term Loan of Rs, 75.00 crore is repayable in 24 equal quarterly installments.
5 Term Loans from a Bank of Rs, 18.75 crore are secured by way of an exclusive charge on certain specified assets of the Company situated at Jaykaypuram, Basantgarh, Distt. Sirohi, in the State of Rajasthan. This Term Loan is repayable in 1 2 equal quarterly installments.
6 Term Loan from a Bank of Rs, 35.00 crore & Rs, 50.31 crore are secured by way of an exclusive first charge on immovable & movable fixed assets of the Company''s specific Split Grinding Units situated at Jhajjar, in the State of Haryana, except charge on the Current Assets. These Term Loans are repayable in 16
& 23 equal quarterly installments respectively.
7 Term Loan from a Bank of Rs, 25.00 crore is secured by way of an exclusive first charge on movable assets of the Company''s AAC Block Unit situated at Jhajjar, in the State of Haryana,except charge on current assets. This Term Loan is repayable in 20 equal quarterly installments.
8 Term Loan from a Bank of Rs,30.00 Crore is secured by way of an exclusive first charge on immovable & movable assets of the Company''s 6 MW Solar Power Plant in the State of Rajasthan, except charge on the Current Assets. This Term Loan is repayable in 24 equal quarterly installments.
9 Te rm Loan from a Bank of Rs, 158.00 crore is secured by way of an exclusive first charge on all the immovable and movable fixed assets of the Company''s Split Grinding Unit at Surat in the State of Gujarat. This Term Loan is repayable in 31 unequal quarterly installments.
10 Term Loans from Banks aggregating to Rs, 750.00 crore are secured by way of first pari passu charge on all the immovable and movable fixed assets of the Company''s Greenfield Cement Plant at Durg in the State of Chattisgarh. These Term Loans from Banks are repayable in 30 equal quarterly installments.
11 Unsecured Loan from a Bank of Rs, 5.00 crore is repayable on 30th June, 2018.
12 Fixed Deposits represents the Deposits accepted by the Company from Public under its Fixed Deposit Scheme having maturity of 2 & 3 years from the date of deposits.
13 The above outstanding NCDs/Term Loans are net of the Processing charges as per IND AS.
Working capital borrowings from Banks are secured by hypothecation of Stores, Raw Materials, Finished Goods, Stock-in-Process and Book Debts etc. and are further secured / to be secured by way of a second charge on the movable and immovable assets pertaining to the Cement Units of the Company situated at Jaykaypuram, Basantgarh, Distt. Sirohi in the State of Rajasthan and Malpuri Khurd, Ahiwara, Distt. Durg, Chattisgarh (except those assets which are exclusively charged to other lenders).
Buyer''s Credit is secured by a charge on the underlying assets and by a second and subservient charge on the moveable assets of the Company situated at Jaykaypuram, Basantgarh, Distt. Sirohi, in the State of Rajasthan.
Note-38 Financial Risk Management Objectives and Policies
The Company''s Financial Risk Management is an integral part of how to plan and execute its Business Strategies. The Company''s Financial Risk Management Policy is set by the Board. The Company''s activities are exposed to a variety of financial risks from its operations. The key financial risks include market risk (including foreign currency risk, interest rate risk and commodity risk etc.), credit risk and liquidity risk.
38.1 Market Risk: Market risk is the risk of loss of future earnings, fair values or future cash flows that may results from change in the price of a financial instrument. The value of a financial instrument may change as result of change in the interest rates, foreign currency exchange rates, equity prices and other market changes may affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments and deposits, foreign currency receivables, payables and loans and borrowings. Market risk comprises mainly three types of risk: interest rate risk, currency risk and other price risk such as equity price risk and commodity risk.
The Company has an elaborate risk management system to inform Board Members about risk management and minimization procedures.
a) Foreign Currency Risk : Foreign Currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company makes certain imports in foreign currency & therefore is exposed to Foreign Exchange Risk.
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.
Foreign Currency Sensitivity
The following table demonstrates the sensitivity to a reasonable possible change of US $ with all other variables held constant. The impact on the Company''s Profit/(Loss)Before Tax due to changes in Foreign Exchange Rate :
b) Interest Rate Risk :-
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because o'' changes in market interest rates. Any changes in the interest rates environment may impact future rates of borrowing. The Company mitigates this risk by maintaining a proper blend of Fixed & Floating Rate Borrowings as also a mix of Rupee & Foreign Currency Borrowings. The following Table shows the blend of Company''s Fixed & Floating Rate Borrowings in Indian Rupee & in Foreign Currency : f-mwn- i
The Company regularly scans the Market & Interest Rate Scenario to find appropriate Financial Instruments & negotiates with the Lenders in order to reduce the effective Cost of Funding.
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.
(c) Commodity Price Risk and Sensitivity:
The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company manages fluctuations in raw material price through hedging in the form of advance procurement when the prices are perceived to be low and also enters into advance buying contracts as strategic sourcing initiative in order to keep raw material and prices under check, cost of material is hedged to the extent possible.
38.2 Credit Risk:
Credit Risk arises from the possibility that counter party may not be able to settle their obligations as agreed. The Company is exposed to credit risk from its operating activities (primarily trade receivables).
Trade Receivables:- Customer Credit Risk is managed based on Company''s established policy, procedures and controls. The Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and aging of trade receivables. Individual credit risk limits are set accordingly.
The credit risk from the organized and bigger buyers is reduced by securing Bank Guarantees/Letter of Credits/part advance payments/post dated cheques. The Out standingâs of different parties are reviewed periodically at different level of organization. The outstanding from the trade segment is secured by two tier security - security deposit from the dealer himself, and our business associates who manage the dealers are also responsible for the outstanding from any of the dealers in their respective region. Impairment analysis is performed based on historical data at each reporting period on an individual basis.
Financial Instruments and Deposits with Banks:
The Company considers factors such as track record, size of institution, market reputation and service standards to select the bank with which balances and deposits are maintained. Generally, balances are maintained with the institutions with which the Company has also availed borrowings. The Company does not maintain significant cash and deposit balances other than those required for its day to day operation.
38.3 Liquidity Risk:
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due.
The Company relies on a mix of borrowings, and excess operating cash flows to meet its needs for funds. The current committed lines of credit are sufficient to meet its short to medium term expansion needs. The Company monitors rolling forecasts of its liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowings facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
Maturity Profile of Financial Liabilities:
The following Table provides undiscounted cash flows towards financial liabilities3 into relevant maturity based on the remaining period at the balance sheet to the contractual maturity date.
Mar 31, 2017
Note-1 I. The Company Overview : Corporate & General Information.
JK Lakshmi Cement Limited (âthe Company'''') is domiciled and incorporated in India and its Shares are publicly traded on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Registered Office of the Company is situated at Jaykaypuram, Basantgarh, Distt. : Sirohi- 307 019, Rajasthan.
The Company is a leading manufacturer and supplier of Cement and Cementationsâ products like RMC & AAC Blocks with manufacturing facilities in the State of Rajasthan, Chattisgarh, Gujarat & Haryana. The Company began its journey in 1982 by setting-up a Cement Plant with a modest Capacity of 0.50 Million Tonnes at Sirohi in the State of Rajasthan. Over the years, the Cement capacity has grown to the present level of 11 Million Tonnes. The Company is the first Cement Manufacturer in North India to introduce coloured bags and registered as ISO 9200. The Company''s Technical Service Cell provides construction solutions to its customers & carries out regular & innovative contact programmes with Individual House Builders, Masons and other Business Associates to keep in tune with their needs and requirements.
These Financial Statements were approved and adopted by the Board of Directors of the Company in their meeting held on 17th May, 2017.
II. Basis of Preparation of Financial Statements.
(i) Statement of Compliance :
The Financial Statements have been prepared in accordance with Indian Accounting Standards (IND AS) as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and relevant provisions of the Companies Act, 2013.
(ii) Basis of Preparation :
These financial statements have been prepared in accordance with IND AS 101, âFirst Time Adoption of IND ASâ, as these are the Company''s first IND AS compliant Financial Statements for the year ended 31st March, 2017.
The Financial Statements correspond to the classification provisions contained in IND AS-1 (Presentation of Financial Statements). The transition to IND AS has been carried out from the Accounting Principles generally accepted in India (Indian GAAP), which is considered as the âPrevious GAAPâ, for purposes of IND AS - 1.
The preparation of these Financial Statements resulted in changes to the Company''s Accounting Policies as compared to the most recent Annual Financial Statements prepared under Previous GAAP, wherever necessary. All Accounting Policies and applicable IND AS have been applied consistently and retrospectively to all periods, including the previous financial year presented and the IND AS opening balance sheet as at 1st April, 2015 (Transition Date). The resulting difference between the carrying amounts under IND AS and Previous GAAP as on the Transition Date has been recognized directly in Retained Earnings . An explanation of the effect of the transition from Previous GAAP to Ind AS on the Company''s equity and profit is provided in Note 48.
In preparing these Financial Statements, the Company has availed certain exemptions and exceptions from retrospective application of certain requirements under IND AS, as explained below:
a) Exemptions from Retrospective Application:
- Deemed cost of Property, Plant and Equipment : The Company has opted to continue with the carrying value for all of its property, plant and equipment as recognized in the previous GAAP financial statements as their deemed cost at the transition date to IND AS (i.e. 1st April, 2015).
- Business Combinations: The Company has opted to apply IND AS 103 prospectively from the date of transition to IND AS, i.e. 1st April, 2015 onwards. However, previous GAAP balances relating to assets and liabilities acquired under business combinations entered into before transition date, have been carried forward without any adjustments.
- Investment in Subsidiaries and Associates : On the transition date, the Company has opted to carry investments in subsidiaries and associates at their deemed cost, i.e. previous GAAP carrying amount.
- Leases : For arrangements entered into prior to 1st April, 2015, the Company has assessed all arrangements for Embedded Leases based on conditions prevailing as at the date of transition (i.e. 1st April, 2015).
b) Exceptions from full Retrospective Application:
Estimates: Upon an assessment of the estimates made under Previous GAAP, the Company has concluded that there was no necessity to revise such estimates under IND AS, except where revision in estimates was necessitated as required by IND AS . The estimates used by the Company to present the amounts in accordance with IND AS reflect conditions existing as at 1st April, 2015, the date of transition to IND AS and as at 31st March, 2016 and 31st March, 2017.
(iii) Basis of Measurement.
The standalone financial statements have been prepared on accrual basis and under the historical cost convention except for the items that have been measured at fair value as required by relevant IND AS.
(iv) Fair Value Measurement.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
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 in to 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.
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 in which they fall.
(v) Current & Non-Current Classifications.
All Assets and Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of product & activities of the Company and their realization in cash and cash equivalent, the Company has determined its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(vi) Significant Accounting Judgments, Estimates and Assumptions.
The preparation of these Financial Statements requires management judgments, estimates and assumptions that affect the application of Accounting Policies, the Accounting disclosures made and the reports amounts of Assets, Liabilities, Income and Expenses. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to Accounting estimates are recognized in the period in which the estimates are revised and any future periods effected pursuant to such revision.
III. Significant Accounting Policies
(1) Property, Plant and Equipment.
Property, Plant and Equipment are stated at cost less accumulated depreciation and accumulated losses, if any. Cost includes expenses directly attributable to bringing the Asset to their location and conditions necessary for it to be capable of operating in the manner intended by the management.
Subsequent cost are included in the asset''s carrying amount or recognized as separate asset, as appropriate, only when it is probable that is future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Internally manufactured property, plant and equipment are capitalized at factory cost, including excise duty, wherever applicable.
Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by the management, the cost of erection/ construction is transferred to the appropriate category of property, plant and equipment cost (net of income and including pre-operative cost / expenses) associated with the commissioning of an asset are capitalized until the period of commissioning has been completed and the asset is ready of its intended use.
Property, Plant and Equipment are eliminated from financial statement, either on disposal or when retired from active use. Losses arising in the case of retirement of Property, plant and equipment and gains or losses arising from disposal of property, plant and equipment are recognized in Statement of Profit and Loss in the year of occurrence.
Transition to Ind AS.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 1st April, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives and residual value.
Deprecation is calculated using the Straight Line Method (SLM) to allocate their cost, net of their residual values, over their estimated useful lives as specified in Schedule II to Companies Act, 2013 except for Captive Power Plants and Split Grinding Units which is provided on Written Down Value Method (WDV) as per the said schedule. Depreciation on Aircraft
& RMC is provided considering estimated useful life of 6 years on SLM basis.
The assets residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit and loss within other gains / (losses).
Depreciation on impaired assets is provided on the basis of their residual useful life.
(2) Investment Properties.
Property that is held for long-term rentals yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.
Investment properties are depreciated using the Straight Line Method (SLM) over their estimated useful lives. The useful live has been determined based on technical evaluation performed by the management''s expert.
The Residual Life, useful lives and depreciation method of investment properties are reviewed, and adjusted on Prospective basis as appropriate, at each financial year end. The effects of any revision are included in the Statement of Profit and Loss when the changes arise.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its investment properties recognized as at 1st April, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
(3) Intangible Assets.
Intangibles Assets are recognized if the future economic benefits attributable to the Assets are expected to flow to the Company and the cost of the asset can be measured reliably.
Internally generated intangibles, excluding capitalized developments costs, are not capitalized and the related expenditure is reflected in the statement of profit and loss in the period in which the expenditure is incurred.
The useful lives of Intangibles Assets are assessed as either finite or indefinite. The amortization period and the amortization method for an Intangible Asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Intangible Asset with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the Intangible Asset may be impaired.
Intangible Assets are amortized as follows:
-Computer Software : Over a period of five years
Intangibles Assets with indefinite useful lives, if any are not mortised, but are tested for impairment annually , either individually or at the cash-generating unit level. The assessment of indefinite useful life is reviewed annually to determine whether indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite life is made on prospective basis.
Gain 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.
(4) Research and Development Cost.
Revenue Expenditure on Research and Development is charged to the Statement of Profit and Loss and Capital Expenditure is added to Property, plant and equipment.
However, Development expenditure on new product is capitalized as intangible asset.
The cost of inventories have been computed to include all cost of purchases, cost of conversion and other related costs incurred in bringing the inventories to their present location and condition. Slow and non-moving material, obsolesces, defective inventories are duly provided for and valued at net realizable value. Goods and materials in transit are valued at actual cost incurred upto the date of balance sheet. Materials and supplies held for use in the production of inventories are not written down if the finished products in which they will be used are expected to be sold at or above cost.
(6) Cash and Cash Equivalents.
Cash and Cash Equivalents includes cash on hand, deposits held at call with Banks / Financial Institutions, other short-term, highly liquid investments which are subject to an insignificant risk of changes in value.
(7) Impairment of Assets.
The carrying amounts of Property, Plant & Equipment, Intangible Assets and Investment Properties are reviewed at each Balance Sheet date to assess impairment, if any, based on internal / external factors. An impairment loss is recognized, as an expense in the Statement of Profit & Loss, wherever the carrying amount of the Asset or Cash Generation Unit (CGU) exceeds its recoverable amount. The impairment loss recognized in prior accounting period is reversed, if there has been an improvement in recoverable amount in subsequent years. Recoverable amount is determined :-
- In the case of an Individual Asset, at the higher of the Fair Value less cost to sell and the value in use; and
- In the case of cash generating unit (a group of assets that generates identified, independent cash flows) at the higher of cash generating unit''s fair value less cost to sell and the value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, and 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.
(8) Foreign Currency Translations & Transitions.
(i) Functional and Presentation Currency.
The Company''s financial statements are presented in INR, which is also the Company''s Functional and Presentation Currency.
(ii) Transaction and Balance.
Foreign currency transactions are recorded at exchange rates prevailing on the date of transaction. Monetary Assets and liabilities related to foreign currency transactions are stated at exchange rate prevailing at the end of the year and exchange difference in respect thereof is charged to the Statement of Profit & Loss.
(9) Financial Instruments.
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.
1. Financial Assets.
1.1 Definition :
Financial Assets include Cash and Cash Equivalents, Trade and Other Receivables, Investments in Securities and other eligible Current and Non-Current Assets.
At initial recognition, all financial assets are measured at fair value. The classification is reviewed at the end of each reporting period.
(i) Financial Assets at Amortized Cost:
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates. These financial assets are intended to be held until maturity. Therefore, they are subsequently measured at amortized cost by applying the Effective Interest Rate (EIR) method to the gross carrying amount of the financial asset. The EIR amortization is included as interest income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of Profit and Loss.
(ii) Financial Assets at Fair value through Other Comprehensive Income :
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount outstanding on specified dates, as well as held for selling. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognized in Other Comprehensive Income (OCI). Interest income calculated using the effective interest rate (EIR) method, impairment gain or loss and foreign exchange gain or loss are recognized in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognized in Other Comprehensive Income is reclassified from the OCI to the Statement of Profit and Loss.
(iii) Financial Assets at Fair value through Profit or Loss (FVTPL):
At the date of initial recognition, Financial assets are held for trading, or which are measured neither at Amortized Cost nor at Fair Value through OCI. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value movements recognized in the Statement of Profit and Loss.
1.2 Trade Receivables.
A Receivable is classified as a ''trade receivable'' if it is in respect to the amount due from customers on account of goods sold or services rendered in the ordinary course of business. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. For some trade receivables the Company may obtain security in
the form of guarantee, security deposit or letter of credit which can be called upon if the counterparty is in default under the terms of the agreement.
1.3 Investment in Equity Shares.
Investment in Equity Securities are initially measured at cost. Any subsequent fair value gain or loss is recognized through Profit or Loss if such investments in Equity Securities are held for trading purposes. The fair value gains or losses of all other Equity Securities are recognized in Other Comprehensive Income.
1.4 Investment in Associates, Joint Ventures and Subsidiaries.
The Company has accounted for its investment in subsidiaries and associates, joint venture at cost.
1.5 Derecognition of Financial Assets.
A Financial Asset is primarily derecognized when:
- The right to receive cash flows from asset has expired, or
- The Company has transferred its right 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-throughâ 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 right 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.
2. Financial Liabilities.
2.1 Definition :
Financial liabilities include Long-term and Short-term Loans and Borrowings, Trade and Other payables and Other eligible Current and Non-current Liabilities.
(a) Initial Recognition and Measurement.
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, and derivative financial instruments.
(b) Subsequent Measurement.
The measurement of financial liabilities depends on their classification, as described below :
i) Financial Liabilities at Fair Value through Profit and Loss.
Financial liabilities at fair value through profit and loss include financial liabilities held for trading. The Company has not designated any financial liabilities upon initial measurement recognition at fair value through profit and loss. Financial liabilities at fair value through profit and loss are at each reporting date at fair value with all the changes recognized in the Statement of Profit and Loss.
ii) Financial Liabilities measured at Amortized Cost.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method (EIR) except for those designated in an effective hedging relationship. The carrying value of borrowings that are designated as hedged
items in fair value hedges that would otherwise be carried at amortized cost are adjusted to record changes in fair values attributable to the risks that are hedged in effective hedging relationship. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortization is included in finance costs in the Statement of Profit and Loss.
2.2 Loans and Borrowings.
After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in the statement of profit and loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
2.3 Financial Guarantee Contracts.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount initially recognized less cumulative amortization.
2.4 Trade and Other Payables.
A payable is classified as trade payable if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables 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 the effective interest method.
2.5 De-recognition of Financial Liability.
A Financial Liability is derecognized when the obligation under the liability is discharged or cancelled or expires. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit and loss as other income or finance costs.
3. 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 recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
4. Derivative Financial Instruments.
The Company uses derivative financial instruments, such as forward currency contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks. Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value at the end of each period. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, on the nature of the item being hedged. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit and loss.
(10) Equity Share Capital.
Ordinary shares are classified as equity. Incremental costs net of taxes directly attributable to the issue of new equity shares are reduced from retained earnings, net of taxes.
(11) Provisions, Contingent liabilities, Contingent Assets and Commitments.
I) General.
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
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.
Contingent liability is disclosed in the case of:
- A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation.
- A present obligation arising from past events, when no reliable estimate is possible:
- A possible obligation arising from past events, unless the probability of outflow of resources is remote. Commitments include the amount of Purchase Order (net of Advances) issued to parties for Completion of Assets.
Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
ii) Other Litigation Claims.
Provision for litigation related obligation represents liabilities that are expected to materialize in respect of matters in appeal.
iii) Onerous Contracts.
A provision for onerous contracts is measured at the present value of the lower of expected costs of terminating the contract and the expected cost of continuing with the contract. Before a provision is established, the Company recognizes impairment on the assets with the contract.
(12) Revenue Recognition.
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. The Company has assumed that recovery of excise duty flows to the entity 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) 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.
i) Sale of Goods.
Revenue is recognized when significant risk and reward of ownership have been passed on to the Customer.
ii) Power Distribution.
Revenue from Power Distribution business is accounted on the basis of billings to the customers and includes unbilled revenues accrued up to the end of accounting year. Customers are billed as per the tariff rates issued by Electricity Regulatory Commission.
iii) Dividend Income.
Dividend Income is accounted for when the right to receive the same is established, which is generally when shareholders approve the dividend.
iv) Lease Incentive
Lease Agreements where the risk and rewards incidental to the ownership of an asset substantially vest with the less or are recognized as operating leases. Leases rentals are recognized on straight -line basis as per the terms of the agreements in the statement of profit and loss.
v) Interest Income.
For all Financial instruments measured at amortized cost, interest income is recorded using effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. Interest income is included in other income in the statement of profit and loss.
vi) Renewable Energy Certificate :
Renewable Energy Certificate (REC) benefits are recognized in the Statement of Profit and Loss on Sale of REC''s. Income from Sale of REC''s is recognized on the delivery to the Customers'' account.
vii) Export Benefits :
Export incentives, Duty drawbacks and other benefits are recognized in the Statement of Profit and Loss.
(13) Employees Benefits.
i) Defined Contribution Plans.
Contributions to the employees'' regional provident fund, superannuation fund, Employees Pension Scheme and Employees'' State Insurance are recognized as defined contribution plan and charged as expenses during the period in which the employees perform the services.
ii) Defined Benefit Plans.
Retirement benefits in the form of Gratuity and Leave Encashment are considered as defined benefit plan and determined on actuarial valuation using the Projected Unit Credit Method at the balance sheet date. Actuarial Gains or Losses through re-measurement of the net obligation of a defined benefit liability or asset is recognized in Other Comprehensive Income. Such re-measurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
The Provident Fund Contribution other than contribution to Employees'' Regional Provident Fund, is made to trust administered by the trustees. The interest rate to the members of the trust shall not be lower than the statutory rate declared by the Central Government under Employees'' Provident Fund and Miscellaneous Provision Act, 1952. The Employer shall make good deficiency, if any.
iii) Short-term Employee Benefits.
Short term benefits are charged off at the undiscounted amount in the year in which the related service is rendered.
iv) Long-term Employee Benefit.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the balance sheet date.
Annual leaves can either be availed or encased subject to restriction on the maximum accumulation of leaves.
v) Termination Benefits.
Termination benefits are recognized as an expense in the period in which they are incurred.
The Company shall recognize a liability and expense for termination benefits at the earlier of the following dates:
(a) When the entity can no longer withdraw the offer of those benefits; and
(b) When the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits.
(14) Borrowing Costs.
(1) Borrowing costs that are specifically attributable to the acquisition, construction, or production of a qualifying asset are capitalized as a part of the cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.
The Borrowing Cost consists of Interest & Other Incidental costs that the Company incurs in connection with the borrowing of such funds.
(2) For general borrowing used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by applying a capitalization rate to the expenditures on that asset. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalized during a period does not exceed the amount of borrowing cost incurred during that period.
(3) All other borrowing costs are recognized as expense in the period in which they are incurred.
(15) Leases.
1. As a Lessee :
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset , even if that right is not explicitly specified in an arrangement.
1.1. Finance Lease.
Finance Lease that transfer substantially all of the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the 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 a reduction in the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s policy on borrowing costs.
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.
1.2. Operating Lease.
Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by less or are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset. Payments under operating lease are recorded in the Statement of Profit and Loss on a straight line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases.
Leasehold lands are amortized over the period of lease.
2. As a Lesser :
Lease income from operating leases where the Company is a less or is recognized in income on a straight-line basis over the lease term unless the recipients are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
(16) Taxes on Income.
a) Current Tax.
i) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals.
ii) Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. 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.
b) Deferred Tax.
Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
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 reassessed 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 the statement of profit and loss is recognized outside the statement of profit and loss.
Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
The break-up of the major components of the deferred tax assets and liabilities as at balance sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws.
(17) Exceptional Items.
On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.
(18) Earnings Per Share (EPS).
i) Basic earnings per share.
Basic earnings per share is calculated by dividing :
- The Profit or Loss attributable to Equity Shareholders of the Company.
- By the Weighted Average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year.
ii) Diluted earnings per share.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account :
- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- The Weighted Average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(19) Segment Accounting.
The Company is engaged primarily into manufacturing of Cement. The Company has only one business segment as identified by management namely Compendious Materials.
Segments have been identified taking into account nature of product and differential risk and returns of the segment. The business segments are reviewed by the Vice Chairman & Managing Director (Chief Operating Decision Maker).
The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.
c. Terms/ right attached to equity shareholders :
i) The Company has only one class of Equity Shares having a par value of Rs 5 per share. Each holder of equity shares is entitled to one vote.
ii) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company , after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
iii) The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.
d. The Company bought back and extinguished 7,000 and 46,81,858 equity Shares in 2011-12 and 2012-13 respectively.
e. Nature of Reserves :-
Capital Redemption Reserve : Represents the statutory reserve created when capital is redeemed.
Securities Premium Reserve : Represents the amount received in excess of Per value of securities.
Debenture Redemption Reserve : Represents the Statutory Reserve of Non Convertibles issued by the Company
* Due & payable within one year
1 Secured Redeemable Non-Convertible Debentures (NCDs) are privately placed and consists of :
I) 10.35% NCDs Series B-2 of Rs, 60 crore are redeemable in three equal annual installments at the end of 8th, 9th and 10th year from the date of allotment i.e. 4th Feb, 2010.
ii) 9% NCDs of Rs, 49.79 crore are redeemable in 3 equal annual installments at the end of 6th, 7th and 8th year from the date of allotment, i.e. 20th July 2012.
iii) 8.70% NCDs Series A of Rs, 75 crore are redeemable at the end of 3rd year from the date of allotment i.e. 6th January 2017.
iv) 8.80% NCDs Series B of Rs, 75 crore are redeemable at the end of 4th year from the date of allotment i.e. 6th Jan uary 2017.
v) 8.90% NCDs Series C of Rs, 150 crore are redeemable at the end of 5th year from the date of allotment i.e. 6th January 2017.
2 All the NCDs are secured by way of a first charge on all the immovable and movable fixed assets / properties pertaining to the Company''s Cement Unit situated at Jaykaypuram, Basantgarh, Distt. Sirohi, in the State of Rajasthan, ranking pari-passu with the charges created on the said assets subject to the prior charges in favour of Banks on specified assets and Company''s Banks for working capital on specified movables assets.
3 NCDs specified in 1 (i) & 1 (ii) are also additionally secured by way of mortgage on Company''s Immovable Property located in the State of Gujarat in addition to Security specified at Sl. No. 2 above.
4 Term Loans from Banks aggregating to Rs, 157.75 crore are secured by way of a first charge on all the immovable and movable properties pertaining to the Company''s Cement Unit situated at Jaykaypuram, Basantgarh, Distt. Sirohi, in the State of Rajasthan, ranking pari-passu with the charges created on the said assets subject to the prior charges in favour of Banks on specified assets and Company''s Banks for working capital on specified movables assets. These Term Loans are repayable as under:
a) Term Loan of Rs, 17.50 crore is repayable in 16 equal quarterly installments.
b) Term Loan of Rs, 9.00 crore is repayable in 3 equal quarterly installments .
c) Term Loan of Rs, 43.75 crore is repayable in 20 equal quarterly installments.
d) Term Loan of Rs, 87.50 crore is repayable in 28 equal quarterly installments.
5 Term Loans from a Bank of Rs, 25 crore are secured by way of an exclusive charge on certain specified assets of the Company situated at Jaykaypuram, Basantgarh, Distt. Sirohi, in the State of Rajasthan. This Term Loan is repayable in 16 equal quarterly installments.
6 Term Loan from a Bank of Rs, 43.75 crore & Rs, 59.06 crore are secured by way of an exclusive first charge on immovable & movable fixed assets of the Company''s specific Split Grinding Units situated at Jhajjar, in the State of Haryana, except charge on the Current Assets. These Term Loans are repayable in 20 & 27 equal quarterly installments respectively.
7 Term Loan from a Bank of Rs, 30.00 crore is secured by way of an exclusive first charge on movable assets of the Company''s AAC Block Unit situated at Jhajjar, in the State of Haryana, except charge on current assets. This Term Loan is repayable in 24 equal quarterly installments.
8 Term Loan from a Bank of Rs, 35.00 Crore is secured by way of an exclusive first charge on immovable & movable assets of the Company''s 6 MW Solar Power Project in the State of Rajasthan, except charge on the Current Assets. This Term Loan is repayable in 28 equ al quarterly installments.
9 Term Loan from a Bank of Rs, 160.00 crore is secured by way of an exclusive first charge on all the immovable and movable fixed assets of the Company''s Split Grinding Unit at Surat in the State of Gujarat. This Term Loan shall be repayable in 35 unequal quarterly installments commencing from 30th June 2017.
10 Term Loans from Banks aggregating to Rs, 850.00 crore are secured by way of first pari passu charge on all the immovable and movable fixed assets of the Company''s Greenfield Cement Plant at Durg in the State of Chhattisgarh. These Term Loans from Banks are repayable in 34 equal quarterly installments.
11 Unsecured Loan from a Bank of Rs, 15.00 crore is repayable in 3 equal half yearly installments.
12 Fixed Deposits represents the Deposits accepted by the Company from Public under its Fixed Deposit Scheme having maturity of 2 & 3 years from the date of deposits.
Working Capital Borrowing from Banks are secured by hypothecation of Stores, Raw Materials, Finished Goods, Stock-in-Process and Book Debts etc. and are further secured by mortage by way of a second charge on the moveable and immovable assets pertaining to the Cement Unit of the Company situated at Jaykaypuram, Basantgarh, Distt.Sirohi, in the State of Rajasthan.
Buyer''s Credit is secured by a charge on the underlying assets and by a second and subservient charge on the moveable assets of the Company situated at Jaykaypuram, Basantgarh, Distt. Sirohi, in the State of Rajasthan.
Note 39. Financial Risk Management Objectives and Policies.
The Company''s Financial Risk Management is an integral part of how to plan and execute its Business Strategies. The Company''s Financial Risk Management Policy is set by the Board. The Company''s activities are exposed to a variety of financial risks from its operations. The key financial risks include market risk (including foreign currency risk, interest rate risk and commodity risk etc.), credit risk and liquidity risk.
39.1 Market Risk: Market risk is the risk of loss of future earnings, fair values or future cash flows that may results from change in the price of a financial instrument. The value of a financial instrument may change as result of change in the interest rates, foreign currency exchange rates, equity prices and other market changes may affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments and deposits, foreign currency receivables, payables and loans and borrowings. Market risk comprises mainly three types of risk: interest rate risk, currency risk and other price risk such as equity price risk and commodity risk.
The Company has an elaborate risk management system to inform Board Members about risk management and minimization procedures.
a) Foreign Currency Risk : Foreign Currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company makes certain imports in foreign currency & therefore is exposed to Foreign Exchange Risk.
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.
b) Interest Rate Risk :-
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Any changes in the interest rates environment may impact future rates of borrowing. The Company mitigates this risk by maintaining a proper blend of Fixed & Floating Rate Borrowings as also a mix of Rupee
& Foreign Currency Borrowings. The following Table shows the blend of Company''s Fixed & Floating Rate Borrowings in Indian Rupee & in Foreign Currency :
The Company regularly scans the Market & Interest Rate Scenario to find appropriate Financial Instruments & negotiates with the Lenders in order to reduce the effect Cost of Funding.
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.
(c) Commodity Price Risk and Sensitivity:
The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company manages fluctuations in raw material price through hedging in the form of advance procurement when the prices are perceived to be low and also enters into advance buying contracts as strategic sourcing initiative in order to keep raw material and prices under check, cost of material is hedged to the extent possible.
39.2 Credit Risk:
Credit Risk arises from the possibility that counter party may not be able to settle their obligations as agreed. The Company is exposed to credit risk from its operating activities (primarily trade receivables).
Trade Receivable:- Customer Credit Risk is managed based on Company''s established policy, procedures and controls. The Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and aging of trade receivables. Individual credit risk limits are set accordingly.
The credit risk from the organized and bigger buyers is reduced by securing Bank Guarantees/Letter of Credits/part advance payments/post dated cheques. The Out standings of different parties are reviewed periodically at different level of organization. The outstanding from the trade segment is secured by two tier security - security deposit from the dealer himself, and our business associates who manage the dealers are also responsible for the outstanding from any of the dealers in their respective region. Impairment analysis is performed based on historical data at each reporting period on an individual basis.
Financial Instruments and Deposits with Banks:
The Company considers factors such as track record, size of institution, market reputation and service standards to select the bank with which balances and deposits are maintained. Generally, balances are maintained with the institutions with which the Company has also availed borrowings. The Company does not maintain significant cash and deposit balances other than those required for its day to day operation.
39.3 Liquidity Risk:
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due.
The Company relies on a mix of borrowings, and excess operating cash flows to meet its needs for funds. The current committed lines of credit are sufficient to meet its short to medium term expansion needs. The Company monitors rolling forecasts of its liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowings facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
Maturity Profile of Financial Liabilities:
The following Table provides undiscounted cash flows towards financial liabilities* into relevant maturity based on the remaining period at the balance sheet to the contractual maturity date.
Mar 31, 2016
1.1. The financial statements are prepared in accordance with the
Indian Generally Accepted Accounting Principles (GAAP) under the
historical cost convention (except for certain fixed assets which were
revalued) on the accrual basis. GAAP comprises mandatory accounting
standards specified under section 133 of the Companies Act 2013 (the
Act) read with Rule 7 of the Companies (Accounts) Rule 2014 and the
relevant provisions of the Act. Accounting policies have been
consistently applied except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting standard
requires a change in the accounting policy hitherto in use.
1.2. Fixed Assets are stated at cost adjusted by revaluation of certain
fixed assets.
1.3. Expenditure during construction/erection period is included under
Capital Work-in-Progress and is allocated to the respective fixed
assets on completion of construction/erection.
1.4. Foreign currency transactions are recorded at exchange rates
prevailing on the date of transaction. Monetary Assets and liabilities
related to foreign currency transactions are stated at exchange rate
prevailing at the end of the year and exchange difference in respect
thereof is charged to Statement of Profit & Loss. Premium in respect of
forward contracts is recognized over the life of the contract.
1.5. Long term investments are stated at cost. Provision for diminution
in the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management. The current
investments are stated at lower of cost and quoted / fair value
computed category wise.
1.6. Inventories are valued at lower of cost and net realizable value
(except scrap/ waste which are valued at net realizable value). The
cost is computed on weighted average basis. Finished Goods and Process
Stock include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition.
1.7. Revenue is recognized when significant risk and reward of
ownership have been passed on to the Customer. Export incentives, Duty
drawbacks and other benefits are recognized in the Statement of Profit
and Loss and other revenue incentives are netted from respective head.
Project subsidy is credited to Capital Reserve.
1.8. Revenue expenditure on Research and Development is charged to
Statement of Profit and Loss and capital expenditure is added to Fixed
Assets.
1.9. Borrowing cost is charged to Statement of Profit and Loss except
cost of borrowing for acquisition of qualifying assets which is
capitalized till the date of commercial use of the asset.
1.10 (i) Depreciation on Buildings, Plant & Machinery {except for Power
Plants, Split Grinding Units and Ready Mix Concrete Plants (RMC)} and
Railway Siding is provided as per Straight Line Method (SLM), as per
useful life specified in Schedule II to the Act (Schedule II).
Depreciation on Captive Power Plants, Split Grinding units & Other
Assets is provided on Written Down Value (WDV) method as per the said
Schedule. Depreciation on Aircraft and RMC is provided considering
estimated useful life of 6 years on SLM basis. Depreciation on impaired
assets is provided on the basis of their residual useful life.
(ii) Leasehold Land is being amortized over the lease period.
1.11. The carrying amounts of Assets are reviewed at each Balance
Sheet date to assess impairment, if any, based on internal / external
factors. An impairment loss is recognised, as an expense in the
Statement of Profit & Loss, wherever the carrying amount of the Asset
exceeds its recoverable amount. The impairment loss recognised in prior
accounting period is reversed, if there has been an improvement in
recoverable amount in subsequent years.
1.12. Intangible Assets are being recognized if the future economic
benefits attributable to the Assets are expected to flow to the Company
and cost of the Asset can be measured reliably. The same are being
amortised over the expected duration of benefits.
1.13. Current Tax is the amount of tax payable on the estimated
taxable income for the current year as per the provisions of Income Tax
Act, 1961. Deferred Tax Assets and Liabilities are recognized in
respect of current year and prospective years. Deferred Tax Assets is
recognized on the basis of reasonable/virtual certainty that sufficient
future taxable income will be available against which the same can be
realized.
1.14. Employee Benefits:
(i) Defined Contribution Plan
Contributions to the Employees'' Regional Provident Fund, Superannuation
Fund and Pension Fund are recognized as Defined Contribution Plan and
charged as expenses in the year in which the employees render the
services.
(ii) Defined Benefit Plan
Retirement benefits in the form of Gratuity and Leave Encashment are
considered as Defined Benefit Plan and determined on actuarial
valuation, using the Projected Unit Credit Method, as at the date of
the Balance Sheet. Actuarial Gains / Losses, if any, are immediately
recognized in the Statement of Profit and Loss.
The Provident Fund Contribution other than Employees'' Regional
Provident Fund, is made to Trust administered by the Trustees. The
interest payable on Fund to the members of the Trust shall not be lower
than the statutory rate declared by the Central Government under
Employees'' Provident Fund and Miscellaneous Provision Act, 1952.
Shortfall, if any, shall be made good by the Company.
(iii) Short Term Employee Benefits
Short term compensated absences are provided based on past experience
of the leave availed.
1.15. Provision in respect of present obligation arising out of past
events are made in Accounts when reliable estimates can be made of the
amount of the obligation. Contingent Liabilities are not recognized but
are disclosed by way of Notes to Accounts. Contingent Assets are not
recognized or disclosed in Financial Statements.
Mar 31, 2014
1.1. The financial statements are prepared in accordance with the
Indian Generally Accepted Accounting Principles (GAAP) under the
historical cost convention on the accrual basis. GAAP comprises
mandatory accounting standards as prescribed by the Companies
(Accounting Standards) Rules, 2006, the provisions the Companies Act,
2013 (to the extent notified), the Companies Act, 1956 (to the extent
applicable). Accounting policies have been consistently applied except
where a newly issued accounting standard is initially adopted or a
revision to an existing accounting standard requires a change in the
accounting policy hitherto in use.
1.2. Fixed Assets are stated at cost adjusted by revaluation /
business valuation.
1.3. Expenditure during construction/erection period is included under
Capital Work-in-Progress and is allocated to the respective fixed
assets on completion of construction/erection.
1.4. Foreign currency transactions are recorded at exchange rates
prevailing on the date of transaction. Monetary Assets and liabilities
related to foreign currency transactions are stated at exchange rate
prevailing at the end of the year and exchange difference in respect
thereof is charged to Statement of Profit & Loss . Premium in respect
of forward contracts is recognized over the life of the contract.
1.5. Long term investments are stated at cost. Provision for
diminution in the value of long term investments is made only if such a
decline is other than temporary in the opinion of the management. The
current investments are stated at lower of cost and quoted / fair value
computed categorywise.
1.6. Inventories are valued at lower of cost and net realisable value
(except scrap/ waste which are valued at net realisable value). The
cost is computed on weighted average basis. Finished Goods and Process
Stock include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition.
1.7. Revenue is recognized when significant risk and reward of
ownership have been passed on to the Customer. Export incentives, Duty
drawbacks and other benefits are recognized in the Statement of Profit
and Loss and other revenue incentives are netted from respective head.
Project subsidy is credited to Capital Reserve.
1.8. Revenue expenditure on Research and Development is charged to
Statement of Profit and Loss and capital expenditure is added to Fixed
Assets.
1.9. Borrowing cost is charged to Statement of Profit and Loss except
cost of borrowing for acquisition of qualifying assets which is
capitalized till the date of commercial use of the asset.
1.10 (i) Depreciation on Buildings, Plant & Machinery {except for Power
Plants, Split Grinding Units and Ready Mix Concrete Plants (RMC)} and
Railway Siding is provided as per straight line method, at the rates
and in the manner specified in Schedule XIV to the Companies Act 1956
as amended. Depreciation on Captive Power Plants, Split Grinding units
& Other Assets is provided on written down value method as per the said
Schedule. Depreciation on Aircraft and RMC is provided @15% on SLM
basis, based on their useful economic life. Continuous Process Plants
as defined in Schedule XIV have been considered on technical
evaluation. Depreciation on impaired assets is provided on the basis of
their residual useful life.
(ii) Leasehold Land is being amortized over the lease period.
(iii) Depreciation on the increased amount of assets due to revaluation
/ business valuation is computed on the basis of residual life of the
assets as estimated by the valuers on straight line method.
1.11. The carrying amounts of Assets are reviewed at each Balance Sheet
date to assess impairment, if any, based on internal / external
factors. An impairment loss is recognised, as an expense in the
Statement of Profit & Loss, wherever the carrying amount of the Asset
exceeds its recoverable amount. Previously recognised impairment loss
is further provided or reversed depending on change in its estimated
recoverable amount in subsequent years.
1.12. Intangible Assets are being recognized if the future economic
benefits attributable to the Assets expected to flow to the Company and
cost of the Asset can be measured reliably. The same are being
amortised over the expected duration of benefits.
1.13. Current Ta x is the amount of tax payable on the estimated
taxable income for the current year as per the provisions of Income Tax
Act, 1961. Deferred Tax Assets and Liabilities are recognised in
respect of current year and prospective years. Deferred Tax Assets is
recognized on the basis of reasonable/virtual certainty that sufficient
future taxable income will be available against which the same can be
realised.
1.14. Employee Benefits:
(i) Defined Contribution Plan
Employees benefits in the form of Superannuation Fund and Provident
Fund(PF) considered as defined contribution plan and the contributions
are charged to the Statement of Profit and Loss of the year when the
contribution to the respective funds are due.
(ii) Defined Benefit Plan
Retirement benefits in the form of Gratuity and Leave Encashment are
considered as defined benefit obligations and are provided for on the
basis of an actuarial valuation, using the Projected Unit Credit
method, as at the date of the Balance Sheet. Actuarial gain / losses,
if any, are immediately recognized in the Statement of Profit and Loss.
The Provident Fund Contribution is made to trust administered by the
trustees. The interest rate to the members of the trust shall not be
lower than the statutory rate declared by the Central Government under
Employees'' Provident Fund and Miscellaneous Provision Act, 1952.
Shortfall, if any, shall be made good by the Company.
(iii) Short Term Employee Benefits
Short term compensated absences are provided based on past experience
of the leave availed.
1.15. Provision in respect of present obligation arising out of past
events are made in Accounts when reliable estimates can be made of the
amount of the obligation. Contingent Liabilities (if material) are
disclosed by way of Notes to Accounts. Contingent Assets are not
recognised or disclosed in Financial Statements.
c. Terms/ right attached to equity shareholders :
i) The Company has only one class of Equity Shares having a par value
of Rs. 5 per share. Each holder of equity shares is entitled to one vote
per share.
ii) In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
iii) The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend.
* Pursuant to the buy back Scheme the Company bought back during the
year 2011-12 , 7000 Equity Shares.
1 Secured Redeemable Non-Convertible Debentures (NCDs) are privately
placed and consists of :
i) 9.85% NCDs Series A of Rs. 100 crore are redeemable in two equal
annual installments at the end of 4th(since redeemed) and 5th year from
the date of allotment i.e. 4th Feb, 2010.
ii) 10.05% NCDs Series B-1 of Rs. 40 crore are redeemable in two equal
annual installments at the end of 6th and 7th year from the date of
allotment i.e. 4th Feb, 2010.
iii) 10.35% NCDs Series B-2 of Rs. 60 crore are redeemable in three equal
annual installments at the end of 8th, 9th and 10th year from the date
of allotment i.e. 4th Feb, 2010.
1a. 9% Secured Redeemable Non Convertiable Debentures ( NCDs) of Rs..
49.79 crore are redeemable in 3 equal annual installments, at the end
of 6th, 7th and 8th year from the date of allotment, i.e. 20th July
2012.
2 All the NCDs are secured by a mortgage on the Company''s immovable
properties located in the State of Gujarat and are also secured by way
of a first charge on all the immovable and movable fixed assets
pertaining to the Company''s Cement Unit situated at Jaykaypuram,
Basantgarh, Distt. Sirohi, in the State of Rajasthan, ranking
pari-passu with the charges created on the said fixed assets, subject
to the prior charges in favour of Banks on specified assets.
3 Term Loans from Banks aggregating to Rs.299.19 crore are secured by way
of a first charge on all the immovable and movable properties
pertaining to the Company''s Cement Unit situated at Jaykaypuram,
Basantgarh, Distt. Sirohi, in the State of Rajasthan, ranking
pari-passu with the charges created on the said assets subject to the
prior charges in favour of Banks on specified assets and Company''s
Banks for working capital on specified movables assets. These Term
Loans are / shall be repayable as under:
a) Term Loans aggregating to Rs. 28.57 crore are repayable in 8 equal
quarterly installments.
b) Term Loan of Rs. 30.62 crore is repayable in 28 equal quarterly
installments.
c) Term Loan of Rs. 45.00 crore is repayable in 15 equal quarterly
installments .
d) Term Loan of Rs. 70.00 crore shall be repayable in 32 equal quarterly
installments commencing from 30th June , 2014.
e) Term Loan of Rs. 125.00 crore shall be repayable in 2 equal half
yearly installments commencing from 31st January, 2015 .
4 Term Loans from Banks aggregating to Rs.105.16 crore are secured by way
of an exclusive charge on certain specified assets of the Company
situated at Jaykaypuram, Basantgarh, Distt. Sirohi, in the State of
Rajasthan. These Term Loans are repayable as under:
a) Term Loans aggregating to Rs. 13.00 crore are repayable in 6 equal
quarterly installments.
b) Term Loan of Rs. 10.91 crore is repayable in 8 equal quarterly
installments.
c) Term Loan of Rs. 37.50 crore is repayable in 12 equal quarterly
installments.
d) Term Loan of Rs. 43.75 crore is repayable in 28 equal quarterly
installments .
5 Term Loan from a Bank of Rs. 70.00 crore is secured by way of an
exclusive first charge on immovable & movable fixed assets of the
Company''s Split Grinding Unit situated at Jhajjar, in the State of
Haryana, except charge on the Current Assets. This Term Loan shall be
repayable in 32 equal quarterly installments commencing from 30th June
2014.
6 Term Loan from a Bank of Rs. 40.00 crore is secured by way of an
exclusive first charge on movable assets of the Company''s AAC Block
Unit situated at Jhajjar, in the State of Haryana,except charge on
current assets. This Term Loan shall be repayable in 32 equal quarterly
installments commencing from 30th June 2015.
7 Term Loan from a Bank of Rs. 50.00 crore is secured /to be secured by
way of an exclusive first charge on movable and immovable assets of the
Company''s 2nd Split Grinding Unit situated at Jhajjar, in the State of
Haryana,except charge on current assets. This Term Loan shall be
repayable in 32 quarterly installments commencing from 31st March 2016.
8 Term Loans from Banks aggregating to Rs. 750.00 crore are secured / to
be secured by way of first pari passu charge on all the immovable and
movable fixed assets of the Company''s Greenfield Cement Plant at Durg
in the State of Chattisgarh. These Term Loans shall be repayable in 40
equal quarterly installments commencing from 31st December 2015.
9 Unsecured Deferred Sales Tax Loan of Rs. 63.78 crore is repayable in 8
quarterly installments .
10 Fixed Deposits represents the Deposits accepted by the Company from
Public under its Fixed Deposit Scheme having maturity of 2 & 3 years
from the date of deposits.
Mar 31, 2013
1.1 The financial statements have been prepared under historical cost
convention (except for certain fixed assets which have been adjusted by
revaluation / business valuation ) on accrual basis in compliance with
applicable Accounting Standards notified by the Companies (Accounting
Standards) Rules, 2006 (as amended) and relevant provisions of the
Companies Act, 1956. Accounting Policies are consistent with the
Generally Accepted Accounting Principles.
1.2 Fixed Assets are stated at cost adjusted by revaluation / business
valuation.
1.3 Expenditure during construction / erection period is included under
Capital Work-in-Progress and is allocated to the respective fixed
assets on completion of construction/erection.
1.4 Foreign currency transactions are recorded at exchange rates
prevailing on the date of transaction. Monetary Assets and liabilities
related to foreign currency transactions are stated at exchange rate
prevailing at the end of the year and exchange difference in respect
thereof is charged to Statement of Profit & Loss . Premium in respect
of forward contracts is recognized over the life of the contract.
1.5 Long term investments are stated at cost. Provision for diminution
in the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management. The current
investments are stated at lower of cost and quoted / fair value
computed categorywise.
1.6 Inventories are valued at lower of cost and net realisable value
(except scrap/ waste which are valued at net realisable value). The
cost is computed on weighted average basis. Finished Goods and Process
Stock include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition.
1.7 Revenue is recognized when significant risk and reward of ownership
have been passed on to the Customer. Export incentives, Duty drawbacks
and other benefits are recognized in the Statement of Profit and Loss
and other revenue incentives are netted from respective head. Project
subsidy is credited to Capital Reserve.
1.8 Revenue expenditure on Research and Development is charged to
Statement of Profit and Loss and capital expenditure is added to Fixed
Assets.
1.9 Borrowing cost is charged to Statement of Profit and Loss except
cost of borrowing for acquisition of qualifying assets which is
capitalized till the date of commercial use of the asset.
1.10 (i) Depreciation on Buildings, Plant & Machinery {except for
Captive Power Plants, Split Grinding Units and Ready Mix Concrete
Plants (RMC)} and Railway Siding is provided as per straight line
method, at the rates and in the manner specified in Schedule XIV to the
Companies Act, 1956 as amended. Depreciation on Captive Power Plants,
Split Grinding units & Other Assets is provided on written down value
method as per the said Schedule. Depreciation on Aircraft and RMC is
provided @15% on SLM basis, based on their useful economic life.
Continuous Process Plants as defined in Schedule XIV have been
considered on technical evaluation. Depreciation on impaired assets is
provided on the basis of their residual useful life.
(ii) Leasehold Land is being amortized over the lease period.
(iii) Depreciation on the increased amount of assets due to revaluation
/ business valuation is computed on the basis of residual life of the
assets as estimated by the valuers on straight line method.
1.11 The carrying amounts of Assets are reviewed at each Balance Sheet
date to assess impairment, if any, based on internal / external
factors. An impairment loss is recognised, as an expense in the
Statement of Profit & Loss, wherever the carrying amount of the Asset
exceeds its recoverable amount. Previously recognised impairment loss
is further provided or reversed depending on change in its estimated
recoverable amount in subsequent years.
1.12 Intangible Assets are being recognized if the future economic
benefits attributable to the Assets expected to flow to the Company and
cost of the Asset can be measured reliably. The same are being
amortised over the expected duration of benefits.
1.13 Current Tax is the amount of tax payable on the estimated taxable
income for the current year as per the provisions of Income Tax Act,
1961. Deferred Tax Assets and Liabilities are recognised in respect of
current year and prospective years. Deferred Tax Assets is recognized
on the basis of reasonable/virtual certainty that sufficient future
taxable income will be available against which the same can be
realised.
1.14 Employee Benefits:
(i) Defined Contribution Plan
Employees benefits in the form of Superannuation Fund and Provident
Fund (PF) considered as defined contribution plan and the contributions
are charged to the Statement of Profit and Loss of the year when the
contribution to the respective funds are due.
(ii) Defined Benefit Plan
Retirement benefits in the form of Gratuity and Leave Encashment are
considered as defined benefit obligations and are provided for on the
basis of an actuarial valuation, using the Projected Unit Credit
method, as at the date of the Balance Sheet. Actuarial gain / losses,
if any, are immediately recognized in the Statement of Profit and Loss.
The Provident Fund Contribution is made to trust administered by the
trustees. The interest rate to the members of the trust shall not be
lower than the statutory rate declared by the Central Government under
Employees'' Provident Fund and Miscellaneous Provision Act, 1952.
Shortfall, if any, shall be made good by the Company.
(iii) Short Term Employee Benefits
Short term compensated absences are provided based on past experience
of the leave availed.
1.15 Provision in respect of present obligation arising out of past
events are made in accounts when reliable estimates can be made of the
amount of the obligation. Contingent Liabilities (if material) are
disclosed by way of Notes to Accounts. Contingent Assets are not
recognised or disclosed in Financial Statements.
Mar 31, 2012
1.1 The financial statements have been prepared under historical cost
convention (except for certain fixed assets which have been adjusted by
revaluation / business valuation ) on accrual basis in compliance with
applicable Accounting Standards notified by the Companies (Accounting
Standards) Rules, 2006 and relevant provisions of the Companies Act,
1956. Accounting Policies are consistent with the Generally Accepted
Accounting Principles.
1.2 Fixed Assets are stated at cost adjusted by revaluation / business
valuation.
1.3 Expenditure during construction / erection period is included under
Capital Work-in-Progress and is allocated to the respective fixed
assets on completion of construction / erection.
1.4 Foreign currency transactions are recorded at exchange rates
prevailing on the date of transaction. Monetary Assets and liabilities
related to foreign currency transactions are stated at exchange rate
prevailing at the end of the year and exchange difference in respect
thereof is charged to Statement of Profit & Loss. Premium in respect of
forward contracts is recognized over the life of the contract.
1.5 Long term investments are stated at cost. Provision for diminution
in the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management. The current
investments are stated at lower of cost and quoted / fair value
computed categorywise.
1.6 Inventories are valued at lower of cost and net realisable value
(except scrap / waste which are valued at net realisable value). The
cost is computed on weighted average basis. Finished Goods and Process
Stock include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition.
1.7 Export incentives, Duty drawbacks and Other benefits are recognized
in the Statement of Profit and Loss and other revenue incentives are
netted from respective head. Project subsidy is credited to Capital
Reserve.
1.8 Revenue expenditure on Research and Development is charged to
Statement of Profit and Loss and capital expenditure is added to Fixed
Assets.
1.9 Borrowing cost is charged to Statement of Profit and Loss except
cost of borrowing for acquisition of qualifying assets which is
capitalized till the date of commercial use of the asset.
1.10 (i) Depreciation on Buildings, Plant & Machinery {except for
Captive Power Plants, Ready Mix Concrete Plants (RMC)} and Railway
Siding is provided as per straight line method, at the rates and in the
manner specified in Schedule XIV to the Companies Act 1956.
Depreciation on Captive Power Plants & Other Assets is provided on
written down value method as per the said Schedule as amended.
Depreciation on Aircraft and RMC is provided @15% on SLM basis, based
on their useful economic life. Continuous Process Plants as defined in
Schedule XIV to the Companies Act 1956 have been considered on
technical evaluation. Depreciation on impaired assets is provided on
the basis of their residual useful life.
(ii) Leasehold Land is being amortized over the lease period.
(iii) Depreciation on the increased amount of assets due to revaluation
/ business valuation is computed on the basis of residual life of the
assets as estimated by the valuers on straight line method.
1.11 The carrying amounts of assets are reviewed at each Balance Sheet
date to assess impairment, if any, based on internal / external
factors. An impairment loss is recognised, as an expenses in the
Statement of Profit & Loss, wherever the carrying amount of the asset
exceeds its recoverable amount. Previously recognised impairment loss
is further provided or reversed depending on change in its estimated
recoverable amount in subsequent years.
1.12 Intangible Assets are being recognized if the future economic
benefits attributable to the assets expected to flow to the Company and
cost of the asset can be measured reliably. The same are being
amortised over the expected duration of benefits.
1.13 Current Tax is the amount of tax payable on the estimated taxable
income for the current year as per the provisions of Income Tax Act,
1961. Deferred Tax Assets and Liabilities are recognised in respect of
current year and prospective years. Deferred Tax Assets is recognized
on the basis of reasonable/virtual certainty that sufficient future
taxable income will be available against which the same can be
realised.
1.14 Employee Benefits:
(i) Defined Contribution Plan
Employees benefits in the form of Superannuation Fund, Provident Fund
(PF) and ESIC considered as defined contribution plan and the
contributions are charged to the Statement of Profit and Loss of the
year when the contribution to the respective funds are due.
(ii) Defined Benefit Plan
Retirement benefits in the form of Gratuity and Leave Encashment are
considered as defined benefit obligations and are provided for on the
basis of an actuarial valuation, using the Projected Unit Credit
method, as at the date of the Balance Sheet. Actuarial gain / losses,
if any, are immediately recognized in the Statement of Profit and Loss.
The Provident Fund Contribution is made to trust administered by the
trustees. The interest rate to the members of the trust shall not be
lower than the statutory rate declared by the Central Government under
Employees' Provident Fund and Miscellaneous Provision Act, 1952.
Shortfall, if any, shall be made good by the Company.
(iii) Short Term Employee Benefits
Short term compensated absences are provided based on past experience
of the leave availed.
1.15 Provision in respect of present obligation arising out of past
events are made in accounts when reliable estimates can be made of the
amount of the obligation. Contingent Liabilities (if material) are
disclosed by way of Notes to Accounts. Contingent Assets are not
recognised or disclosed in Financial Statements but are included, if
any, in the Directors' Report.
Mar 31, 2011
1. The financial statements have been prepared under historical cost
convention (except for certain fixed assets which have been adjusted by
revaluation/business valuation) on accrual basis in compliance with
applicable Accounting Standards notified by the Companies (Accounting
Standards) Rules, 2006 and relevant provisions of the Companies Act,
1956. Accounting Policies are consistent with the Generally Accepted
Accounting Principles.
2. Fixed Assets are stated at cost adjusted by revaluation/business
valuation.
3. Expenditure during construction/erection period is included under
Capital Work-in-Progress and is allocated to the respective fixed
assets on completion of construction/erection.
4. Foreign currency transactions are recorded at exchange rates
prevailing on the date of transaction. Monetary Assets and liabilities
related to foreign currency transactions are stated at exchange rate
prevailing at the end of the year and exchange difference in respect
thereof is charged to Profit & Loss Account. Premium in respect of
forward contracts is recognized over the life of the contract.
5. Long term investments are stated at cost. Provision for diminution
in the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management. The current
investments are stated at lower of cost and quoted / fair value
computed category wise.
6. Inventories are valued at lower of cost and net realisable value
(except scrap/ waste which are valued at net realisable value). The
cost is computed on weighted average basis. Finished Goods and Process
Stock include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition.
7. Export incentives, Duty drawbacks and Other benefits are recognized
in the Profit and Loss Account. Project subsidy is credited to Capital
Reserve.
8. Revenue expenditure on Research and Development is charged to
Profit and Loss Account and capital expenditure is added to Fixed
Assets.
9. Borrowing cost is charged to Profit and Loss Account except cost of
borrowing for acquisition of qualifying assets which is capitalised
till the date of commercial use of the asset.
10. (i) Depreciation on Buildings, Plant & Machinery and Railway Siding
is provided as per straight line method considering the rates in force
at the time of respective additions of the assets made before 2nd April
1987 and on additions thereafter at the rates and in the manner
specified in Schedule XIV to the Companies Act 1956. Depreciation on
Other Assets is provided on written down value method as per the said
Schedule as amended. Continuous Process Plants as defined in Schedule
XIV have been considered on technical evaluation. Depreciation on
impaired assets is provided on the basis of their residual useful life.
(ii) Leasehold Land is being amortized over the lease period.
(iii) Depreciation on the increased amount of assets due to revaluation
/ business valuation is computed on the basis of residual life of the
assets as estimated by the valuers on straight line method.
11. The carrying amounts of Assets are reviewed at each Balance Sheet
date to assess impairment, if any, based on internal / external
factors. An impairment loss is recognised, as an expenses in the Profit
&Loss Account, wherever the carrying amount of the Asset exceeds its
recoverable amount. Previously recognised impairment loss is further
provided or reversed depending on change in its estimated recoverable
amount in subsequent years.
12. Intangible Assets are being recognized if the future economic
benefits attributable to the Assets expected to flow to the Company and
cost of the Asset can be measured reliably. The same are being
amortised over the expected duration of benefits.
13. Current Tax is the amount of tax payable on the estimated taxable
income for the current year as per the provisions of Income Tax Act,
1961. Deferred Tax Assets and Liabilities are recognised in respect of
current year and prospective years. Deferred Tax Assets is recognized
on the basis of reasonable/virtual certainty that sufficient future
taxable income will be available against which the same can be
realised.
14. Employee Benefits:
(i) Defined Contribution Plan
Employees benefits in the form of Superannuation Fund , Provident Fund
(PF) and ESIC considered as defined contribution plan and the
contributions are charged to the Profit and Loss Account of the year
when the contribution to the respective funds are due.
(ii) Defined Benefit Plan
Retirement benefits in the form of Gratuity and Leave Encashment are
considered as defined benefit obligations and are provided for on the
basis of an actuarial valuation, using the Projected Unit Credit
method, as at the date of the Balance Sheet. Actuarial gain / losses,
if any, are immediately recognized in the Profit and Loss Account.
The Provident Fund Contribution is made to trust administered by the
trustees. The interest rate to the members of the trust shall not be
lower than the statutory rate declared by the Central Government under
Employees Provident Fund and Miscellaneous Provision Act, 1952.
Shortfall, if any, shall be made good by the Company.
(iii) Short Term Employee Benefits
Short term compensated absences are provided based on past experience
of the leave availed.
15. Provision in respect of present obligation arising out of past
events are made in Accounts when reliable estimates can be made of the
amount of the obligation. Contingent Liabilities (if material) are
disclosed by way of Notes to Accounts. Contingent Assets are not
recognised or disclosed in Financial Statements but are included, if
any, in the Directors Report.
Mar 31, 2010
1. The financial statements have been prepared under historical cost
convention (except for certain fixed assets which have been adjusted by
revaluation/business valuation) on accrual basis in compliance with
applicable Accounting Standards notified by the Companies (Accounting
Standards) Rules, 2006 and relevant provisions of the Companies Act,
1956. Accounting Policies are consistent with the Generally Accepted
Accounting Principles.
2. Fixed Assets are stated at cost adjusted by revaluation/business
valuation.
3. Expenditure during construction/erection period is included under
Capital Work-in-Progress and allocated to the respective fixed assets
on completion of construction/erection.
4. Foreign currency transactions are recorded at exchange rates
prevailing on the date of transaction. Monetary Assets and liabilities
related to foreign currency transactions are stated at exchange rate
prevailing at the end of the year and exchange difference in respect
thereof is charged to Profit & Loss Account. Premium in respect of
forward contracts is recognized over the life of the contract.
5. Long term investments are stated at cost. Provision for diminution
in the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management. The current
investments are stated at lower of cost and quoted/fair value computed
categorywise.
6. Inventories are valued at lower of cost and net realisable value
(except scrap/waste which are valued at net realisable value). The cost
is computed on weighted average basis. Finished Goods and Process Stock
include cost of conversion and other costs incurred in bringing the
inventories to their present location and condition.
7. Export incentives, Duty drawbacks and Other benefits are recognized
in the Profit and Loss Account. Project subsidy is credited to Capital
Reserve.
8. Revenue expenditure on Research and Development is charged to
Profit and Loss Account and capital expenditure is added to Fixed
Assets.
9. Borrowing cost is charged to Profit and Loss Account except cost of
borrowing for acquisition of qualifying assets which is capitalised
till the date of commercial use of the asset.
10. (i) Depreciation on Buildings, Plant & Machinery and Railway
Siding is provided as per straight line method considering
the rates in force at the time of respective additions of the assets
made before 2nd April, 1987 and on additions thereafter at the rates
and in the manner specified in Schedule XIV to the Companies Act, 1956.
Depreciation on Other Assets is provided on written down value method
as per the said Schedule as amended. Continuous Process Plants as
defined in Schedule XIV have been considered on technical evaluation.
Depreciation on impaired assets is provided on the basis of their
residual useful life.
(ii) Leasehold Land is being amortized over the lease period.
(iii) Depreciation on the increased amount of assets due to
revaluation/business valuation is computed on the basis of residual
life of the assets as estimated by the valuers on straight line method.
11. The carrying amounts of Assets are reviewed at each Balance Sheet
date to assess impairment, if any, based on internal/external factors.
An impairment loss is recognised, as an expenses in the Profit &Loss
Account, wherever the carrying amount of the Asset exceeds its
recoverable amount. Previously recognised impairment loss is further
provided or reversed depending on change in its estimated recoverable
amount in subsequent years.
12. Intangible Assets are being recognized if the future economic
benefits attributable to the Assets expected to flow to the Company and
cost of the Asset can be measured reliably. The same are being
amortised over the expected duration of benefits.
13. Current Tax is the amount of tax payable on the estimated taxable
income for the current year as per the provisions of Income Tax Act,
1961. Deferred Tax Assets and Liabilities are recognised in respect of
current year and prospective years. Deferred Ta x Assets is recognized
on the basis of reasonable/virtual certainty that sufficient future
taxable income will be available against which the same can be
realised.
14. Employee Benefits:
(i) Defined Contribution Plan
Employees benefits in the form of Superannuation Fund , Provident
Fund(PF) and ESIC considered as defined contribution plan and the
contributions are charged to the Profit and Loss Account of the year
when the contribution to the respective funds are due.
(ii) Defined Benefit Plan
Retirement benefits in the form of Gratuity and Leave Encashment are
considered as defined benefit obligations and are provided for on the
basis of an actuarial valuation, using the Projected Unit Credit
method, as at the date of the Balance Sheet. Actuarial gain/losses, if
any, are immediately recognized in the Profit and Loss Account.
The Provident Fund Contribution is made to trust administered by the
trustees. The interest rate to the members of the trust shall not be
lower than the statutory rate declared by the Central Government under
Employeesà Provident Fund and Miscellaneous Provision Act, 1952.
Shortfall, if any, shall be made good by the Company.
(iii) Short Term Employee Benefits
Short term compensated absences are provided based on past experience
of the leave availed.
15. Provision in respect of present obligation arising out of past
events are made in Accounts when reliable estimates can be made of the
amount of the obligation. Contingent Liabilities (if material) are
disclosed by way of Notes to Accounts. Contingent Assets are not
recognised or disclosed in Financial Statements but are included, if
any, in the DirectorÃs Report.
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