A Oneindia Venture
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Accounting Policies of Jumbo Bag Ltd. Company
Mar 31, 2025
1.1 CORPORATE INFORMATION
Jumbo Bag Limited is a part of BLISS Group. Jumbo Bag Ltd. was established in the year 1990 with an initial capacity of 720,000 jumbo bags (FIBCs).
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES1.2 Basis of Accounting And Preparation Of Financial Statements1.3 Statement of Compliance
The financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015.
With effect from 1st April, 2019, Ind AS 116 - "Leases" (Ind AS 116) supersedes Ind AS 17 - "Leases". The Company has adopted Ind AS 116 using the prospective approach. The application of Ind AS 116 has resulted into recognition of ''Right-of-Use'' asset with a corresponding Lease Liability in the Balance Sheet.
1.4 Basis of preparation and presentation
The financial statements have been prepared on accrual basis under the historical cost convention except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on above basis, except for lease transactions that are within the scope of Ind AS 116 - Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below -1.5 Property, Plant and Equipment (PPE)
a) Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
b) Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. For qualifying assets, borrowing costs are capitalized in accordance with Ind AS 23 - Borrowing costs. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
c) Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
d) Depreciation is recognized so as to write off the cost or valuation of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
e) Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular are capitalized and depreciated over the residual useful life of the respective assets.
f) Individual assets whose cost is less than Rs. 5,000 are fully depreciated.
g) Leasehold land / Improvements thereon are amortized over the primary period of lease.
h) An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of its property, plant and equipment recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as deemed cost as of the transition date.
Intangible assets with finite useful lives are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.
The intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use. The amortization periods are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.
Intangible assets comprising of software is amortized over estimated useful life of 4 years.
De-recognition of intangible assets:
An intangible asset is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, arerecognised in profit or loss when the asset is derecognized.
Investments in associates and joint ventures
An associate is entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of parties sharing control.
Inventories are valued at the lower of cost and estimated net realizable value (net of allowances) after providing for obsolescence and other losses, where considered necessary. The cost comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of finished goods and work in progress, incurred in bringing such inventories to their present location and condition. Trade discounts or rebates are deducted in determining the costs of purchase. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. In case of raw materials and traded goods, cost (net of CENVAT/ VAT/GST credits wherever applicable) is determined on a moving weighted average basis.
1.8 Cash and cash equivalents (for the purpose of cash flow statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for customer returns, taxes on sales, estimated rebates and other similar allowances.
i) Revenue from sale of goods is recognized when the following conditions are sat isfied:
⢠The Company has transferred the significant risks and rewards of ownership of the goods to the buyer which generally coincides with the delivery of goods,
⢠The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over goods sold;
⢠The amount of revenue can be measured reliably:
⢠It is probable that the economic benefits associated with the transaction will flow to the Company;
⢠The costs incurred or to be incurred in respect of the transaction can be measured reliably.
(ii) Service income is recognized on completion of service.
Dividend income from investments is recognised when the right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principle outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
1.12 Foreign currency transactions and translations
Foreign currency transactions are recorded at rates of exchange prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the rate of exchange prevailing at the year-end. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:
⢠exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
⢠Exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
⢠exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.
1.13 Government grants, subsidies and export incentives
Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received.
Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue in the balance sheet and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets. Revenue grant is recognized as an income in the period in which related obligation is met.
Export Incentives earned in the year of exports are treated as income and netted off from cost of raw material imported.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
Employee benefits include wages & salaries, provident fund, employee state insurance scheme, gratuity fund and Superannuation.
Contributions to defined contribution plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement
recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows:
⢠Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠Net interest expense or income; and
⢠Re-measurement
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
c. Other Short-term and long-term employee benefits
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Operating segments reflect the Company''s management structure and the way the financial information is regularly reviewed by the Company''s Chief Operating Decision Maker (CODM). The CODM considers the business from both business and product perspective based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / (loss) amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
he accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under unallocated revenue / expenses / assets / liabilities.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgement. The Company uses judgement in assessing whether a contract (or part of contract) includes a lease, the lease team (including anticipated renewals), the applicable discount rate, variable lease payments whether are in-substance fixed.
The judgement involves assessment of whether the asset included in the contract is a fully or partly identified asset based on the facts and circumstances, whether the contract include a lease and non-lease component and if so, separation thereof for the purpose of recognition and measurement, determination of lease term basis, inter alia the noncancellable period of lease and whether the lessee intends to opt for continuing with the use of the asset upon the expiry thereof, and whether the lease payments are fixed are variable or a combination of both.
The Company, as a lessee, recognizes a right-of-use asset and a lease liability for its leasing arrangements, if the contract conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the Company has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset. The cost of the right-of-use asset shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use asset is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the lease term.
The Company, as a lessor, classifies a lease either as an operating lease or a finance lease. Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing
the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.
Income tax expense represents the sum of the tax currently payable and deferred tax. Current Tax
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable income tax laws of the country in which the respective entities in the Company are incorporated. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amount of assets and liabilities in the financial statements and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and Deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Minimum Alternative Tax ("MAT") credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT Credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.
1.20 Impairment of tangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets or cash generating units to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced
to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
A provision is recognized when the Company has a present obligation (legal / constructive) as a result
of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material.
Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events
not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provisions for the expected cost of sales related obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the management''s best estimate of the expenditure required to settle the Company''s obligation.
Warranties: Provisions for the expected cost of warranty obligations under the local sale of goods legislation are recognised at the date of sale of the relevant products, at the directors best estimate of
the expenditure required to settle the Company''s obligation.
Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date
basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
1.23.1 Classification of financial asset
Financial assets that meet the following conditions are subsequently measured at amortised cost less impairment loss (FVTPL) (except for investments that are designated as at fair value through profit or loss on initial recognition:
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets that meet the following conditions are subsequently measured at fair value through other comprehensive income (FVTOCI) (except for investments that are designated as at fair value through profit or loss on initial recognition:
⢠the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
1.23.2 Amortised cost and Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the Other Income.
1.23.3 Investments in equity instruments at FVTOCI
On initial recognition, the Group can make an irrevocable election (on an instrument-byinstrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the ''Reserve tor equity instruments through other comprehensive income. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
⢠it has been acquired principally for the purpose of selling it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Dividends on these investments in equity instruments are recognised in profit or loss when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
1.23.4 Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company
irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for equity instruments which are not held for trading.
Debt instrument that do not meet the amortised cost criteria or fair value through other comprehensive income criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the fair value through other comprehensive income criteria but are designated as at FVTPL are measured at FVTPL.
A financial asset may be designated as at FVTPL upon initial recognition if such designation eliminates
or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss is included in the other income line item .Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
1.23.5 Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial assets, and financials guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instruments.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12- month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18 - Revenue, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
1.23.6 De-recognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
On de-recognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the
consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
1.24 Financial Liabilities And Equity Instruments1.24.1 Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
All financial liabilities are subsequently measured at amortised cost using the effective interest method
or at FVTPL. However, financial liabilities that arise when a transfer of a financial asset does not qualifyforderecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company are measured in accordance with the specific accounting policies set out below.
1.24.4 Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠it has been incurred principally for the purpose of repurchasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company
manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurementrecognised in profit or loss.
1.24.5 Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
1.25 Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts and cross currency swaps.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
The company designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging
instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash
flow hedges is recognised in other comprehensive income and accumulated under the heading of cash
flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ''Other income'' line item. Amounts
previously recognised in other comprehensive income and accumulated in equity relating to (effective portion as described above) are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction results in the recognition of a nonfinancial asset or a non-financial liability ,such gains and losses are transferred from equity (but not as a reclassification adjustment) and included in the initial measurement of the cost of the non -financial asset or non-financial liability.
In cases where the designated hedging instruments are options and forward contracts, the company has an option, for each designation, to designate on an instrument only the changes in intrinsic value of the options and spot element of forward contracts respectively as hedges. In such cases, the time value of the options is accounted based on the type of hedged item which those options hedge.
In case of transaction related hedged item in the above cases, the change in time value of the options is recognised in other comprehensive income to the extent it relates to the hedged item and accumulated in a separate component of equity i.e. Reserve for time value of options and forward elements of forward contracts in hedging relationship. This separate component is removed and directly included in the initial cost or other carrying amount of the asset or the liability (i.e. not as a reclassification adjustment thus not affecting other comprehensive income) if the hedged item subsequently results in recognition of a non-financial asset or a non-financial liability. In other cases, the amount accumulated is reclassified to profit or loss as a reclassification adjustment in the same period in which the hedged expected future cash flows affect profit or loss.
In case of time-period related hedged item in the above cases, the change in time value of the options is recognised in other comprehensive income to the extent it relates to the hedged item and accumulated in a separate component of equity i.e. Reserve for time value of options and forward elements of forward contracts in hedging relationship. The time value of options at the date of designation of the options in the hedging relationships is amortised on a systematic and rational basis over the period during which the options'' intrinsic value could affect profit or loss. This is done as a reclassification adjustment and hence affects other comprehensive income.
In cases where only the spot element of the forward contracts is designated in a hedging relationship and the forward element of the forward contract is not designated, the company makes the choice for each designation whether to recognise the changes in forward element of fair value of the forward contracts in profit or loss or to account for this element similar to the time value of an option.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilising the credits.
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2024
1.1 CORPORATE INFORMATION
Jumbo Bag Limited is a part of BLISS Group. Jumbo Bag Ltd. was established in the year 1990 with an initial capacity of 720,000 jumbo bags (FIBCs).
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES1.2 Basis of Accounting And Preparation Of Financial Statements1.3 Statement of Compliance
The financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015.
With effect from 1st April, 2019, Ind AS 116 - "Leases" (Ind AS 116) supersedes Ind AS 17 - "Leases". The Company has adopted Ind AS 116 using the prospective approach. The application of Ind AS 116 has resulted into recognition of ''Right-of-Use'' asset with a corresponding Lease Liability in the Balance Sheet.
1.4 Basis of preparation and presentation
The financial statements have been prepared on accrual basis under the historical cost convention except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on above basis, except for lease transactions that are within the scope of Ind AS 116 - Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below -1.5 Property, Plant and Equipment (PPE)
a) Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
b) Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. For qualifying assets, borrowing costs are capitalized in accordance with Ind AS 23 - Borrowing costs. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
c) Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
d) Depreciation is recognized so as to write off the cost or valuation of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
e) Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular are capitalized and depreciated over the residual useful life of the respective assets.
f) Individual assets whose cost is less than Rs. 5,000 are fully depreciated.
g) Leasehold land / Improvements thereon are amortized over the primary period of lease.
h) An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of its property, plant and equipment recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as deemed cost as of the transition date.
Intangible assets with finite useful lives are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.
The intangible assets are amortized over their respective individual estimated useful lives on a straightline basis, commencing from the date the asset is available to the Company for its use. The amortization periods are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.
Intangible assets comprising of software is amortized over estimated useful life of 4 years.
De-recognition of intangible assets:
An intangible asset is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, arerecognised in profit or loss when the asset is derecognized.
Investments in associates and joint ventures
An associate is entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of parties sharing control.
Inventories are valued at the lower of cost and estimated net realizable value (net of allowances) after providing for obsolescence and other losses, where considered necessary. The cost comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of finished goods and work in progress, incurred in bringing such inventories to their present location and condition. Trade discounts or rebates are deducted in determining the costs of purchase. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. In case of raw materials and traded goods, cost (net of CENVAT/ VAT/ GST credits wherever applicable) is determined on a moving weighted average basis.
1.8 Cash and cash equivalents (for the purpose of cash flow statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for customer returns, taxes on sales, estimated rebates and other similar allowances.
i) Revenue from sale of goods is recognized when the following conditions are satisfied:
⢠The Company has transferred the significant risks and rewards of ownership of the goods to the buyer which generally coincides with the delivery of goods,
⢠The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over goods sold;
⢠The amount of revenue can be measured reliably:
⢠It is probable that the economic benefits associated with the transaction will flow to the Company;
⢠The costs incurred or to be incurred in respect of the transaction can be measured reliably.
(ii) Service income is recognized on completion of service.
Dividend income from investments is recognised when the right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principle outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
1.12 Foreign currency transactions and translations
Foreign currency transactions are recorded at rates of exchange prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the rate of exchange prevailing at the year-end. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:
⢠Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
⢠Exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
⢠Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.
1.13 Government grants, subsidies and export incentives
Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received.
Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue in the balance sheet and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets. Revenue grant is recognized as an income in the period in which related obligation is met.
Export Incentives earned in the year of exports are treated as income and netted off from cost of raw material imported.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
Employee benefits include wages & salaries, provident fund, employee state insurance scheme, gratuity fund and Superannuation.
Contributions to defined contribution plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows:
⢠Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠Net interest expense or income; and
⢠Re-measurement
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
c. Other Short-term and long-term employee benefits
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Operating segments reflect the Company''s management structure and the way the financial information is regularly reviewed by the Company''s Chief Operating Decision Maker (CODM). The CODM considers the business from both business and product perspective based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / (loss) amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under unallocated revenue / expenses / assets / liabilities.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgement. The Company uses judgement in assessing whether a contract (or part of contract) includes a lease, the lease team (including anticipated renewals), the applicable discount rate, variable lease payments whether are in-substance fixed.
The judgement involves assessment of whether the asset included in the contract is a fully or partly identified asset based on the facts and circumstances, whether the contract include a lease and non-lease component and if so, separation thereof for the purpose of recognition and measurement, determination of lease term basis, inter alia the non-cancellable period of lease and whether the lessee intends to opt for continuing with the use of the asset upon the expiry thereof, and whether the lease payments are fixed are variable or a combination of both.
The Company, as a lessee, recognizes a right-of-use asset and a lease liability for its leasing arrangements, if the contract conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the Company has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset. The cost of the right-of-use asset shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use asset is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the lease term.
The Company, as a lessor, classifies a lease either as an operating lease or a finance lease. Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable income tax laws of the country in which the respective entities in the Company are incorporated. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amount of assets and liabilities in the financial statements and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and Deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Mat Credit
Minimum Alternative Tax ("MAT") credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT Credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.
1.20 Impairment of tangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets or cash generating units to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit
to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
A provision is recognized when the Company has a present obligation (legal / constructive) as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material.
Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provisions for the expected cost of sales related obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the management''s best estimate of the expenditure required to settle the Company''s obligation.
Warranties: Provisions for the expected cost of warranty obligations under the local sale of goods legislation are recognised at the date of sale of the relevant products, at the directors best estimate of the expenditure required to settle the Company''s obligation.
Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
1.23.1 Classification of financial asset
Financial assets that meet the following conditions are subsequently measured at amortised cost less impairment loss (FVTPL) (except for investments that are designated as at fair value through profit or loss on initial recognition:
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets that meet the following conditions are subsequently measured at fair value through other comprehensive income (FVTOCI) (except for investments that are designated as at fair value through profit or loss on initial recognition:
⢠the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
1.23.2 Amortised cost and Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the Other Income.
1.23.3 Investments in equity instruments at FVTOCI
On initial recognition, the Group can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the ''Reserve tor equity instruments through other comprehensive income. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
⢠it has been acquired principally for the purpose of selling it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Dividends on these investments in equity instruments are recognised in profit or loss when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
1.23.4 Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for equity instruments which are not held for trading.
Debt instrument that do not meet the amortised cost criteria or fair value through other comprehensive income criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the fair value through other comprehensive income criteria but are designated as at FVTPL are measured at FVTPL.
A financial asset may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss is included in the other income line item .Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
1.23.5 Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial assets, and financials guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instruments.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12- month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18 - Revenue, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
1.23.6 De-recognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
On de-recognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
1.24 Financial Liabilities And Equity Instruments1.24.1 Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL. However, financial liabilities that arise when a transfer of a financial asset does not qualifyforderecognition
or when the continuing involvement approach applies, financial guarantee contracts issued by the Company are measured in accordance with the specific accounting policies set out below.
1.24.4 Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠it has been incurred principally for the purpose of repurchasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurementrecognised in profit or loss.
1.24.5 Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
1.25 Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts and cross currency swaps.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
The company designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and
is included in the ''Other income'' line item. Amounts previously recognised in other comprehensive income and accumulated in equity relating to (effective portion as described above) are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a nonfinancial liability ,such gains and losses are transferred from equity (but not as a reclassification adjustment) and included in the initial measurement of the cost of the non -financial asset or non-financial liability.
In cases where the designated hedging instruments are options and forward contracts, the company has an option, for each designation, to designate on an instrument only the changes in intrinsic value of the options and spot element of forward contracts respectively as hedges. In such cases, the time value of the options is accounted based on the type of hedged item which those options hedge.
In case of transaction related hedged item in the above cases, the change in time value of the options is recognised in other comprehensive income to the extent it relates to the hedged item and accumulated in a separate component of equity i.e. Reserve for time value of options and forward elements of forward contracts in hedging relationship. This separate component is removed and directly included in the initial cost or other carrying amount of the asset or the liability (i.e. not as a reclassification adjustment thus not affecting other comprehensive income) if the hedged item subsequently results in recognition of a nonfinancial asset or a non-financial liability. In other cases, the amount accumulated is reclassified to profit or loss as a reclassification adjustment in the same period in which the hedged expected future cash flows affect profit or loss.
In case of time-period related hedged item in the above cases, the change in time value of the options is recognised in other comprehensive income to the extent it relates to the hedged item and accumulated in a separate component of equity i.e. Reserve for time value of options and forward elements of forward contracts in hedging relationship. The time value of options at the date of designation of the options in the hedging relationships is amortised on a systematic and rational basis over the period during which the options'' intrinsic value could affect profit or loss. This is done as a reclassification adjustment and hence affects other comprehensive income.
In cases where only the spot element of the forward contracts is designated in a hedging relationship and the forward element of the forward contract is not designated, the company makes the choice for each designation whether to recognise the changes in forward element of fair value of the forward contracts in profit or loss or to account for this element similar to the time value of an option.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilising the credits.
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2015
1.1 Basis of preparation of financial statements
The financial statements have been prepared on accrual basis under the
historical cost convention and in accordance with generally accepted
accounting principles in India and materially comply with the Mandatory
Accounting Standards notified by the Central Government of India under
the Companies (Accounting standards) Rules, 2006 and with the relevant
provisions of the Companies Act, 2013.
1.2 Use of estimates
The preparation of financial statements in conformity with Indian
Generally Accepted Accounting Policies (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure relating to contingent
liabilities as at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates. Any revision to accounting
estimates is recognized prospectively in current and future periods.
1.3 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition less accumulated
depreciation. The cost of fixed assets includes freight, duties, taxes
and other incidental expenses relating to acquisition. Duties and taxes
where MODVAT and VAT are applicable have been appropriately treated.
Where fixed assets have been acquired from a country outside India, the
cost of these fixed assets also includes exchange differences
(favorable and unfavorable) arising in respect of foreign currency
loans on other liabilities incurred specifically for the purpose of
their acquisition. Borrowing costs related to the acquisition or
construction of the qualifying fixed assets for the period up to the
completion of their acquisition or constructions are capitalized.
Losses arising from the retirement and the gains or losses arising form
disposal of fixed assets which are carried at cost are recognized in
the Statement of Profit and Loss.
Depreciation on the fixed assets is provided on a straight line method,
over the estimated useful life of the assets. Effective 1st April 2014,
the company depreciates its Fixed Assets over the useful life in the
manner prescribed in Schedule II of the act, as against the earlier
practice of depreciating the rates prescribed in Schedule XIV of the
Companies Act, 1956.
Depreciation on additions to assets or on sale / disposal of assets, is
calculated on pro rata basis from the month of such addition or upto
the month of such sale / disposal as the case may be.
1.4 Impairment of assets
In accordance with Accounting Standard 28 (AS 28) on Impairment of
assets, where there is an indication of Impairment of the Company's
assets, the carrying amount of the Company's assets are reviewed at
each balance sheet date to determine whether there is any impairment on
the assets based on internal/external factors. Any impairment loss, if
any, is recognized in the statement of Profit and Loss, wherever the
carrying amount of an asset exceeds its estimated recoverable amount
which is estimated at the higher of its net selling price and its value
in use. In assessing the value in use, the estimated future cash flows
are discounted to the present value at the weighted average cost of
capital. After impairment, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
Previously recognized impairment loss is further provided or reversed
depending on changes in circumstances.
1.5 Revenue recognition
Revenue from sale of manufactured goods, including scrap, is recognized
on transfer of all significant risks and rewards of ownership to the
buyer which is generally on dispatch of goods.
Domestic sales inclusive of sales tax, Excise duty, net of sales
returns and quantity discounts is on accrual basis.
Export sales are accounted on the basis of dates of invoicing from the
factory.
Job work and other service revenues is recognized as and when services
are rendered.
Income from Investments/other income is recognized on accrual basis.
Interest on deployment of surplus funds is recognized using the time
proportionate method based on underlying interest rates.
1.6 Inventories
Inventories are carried at the lower of cost and net realizable value.
The comparison of cost and net realizable value is made on an
item-by-item basis. Cost comprises purchase price and all incidental
expenses incurred in bringing the inventory to its present location and
condition.
The method of determination of cost is as follows:
* Spares and Consumables are valued at cost.
* Raw-Materials & Intermediates are valued at weighted cost - (net of
MODVAT).
* Work-in-Process is valued at material cost plus direct
Manufacturing Expenses.
* Finished Goods are valued at the lower of cost or net Realisable
value. Cost includes cost of conversion and other expenses incurred in
bringing the goods to their location and condition inclusive of Excise
Duty.
* Saleable / disposable stock of scrap is valued at estimated
realizable value. Provision for inventory obsolescence is assessed
annually and is provided as and when considered necessary.
1.7 Foreign exchange transactions
Foreign currency transactions are recorded at the rates of exchange
prevailing on the dates of the respective transaction. Exchange
differences arising on foreign exchange transactions settled during the
year are recognized in the profit and loss statement of the year,
except that exchange differences related to acquisition of fixed assets
from a country outside India are adjusted in the carrying amount of the
related fixed assets.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date are translated at the closing exchange rates on
that date; the resultant exchange differences are recognized in the
statement of profit and loss except those related to acquisition of
fixed assets from a country outside India which are adjusted in the
carrying amount of the related fixed assets. Where an underlying
import/ export is covered, it is recognized at the rate at which the
exchange is covered. Where the transaction remains uncovered, it is
recognized on mark to market basis as on 31st March 2015.
Net exchange fluctuation gain is accounted as other income and loss is
accounted as other expenses.
1.8 Provisions and contingent liabilities
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
1.9 Income tax
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income-tax law) and deferred
tax charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the year) provided in
the books of accounts.
Mar 31, 2014
1.1 Basis of preparation of financial statements
The fi nancial statements have been prepared on accrual basis under the
historical cost convention and in accordance with generally accepted
accounting principles in India and materially comply with the Mandatory
Accounting Standards notifi ed by the Central Government of India under
the Companies (Accounting standards) Rules, 2006 and with the relevant
provisions of the Companies Act, 1956
1.2 Use of estimates
The preparation of fi nancial statements in conformity with Indian
Generally Accepted Accounting Policies (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure relating to contingent
liabilities as at the date of the fi nancial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
1.3 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition less accumulated
depreciation. The cost of fixed assets includes freight, duties, taxes
and other incidental expenses relating to acquisition. Duties and taxes
where MODVAT and VAT are applicable have been appropriately treated.
Where fi xed assets have been acquired from a country outside India,
the cost of these fixed assets also includes exchange differences
(favorable and unfavorable) arising in respect of foreign currency
loans on other liabilities incurred specifically for the purpose of
their acquisition. Borrowing costs related to the acquisition or
construction of the qualifying fixed assets for the period up to the
completion of their acquisition or constructions are capitalized.
Depreciation is provided on the Straight Line Method from the day in
which the asset is put to use. The rates of depreciation prescribed in
Schedule XIV to the Companies Act, 1956 are considered as the minimum
rates. If the management''s estimate of the useful life of a fixed asset
at the time of acquisition of the asset or of the remaining useful life
on a subsequent review is shorter than that envisaged in the aforesaid
schedule, depreciation is provided at a higher rate based on the
management''s estimate of the useful life or remaining useful life.
Pursuant to this policy, depreciation on assets has been provided at
the rates based on the estimated useful lives of fixed assets
Depreciation on fi xed Assets sold or scrapped during the year is
provided up to the date in which such assets are sold or scrapped.
Depreciation on additions to Fixed Assets is calculated on prorate
basis from the date of addition.
Assets individually costing Rs 5,000 or less are depreciated at the
rate of 100%.
Depreciation is charged on a proportionate basis for all assets
purchased and sold during the year.
1.4 Impairment of assets
In accordance with Accounting Standard 28 (AS 28) on Impairment of
assets, where there is an indication of Impairment of the Company''s
assets, the carrying amount of the Company''s assets are reviewed at
each balance sheet date to determine whether there is any impairment on
the assets based on internal/external factors. Any impairment loss, if
any, is recognized in the profit & loss statement, wherever the
carrying amount of an asset exceeds its estimated recoverable amount
which is estimated at the higher of its net selling price and its value
in use. In assessing the value in use, the estimated future cash fi ows
are discounted to the present value at the weighted average cost of
capital. After impairment, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
Previously recognized impairment loss is further provided or reversed
depending on changes in circumstances.
1.5 Revenue recognition
Revenue from sale of manufactured goods, including scrap, is recognized
on transfer of all significant risks and rewards of ownership to the
buyer which is generally on dispatch of goods.
Domestic sales inclusive of sales tax, Excise duty, net of sales
returns and quantity discounts on accrual basis.
Export sales are accounted on the basis of dates of invoicing from the
factory.
Job work and other service revenues is recognized as and when services
are rendered.
Income from Investments/other income is recognized on accrual basis.
Interest on deployment of surplus funds is recognized using the time
proportionate method based on underlying interest rates.
1.6 Inventories
Inventories are carried at the lower of cost and net realizable value.
The comparison of cost and net realizable value is made on an
item-by-item basis. Cost comprises purchase price and all incidental
expenses incurred in bringing the inventory to its present location and
condition.
The method of determination of cost is as follows:
Spares and Consumables are valued at cost.
Raw-Materials & Intermediates are valued at weighted cost - (net of
MODVAT)
Work-in-Process is valued at material cost plus direct
Manufacturing Expenses.
Finished Goods are valued at the lower of cost or net Realisable
value. Cost includes cost of conversion and other expenses incurred in
bringing the goods to their location and condition inclusive of Excise
Duty.
Saleable / disposable stock of scrap is valued at estimated realizable
value. Provision for inventory obsolescence is assessed annually and is
provided as and when considered necessary.
1.7 Foreign exchange transactions
Foreign currency transactions are recorded at the rates of exchange
prevailing on the dates of the respective transaction. Exchange
differences arising on foreign exchange transactions settled during the
year are recognized in the profit and loss statement of the year,
except that exchange differences related to acquisition of fi xed
assets from a country outside India are adjusted in the carrying amount
of the related fixed assets.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date are translated at the closing exchange rates on
that date; the resultant exchange differences are recognized in the
profit and loss statement except those related to acquisition of fixed
assets from a country outside India which are adjusted in the carrying
amount of the related fixed assets. Where an underlying import/ export
is covered, it is recognized at the rate at which the exchange is
covered. Where the transaction remains uncovered, it is recognized on
mark to market basis as on 31st March 2014.
Net exchange fl uctuation gain is accounted as other income and loss is
accounted as other expenses.
1.8 Provisions and contingent liabilities
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outfl ow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outfl ow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outfl ow of
resources is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
1.9 Income taxes
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income-tax law) and deferred
tax charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the year) provided in
the books of accounts.
3. Earnings per share
The basic and diluted earnings per share are computed by dividing the
net profit attributable to equity shareholders for the year by the
weighted average number of equity shares outstanding during the year.
The Company did not have any potentially dilutive equity shares
outstanding during the year.
4. Investments
Long term Investments are valued at cost less provision for diminution
in value other than temporary, if any.
5. Employee Benefits
i Short Term - Short term employee benefits are recognized as an
expense as per the Company''s Scheme based on expected obligations.
ii. Post Retirement
Post retirement benefits comprise of provident fund, superannuation and
gratuity which are accounted for as follows:
a) Provident fund
This is a defi ned contribution plan. Contributions in respect of staff
and workers are remitted to provident fund authorities in accordance
with the relevant statute and are charged to profit and loss statement
as and when due. The Company has no further obligations for future
provident fund benefits in respect of these employees other than its
annual contributions.
b) Superannuation
This is a defi ned contribution plan. The Company makes contribution as
per the scheme to superannuation Fund administered by Life Insurance
Corporation of India. The Company has no further obligation of future
superannuation benefits other than its annual contributions and
recognizes such contributions as expense as and when due.
c) Gratuity
This is a defined benefit plan. Provision for gratuity is made based on
actuarial valuation using projected unit credit method. Actuarial gains
and losses, comprising of experience adjustments and the effects of
changes in actuarial assumptions, are recognized immediately in the
profit and loss statement as income or expense
6. Deferred Tax Liability
Deferred Tax resulting from timing difference between book and Tax
profit is accounted for under liability method, at the current rate of
tax, to the extent, the timing differences are expected to crystallize.
The deferred tax charge or credit is recognized using prevailing
enacted or substantively enacted tax rate. Where there is unabsorbed
depreciation or carried forward losses, deferred tax assets are
recognized only if there is virtual certainty of realization of such
assets. Deferred tax liabilities/assets are reviewed at each balance
sheet date based on the law in force and shown net of
assets/liabilities in the books.
7. Leases:
Leases are classified as fi nance or operating leases depending upon
the terms of the lease agreements. Assets held under finance leases
are recognized as assets of the Company on the date of acquisition and
depreciated over their estimated useful life or period of lease.
Initial direct costs under the financial lease are included as a part
of the amount recognized as asset under the finance lease.
Rentals payable under operating leases are treated as revenue expenses
as and when incurred with reference to terms of agreement.
Operating leases
The company is obligated under cancelable operating leases for Jumbo
Bag Ltd, Athipedu factory rent which is renewable at the options of
both the lessor and the lessee. The expense under the contracted lease
amounts to Rs.80.22/-lakhs (previous year Rs.87.45/- lakhs) is
recognized in the profit & loss statement
8. Custom duty
Custom duty is accounted as and when paid and on actual.
9. Borrowing Costs
As per the Accounting Standard 16 (AS 16), borrowing costs that are
directly attributable to the cost of acquisition, construction,
production of a qualifying asset are capitalized as a part of cost of
such asset till the asset is installed/ put to use. Cost that are not
directly attributable to the qualifying the asset are determined by
applying a weighted average rate and are capitalized as a part of the
cost of asset of such qualifying asset till the time asset is ready to
use/ installed.
10. Dues to Micro, Small and Medium Enterprises:
The management has written to vendors requesting them to inform whether
they would fall under the preview of Micro, Small and Medium
Enterprises Act, 2001. Based on disclosure received, amount payable to
such enterprises as at 31st March 2014 is Nil. The above information
has been determined to the extent such parties have been identifi ed on
the basis of information available with the Company which has been
relied upon by the auditors.
11. Provisions made with regard to Fire Accident:
There was a major fi re accident at our Athipedu unit on 23rd November
2013 and that led to complete shut down of the damaged factory premises
for a period of 15 days. The company had to look for alternative
locations to fulfi l the orders and strived to keep the production
going. However, fire accident has largely impacted the financial
performance of the company after the second half of the financial year
2013-14. The company has put determined efforts to resurrect the
performance in the last two quarters. The financial performance is
expected to considerably improve in the current financial year with
increase in business volume and value added customers.
The property damaged and destroyed in the fire includes Factory
Building, Plant & Equipment, Electricals, Raw Materials and Stocks. The
company had immediately fi led the claim bill for the Fixed Assets and
the stocks destroyed in fi re with the Insurance companies'' viz. United
India Insurance Limited and New India Assurance Limited respectively.
The total claim bill placed with respect to Fixed Assets amounted to
Rs.388 Lacs and for stocks amounted to Rs.897 lakhs.
The amount considered in the financials after excess and possible
deductions, duties and taxes is Rs.350 Lacs and for Fixed Assets on
reinstatement/market value basis and Rs.731 Lacs for stocks. While the
insurance company, upon the recommendation of the surveyor has made an
interim on account payment of Rs.70 Lacs in the case of Fixed Assets,
the claim process with the stock surveyor is still in process and no on
account payment has yet been received.
On basis of the prevailing situation and to provide a reasonable and
accountable fi nancial statement to the stakeholders, the company has
made the provisions/ adjustments in books of accounts under the head
Exceptional items - Insurance claim receivable amounting to Rs.841
Lacs. Also, a sum of Rs.110 Lacs is considered as profit, being the
difference between the book value and the reinstatement value of the
assets proposed for reinstatement. A sum of Rs.1099 Lacs is shown as
receivable from Insurance company under the Current Assets.
DISCLOSURE UNDER AS-15 15. Defined Contribution Plans:-
(a) Contribution to Provident Fund /ESI : 33.96 lacs
(b) Contribution to Superannuation Fund : 8.06 lacs
Defined Benefit Plans:-
Gratuity:- 14.18 lacs
The Gratuity liability is covered by a Master Policy taken out with LIC
of India under the Cash Accumulation scheme. The company during the
year has done actuarial valuation as on 31.03.2014 and the estimated
liability amounted to Rs.14.18 Lacs which is debited to P & L
Statement.
16. Segmental Reporting
Information given in accordance with the requirement of Accounting
Standard 17, on Segment Reporting. Company''s business segments are as
under:
Manufacturing:
Manufacture of Flexible intermediate bulk container packaging material
used for industrial purposes. Trading:
Trading of Polymers.
Segment Accounting Policies:
a. Segment accounting disclosures are in line with accounting policies
of the Company.
b. Segment Revenue includes Sales and other income directly identifi
able with / allocable to the segment.
c. Expenses that are directly identifi able with allocable to segments
are considered for determining the Segment Result.
d. Major portion of segment liabilities and Assets relates to
manufacturing segment
e. The company has no Secondary Reportable Segment.
f. Regrouping done wherever necessary.
Mar 31, 2013
1.1 Basis of preparation of fi nancial statements.
The fi nancial statements have been prepared on accrual basis under the
historical cost convention and in accordance with generally accepted
accounting principles in India and materially comply with the Mandatory
Accounting Standards notifi ed by the Central Government Of India under
the Companies (Accounting standards) Rules, 2006 and with the relevant
provisions of the Companies Act, 1956
1.2 Use of estimates
The preparation of fi nancial statements in conformity with Indian
Generally Accepted Accounting Policies (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure relating to contingent
liabilities as at the date of the fi nancial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
1.3 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition less accumulated
depreciation. The cost of fi xed assets includes freight, duties, taxes
and other incidental expenses relating to acquisition. Duties and taxes
where MODVAT and VAT are applicable have been appropriately treated.
Where fi xed assets have been acquired from a country outside India,
the cost of these fi xed assets also includes exchange differences
(favorable and unfavorable) arising in respect of foreign currency
loans on other liabilities incurred specifi cally for the purpose of
their acquisition. Borrowing costs related to the acquisition or
construction of the qualifying fi xed assets for the period up to the
completion of their acquisition or constructions are capitalized.
Depreciation is provided on the Straight Line Method from the day in
which the asset is put to use. The rates of depreciation prescribed in
Schedule XIV to the Companies Act, 1956 are considered as the minimum
rates. If the management''s estimate of the useful life of a fi xed
asset at the time of acquisition of the asset or of the remaining
useful life on a subsequent review is shorter than that envisaged in
the aforesaid schedule, depreciation is provided at a higher rate based
on the management''s estimate of the useful life or remaining useful
life. Pursuant to this policy, depreciation on assets has been provided
at the rates based on the estimated useful lives of fi xed assets.
Depreciation on fi xed Assets sold or scrapped during the year is
provided up to the date in which such assets are sold or scrapped.
Depreciation on additions to Fixed Assets is calculated on prorata
basis from the date of addition.
Assets individually costing Rs 5,000 or less are depreciated at the
rate of 100%.
Depreciation is charged on a proportionate basis for all assets
purchased and sold during the year.
1.4 Impairment of assets
In accordance with Accounting Standard 28 (AS 28) on Impairment of
assets, where there is an indication of Impairment of the Company''s
assets, the carrying amount of the Company''s assets are reviewed at
each balance sheet date to determine. Whether there is any impairment
on the assets based on internal/external factors. Any impairment loss,
if any, is recognized In the profi t & loss statement, wherever the
carrying amount of an asset exceeds its estimated recoverable amount
which is estimated at the higher of its net selling price and its value
in use. In assessing the value in use, the estimated future cash fl ows
are discounted to the present value at the weighted average cost of
capital. After impairment, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
Previously recognized impairment loss is further provided or reversed
depending on changes in circumstances.
1.5 Revenue recognition
Revenue from sale of manufactured goods, including scrap, is recognized
on transfer of all signifi cant risks and rewards of ownership to the
buyer which is generally on dispatch of goods.
Domestic sales inclusive of sales tax, Excise duty, net of sales
returns and quantity discounts on accrual basis.
Export sales are accounted on the basis of dates of invoicing from the
factory.
Job work and other service revenues is recognized as when services are
rendered.
Income from Investments/other income is recognized on accrual basis.
Interest on deployment of surplus funds is recognized using the time
proportionate method based on underlying interest rates.
1.6 Inventories
Inventories are carried at the lower of cost and net realizable value.
The comparison of cost and net realizable value is made on an
item-by-item basis. Cost comprises purchase price and all incidental
expenses incurred in bringing the inventory to its present location and
condition.
The method of determination of cost is as follows:
- Spares and Consumables are valued at cost.
- Raw-Materials & Intermediates are valued at weighted cost  (net of
MODVAT).
- Work-in-Process is valued at material cost plus direct Manufacturing
Expenses.
- Finished Goods are valued at the lower of cost or net Realisable
value. Cost includes cost of conversion and other expenses incurred in
bringing the goods to their location and condition inclusive of Excise
Duty.
- Saleable / disposable stock of scrap is valued at estimated
realizable value. Provision for inventory obsolescence is assessed
annually and is provided as and when considered necessary.
1.7 Foreign exchange transactions
Foreign currency transactions are recorded at the rates of exchange
prevailing on the dates of the respective transaction. Exchange
differences arising on foreign exchange transactions settled during the
year are recognized in the profi t and loss statement of the year,
except that exchange differences related to acquisition of fi xed
assets from a country outside India are adjusted in the carrying amount
of the related fi xed assets.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date are translated at the closing exchange rates on
that date; the resultant exchange differences are recognized in the
profi t and loss statement except those related to acquisition of fi
xed assets from a country outside India which are adjusted in the
carrying amount of the related fi xed assets. Where an underlying
import/ export is covered, it is recognized at the rate at which the
exchange is covered. Where the transaction remains uncovered, it is
recognized on mark to market basis as on 31st March 2013.
Net exchange fl uctuation gain is accounted as other income and loss is
accounted as other expenses.
1.8 Provisions and contingent liabilities
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outfl ow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outfl ow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outfl ow of
resources is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefi ts expected to be received under it, are recognized
when it is probable that an outfl ow of resources embodying economic
benefi ts will be required to settle a present obligation as a result
of an obligating event, based on a reliable estimate of such
obligation.
1.9 Income taxes
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income-tax law) and deferred
tax charge or credit (refl ecting the tax effects of timing differences
between accounting income and taxable income for the year) provided in
the books of accounts.
Mar 31, 2012
1.1 Basis of preparation of financial statements.
The financial statements have been prepared on accrual basis under the
historical cost convention and in accordance with generally accepted
accounting principles in Indian and materially comply with the
Mandatory Accounting Standards notified by the Central Government of
India under the Companies (Accounting Standards) Rules, 2006 and with
the relevant provisions of the Companies Act, 1956.
1.2 Use of estimates
The preparation of financial statements in conformity with Indian
Generally Accepted Accounting Policies (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure relating to contingent
liabilities as at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates. Any revision to accounting
estimates is recognised prospectively in current and future periods.
1.3 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition less accumulated
depreciation. The cost of fixed assets includes freight, duties, taxes
and other incidental expenses relating to acquisition. Where fixed
assets have been acquired from a country outside India, the cost of
these fixed assets also includes exchange differences (favorable and
unfavorable) arising in respect of foreign currency loans on other
liabilities incurred specifically for the purpose of their acquisition.
Borrowing costs related to the acquisition or construction of the
qualifying fixed assets for the period up to the completion of their
acquisition or constructions are capitalized.
Depreciation is provided on the Straight Line Method from the day in
which the asset is put to use. The rates of depreciation prescribed in
Schedule XIV to the Companies Act, 1956 are considered as the minimum
rates. If the managementÃs estimate of the useful life of a fixed asset
at the time of acquisition of the asset or of the remaining useful life
on a subsequent review is shorter than that envisaged in the aforesaid
schedule, depreciation is provided at a higher rate based on the
managementÃs estimate of the useful life or remaining useful life.
Pursuant to this policy, depreciation on assets has been provided at
the rates based on the estimated useful lives of fixed assets
Depreciation on fixed Assets sold or scrapped during the year is
provided up to the date in which such assets are sold or scrapped.
Depreciation on additions to Fixed Assets is calculated on prorate
basis from the date of addition.
Assets individually costing Rs. 5,000 or less are depreciated at the
rate of 100%.
Depreciation is charged on a proportionate basis for all assets
purchased and sold during the year.
1.4 Impairment of assets
In accordance with Accounting Standard 28 ( AS 28) on Impairment of
assets, where there is an indication of Impairment of the CompanyÃs
assets, the carrying amount of the CompanyÃs assets are reviewed at
each balance sheet date to determine. Whether there is any impairment
on the assets based on internal/external factors. Any impairment loss,
if any, is recognized In the profit & loss statement, wherever the
carrying amount of an asset exceeds its estimated recoverable amount
which is estimated at the higher of its net selling price and its value
in use. In assessing the value in use, the estimated future cash fows
are discounted to the present value at the weighted average cost of
capital. After impairment, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
Previously recognized impairment loss is further provided or reversed
depending on changes in circumstances.
1.5 Revenue recognition
Revenue from sale of manufactured goods, including scrap, is recognized
on transfer of all significant risks and rewards of ownership to the
buyer which is generally on dispatch of goods.
Domestic sales inclusive of sales tax, Excise duty, net of sales
returns and quantity discounts on accrual basis.
Export sales are accounted on the basis of dates of invoicing from the
factory.
Job work and other service revenues is recognized as when services are
rendered.
Income from Investments/other income is recognized on accrual basis.
Interest on deployment of surplus funds is recognized using the time
proportionate method based on underlying interest rates.
1.6 Inventories
Inventories are carried at the lower of cost and net realizable value.
The comparison of cost and net realizable value is made on an
item-by-item basis. Cost comprises purchase price and all incidental
expenses incurred in bringing the inventory to its present location and
condition.
The method of determination of cost is as follows:
- Spares and Consumables are valued at cost.
- Raw-Materials & Intermediates are valued at weighted cost à (net of
MODVAT)
- Work-in-Process is valued at material cost plus direct Manufacturing
Expenses.
- Finished Goods are valued at the lower of cost or net Realisable
value. Cost includes cost of conversion and other expenses incurred in
bringing the goods to their location and condition inclusive of Excise
Duty.
- Saleable / disposable stock of scrap is valued at estimated
realizable value. Provision for inventory obsolescence is assessed
annually and is provided as and when considered necessary.
1.7 Foreign exchange transactions
Foreign currency transactions are recorded at the rates of exchange
prevailing on the dates of the respective transaction. Exchange
differences arising on foreign exchange transactions settled during the
year are recognized in the profit and loss statement of the year,
except that exchange differences related to acquisition of fixed assets
from a country outside India are adjusted in the carrying amount of the
related fixed assets.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date are translated at the closing exchange rates on
that date; the resultant exchange differences are recognized in the
profit and loss statement except those related to acquisition of fixed
assets from a country outside India which are adjusted in the carrying
amount of the related fixed assets.
Net exchange fluctuation gain is accounted as other income and loss is
accounted as other expenses.
1.8 Provisions and contingent liabilities
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made. Provisions
for onerous contracts, i.e. contracts where the expected unavoidable
costs of meeting the obligations under the contract exceed the economic
benefits expected to be received under it, are recognized when it is
probable that an outflow of resources embodying economic benefits will
be required to settle a present obligation as a result of an obligating
event, based on a reliable estimate of such obligation.
1.9 Income taxes
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income-tax law) and deferred
tax charge or credit (refecting the tax effects of timing differences
between accounting income and taxable income for the year) provided in
the books of accounts.
Mar 31, 2011
1. Basis of preparation of financial statements.
(a) The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting and
comply with the Accounting Standards issued by the Institute of
Chartered Accountants of India and the relevant provisions of the
Companies Act, 1956, to the extent applicable. The financial statements
are presented in Indian rupees.
(b) Accounting policies not specifcally referred to otherwise are
consistent and in consonance with generally accepted accounting
principles.
2. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities on the
date of the financial statements. Actual results could differ from
those estimates. Any revision to accounting estimates is recognized
prospectively in current and future periods.
3 Fixed assets and depreciation
Fixed assets are carried at the cost of acquisition less accumulated
depreciation. The cost of fixed assets includes freight, duties, taxes
and other incidental expenses relating to acquisition. Where fixed
assets have been acquired from a country outside India, the cost of
these fixed assets also includes exchange differences (favorable and
unfavorable) arising in respect of foreign currency loans on other
liabilities incurred specifcally for the purpose of their acquisition.
Borrowing costs related to the acquisition or construction of the
qualifying fixed assets for the period up to the completion of their
acquisition or constructions are capitalized.
Depreciation is provided on the Straight Line Method from the day in
which the asset is put to use. The rates of depreciation prescribed in
Schedule XIV to the Companies Act, 1956 are considered as the minimum
rates. If the management's estimate of the useful life of a fixed asset
at the time of acquisition of the asset or of the remaining useful life
on a subsequent review is shorter than that envisaged in the aforesaid
schedule, depreciation is provided at a higher rate based on the
management's estimate of the useful life or remaining useful life.
Pursuant to this policy, depreciation on assets has been provided at
the rates based on the estimated useful lives of fixed assets.
Assets individually costing Rs 5,000 or less are depreciated at the
rate of 100%.
Depreciation is charged on a proportionate basis for all assets
purchased and sold during the year.
4. Revenue recognition
Revenue from sale of Manufactured goods, including scrap, is recognized
on transfer of all significant risks and rewards of ownership to the
buyer. The amount recognized as sale is inclusive of sales tax, custom
duty, trade, Excise duty and quantity discounts on accrual basis.
Interest on deployment of surplus funds is recognized using the time
proportionate method based on underlying interest rates.
5. Inventories
Inventories are carried at the lower of cost and net realizable value.
The comparison of cost and net realizable value is made on an
item-by-item basis. Cost comprises purchase price and all incidental
expenses incurred in bringing the inventory to its present location and
condition.
The method of determination of cost is as follows:
- Spares and Consumables are valued at cost.
- Raw-Materials & Intermediates are valued at weighted cost à (net of
MODVAT)
- Work-in-Process is valued at material cost plus Manufacturing
Expenses.
- Finished Goods are valued at the lower of cost or net realisable
value. Cost includes cost of conversion and other expenses incurred in
bringing the goods to their location and condition inclusive of Excise
Duty.
- Saleable / disposable stock of scrap is valued at estimated
realizable value. Provision for inventory obsolescence is assessed
annually and is provided as and when considered necessary.
6. Foreign exchange transactions
Foreign currency transactions are recorded at the rates of exchange
prevailing on the dates of the respective transaction. Exchange
differences arising on foreign exchange transactions settled during the
year are recognized in the profit and loss account of the year, except
that exchange differences related to acquisition of fixed assets from a
country outside India are adjusted in the carrying amount of the
related fixed assets. Monetary assets and liabilities denominated in
foreign currencies as at the balance sheet date are translated at the
closing exchange rates on that date; the resultant exchange differences
are recognized in the profit and loss account except those related to
acquisition of fixed assets from a country outside India which are
adjusted in the carrying amount of the related fixed assets.
7. Provisions and contingent liabilities
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outfow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outfow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outfow of
resources is remote, no provision or disclosure is made. Provisions for
onerous contracts, i.e. contracts where the expected unavoidable costs
of meeting the obligations under the contract exceed the economic
benefits expected to be received under it, are recognized when it is
probable that an outfow of resources embodying economic benefits will be
required to settle a present obligation as a result of an obligating
event, based on a reliable estimate of such obligation.
8. Income taxes
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income-tax law) and deferred
tax charge or credit (refecting the tax effects of timing differences
between accounting income and taxable income for the year) provided in
the books of accounts.
9. Earnings per share
The basic and diluted earnings per share are computed by dividing the
net profit attributable to equity shareholders for the year by the
weighted average number of equity shares outstanding during the year.
The Company did not have any potentially dilutive equity shares
outstanding during the year.
10. Retirement benefits to employees.
i. Short Term
Short term employee benefits are recognized as an expense as per the
company's scheme based on expected obligations.
ii. Post Retirement
Post retirement benefits comprise of provident fund, superannuation and
gratuity which are accounted for as follows:
a) Provident fund
This is a defned contribution plan. Contributions in respect of staff
and workers are remitted to provident fund authorities in accordance
with the relevant statute and are charged to profit and loss account as
and when due. The Company has no further obligations for future
provident fund benefits in respect of these employees other than its
annual contributions.
b) Superannuation
This is a defned contribution plan. The Company makes contribution as
per the scheme to Superannuation Fund administered by Life Insurance
Corporation of India. The Company has no further obligation of future
superannuation benefits other than its annual contributions and
recognizes such contributions as expense as and when due.
c) Gratuity
This is a defned beneft plan. Provision for gratuity is made based on
actuarial valuation using projected unit credit method. Actuarial gains
and losses, comprising of experience adjustments and the effects of
changes in actuarial assumptions, are recognized immediately in the
profit and loss account as income or expense
11. Deferred Tax Liability
Deferred Tax resulting from timing difference between book and Tax
profit is accounted for under liability method, at the current rate of
tax, to the extent, the timing differences are expected to crystallize.
12. Intangible Assets
Impairment of Assets:
The company assesses at each balance sheet date whether there is any
indication that an asset including goodwill may be impaired. If any
such indication exists, the Company estimates the recoverable amount of
the asset. If such recoverable amount of the asset or the recoverable
amount of the cash-generating unit to which the asset belongs is less
than its carrying amount, the carrying amount is reduced to its
recoverable amount. The reduction is treated as an impairment loss and
is recognized in the profit and loss account. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is refected at the recoverable amount.
13. Dues to Micro, Small and Medium Enterprises:
The management has written to vendors requesting them to inform whether
they would fall under the preview of Micro, Small and Medium
Enterprises Act, 2001. Based on disclosure received, amount payable to
such enterprises as at 31st March 2011 is Nil.
The computation of profit under section 349 of Companies Act, 1956 is
not considered as the managerial remuneration. The remuneration that is
paid is minimum remuneration based on effective capital of the Company
as prescribed under Schedule XIII of the said Act.
16. Leases
Operating leases
The company is obligated under cancellable operating leases for Jumbo
Bag Ltd., Athipedu factory which are renewable at the options of both
the lessor and the lessee. The expense under the contracted lease
amounts to Rs. 86,08,696/- (previous year Rs.74,79,498/-)
17. Disclosure Under AS-15
Defned Contribution Plans:-
(a) Contribution to Provident Fund : Rs.16,16,528/-
(b) Contribution to Superannuation Fund : Rs. 6,83,510/-
Defned Beneft Plans:- Gratuity:
The Gratuity liability is covered by a Master Policy taken out with LIC
of India under the Cash Accumulation scheme. The company during the
year has done actuarial valuation as on 31.03.2011 and the estimated
liability amounted to Rs. 16.22 Lakhs which is debited to P & L
Account.
Retirement benefits:
Disclosure as required by Accounting Standard (AS) Ã 15 (Revised 2005)
"Employee benefitsà issued by the Institute of Chartered Accountants of
India are given below:
The estimates of future salary increases, considered in actuarial
valuation, takes account of infation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
18. Segmental Reporting
Information given in accordance with the requirement of Accounting
Standard 17, on Segment Reporting.
CompanyÃs business segments are as under:
Manufacturing: Manufacture of Flexible intermediate bulk container
packaging material used for industrial purposes.
Trading: Trading of Polymers.
Segment Accounting Policies:
a. Segment accounting disclosures are in line with accounting policies
of the Company.
b. Segment Revenue includes Sales and other income directly
identifable with / allocable to the segment.
c. Expenses that are directly identifable with / allocable to segments
are considered for determining the Segment Result.
d. Major portion of segment liabilities and Assets relates to
manufacturing segment
e. Previous year fgures have not been furnished since this is the frst
year of disclosure in terms of the standard.
Mar 31, 2010
1. Basis of preparation of financial statements
(a) The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting and
comply with the Accounting Standards issued by the Institute of
Chartered Accountants of India and the relevant provisions of the
Companies Act, 1956, to the extent applicable. The financial statements
are presented in Indian rupees.
(b) Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
principles.
2. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities on the
date of the financial statements. Actual results could differ from
those estimates. Any revision to accounting estimates is recognized
prospectively in current and future periods.
3. Fixed assets and depreciation
Fixed assets are carried at cost of acquisition less accumulated
depreciation. The cost of fixed assets includes freight, duties, taxes
and other incidental expenses relating to acquisition. Where fixed
assets have been acquired from a country outside India, the cost of
these fixed assets also includes exchange differences (favorable and
unfavorable) arising in respect of foreign currency loans on other
liabilities incurred specifically for the purpose of their acquisition.
Borrowing costs related to the acquisition or construction of the
qualifying fixed assets for the period up to the completion of their
acquisition or constructions are capitalized.
Depreciation is provided on the Straight Line Method from the day in
which the asset is put to use. The rates of depreciation prescribed in
Schedule XIV to the Companies Act, 1956 are considered as the minimum
rates. If the managements estimate of the useful life of a fixed asset
at the time of acquisition of the asset or of the remaining useful life
on a subsequent review is shorter than that envisaged in the aforesaid
schedule, depreciation is provided at a higher rate based on the
managements estimate of the useful life or remaining useful life.
Pursuant to this policy, depreciation on assets has been provided at
the rates based on the estimated useful lives of fixed assets
Assets individually costing Rs 5,000 or less are depreciated at the
rate of 100%.
Depreciation is charged on a proportionate basis for all assets
purchased and sold during the year.
4. Revenue recognition
Revenue from sale of Manufactured goods, including scrap, is recognized
on transfer of all significant risks and rewards of ownership to the
buyer. The amount recognized as sale is inclusive of sales tax, custom
duty, trade, Excise duty and quantity discounts on accrual basis.
Interest on deployment of surplus funds is recognized using the time
proportionate method based on underlying interest rates.
(i) TUF Interest: During the current financial year 2009-10, the
company has earned Rs.77.71 Lakhs by way of Interest Subsidy from
Technology Upgradation Fund maintained by the Central Government. Out
of the said amount Rs.61.19 Lakhs relates to the previous year, and the
same was recognized in the current year since the receipt of the same
become certain only during the current year.
5. Inventories
Inventories are carried at the lower of cost and net realizable value.
The comparison of cost and net realizable value is made on an
item-by-item basis. Cost comprises purchase price and all incidental
expenses incurred in bringing the inventory to its present location and
condition.
The method of determination of cost is as follows:
- Spares and Consumables are valued at cost.
- Raw-Materials & Intermediates are valued at weighted cost - (net of
MODVAT)
- Work-in-Process is valued at material cost plus Manufacturing
Expenses.
- Finished Goods are valued at the lower of cost or net realisable
value. Cost includes cost of conversion and other expenses incurred in
bringing the goods to their location and condition inclusive of Excise
Duty.
- Saleable / disposable stock of scrap is valued at estimated
realizable value.
provision for inventory obsolescence is assessed annually and is
provided as and when considered necessary.
6. Foreign exchange transactions
Foreign currency transactions are recorded at the rates of exchange
prevailing on the dates of the respective transaction. Exchange
differences arising on foreign exchange transactions settled during the
year are recognized in the profit and loss account of the year, except
that exchange differences related to acquisition of fixed assets from a
country outside India are adjusted in the carrying amount of the
related fixed assets.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date are translated at the closing exchange rates on
that date; the resultant exchange differences are recognized in the
profit and loss account except those related to acquisition of fixed
assets from a country outside India which are adjusted in the carrying
amount of the related fixed assets.
7. Provisions and contingent liabilities
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
8. Tax on Income
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income-tax law) and deferred
tax charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the year) provided in
the books of accounts.
9. Earnings per share
The basic and diluted earnings per share are computed by dividing the
net profit attributable to equity shareholders for the year by the
weighted average number of equity shares outstanding during the year.
The Company did not have any potentially dilutive equity shares
outstanding during the year.
10. Retirement Benefits to Employees.
i Short Term
Short term employee benefits are recognized as an expense as per the
Companys Scheme based on expected obligations.
ii. Post Retirement
Post retirement benefits comprise of provident fund, superannuation and
gratuity which are accounted for as follows:
a) Provident fund
This is a defined contribution plan. Contributions in respect of staff
and workers are remitted to provident fund authorities in accordance
with the relevant statute and are charged to profit and loss account as
and when due. The Company has no further obligations for future
provident fund benefits in respect of these employees other than its
annual contributions.
b) Superannuation
This is a defined contribution plan. The Company makes contribution as
per the scheme to superannuation Fund administered by Life Insurance
Corporation of India. The Company has no further obligation of future
superannuation benefits other than its annual contributions and
recognizes such contributions as expense as and when due.
c) Gratuity
This is a defined benefit plan. Provision for gratuity is made based on
actuarial valuation using projected unit credit method. Actuarial gains
and losses, comprising of experience adjustments and the effects of
changes in actuarial assumptions, are recognized immediately in the
profit and loss account as income or expense
11. Deferred Tax Liability
Deferred Tax resulting from timing difference between book and Tax
profit is accounted for under liability method, at the current rate of
tax, to the extent, the timing differences are expected to crystallize.
12. Intangible Assets
Impairment of Assets:
The company assesses at each balance sheet date whether there is any
indication that an asset including goodwill may be impaired. If any
such indication exists, the Company estimates the recoverable amount of
the asset. If such recoverable amount of the asset or the recoverable
amount of the cash-generating unit to which the asset belongs is less
than its carrying amount, the carrying amount is reduced to its
recoverable amount. The reduction is treated as an impairment loss and
is recognized in the profit and loss account. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
13. Dues to Micro, Small and Medium Enterprises:
The management is currently in the process of identifying enterprises
which have provided goods and services to the company which qualify
under the definition of micro, small and medium enterprises, as defined
in Micro, Small and Medium Enterprises Act 2001. Accordingly, the
disclosure is apart of amount payable to such Enterprises as at 31st
march 2010 is NIL.
14. Leases
(a) Operating leases
The company is obligated under cancellable operating leases for Jumbo
Bag Ltd ,Athipedu factory which are renewable at the options of both
the lessor and the lessee. The expense under the contacted lease
amounts to Rs.74,79,498/- ( previous year Rs.59,17,768 /-)
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