Mar 31, 2023
Maithan Alloys Limited ("the Company") is a public company domiciled in India limited by shares, and it''s incorporated on 19 September 1985 under the provisions of the Companies Act applicable in India. Its shares are listed on Calcutta Stock Exchange (CSE) and the National Stock Exchange (NSE) and are traded on Bombay Stock Exchange (BSE) under Permitted category. The Company is primarily engaged in the business of manufacturing and exporting of all three bulk Ferro alloys- Ferro Manganese, Silico Manganese and Ferro Silicon. It is also engaged in the generation and supply of Wind Power and has a Captive Power Plant.
a. Statement of Compliance
These (''financial statements'') of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 ("the Act") read with Rule 4A of the Companies (Indian Accounting Standards) Rules, 2015, Companies (Indian Accounting Standards),as amended, and other relevant provisions of the Companies Act, 2013 ("the Act"). The accounting policies are applied consistently to all the periods presented in the financial statements.
The financial statements have been prepared on the going concern basis and at historical cost and on accrual method of accounting, except for certain financial assets and liabilities that are measured at fair value/ amortised cost. (Refer note 3(j) below).
Historical cost is based on the fair value of the consideration given in exchange for goods and services at the time of their acquisition.
The preparation of the financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates under different assumptions and conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods affected.
The financial statements are prepared in Indian Rupees (^) which is the functional currency of the company and the currency of the primary economic environment in which the company operates and all values are rounded to the nearest crores, utpo 2 decimal places except as otherwise indicated.
All assets and liabilities are classified as current or non-current as per the Company''s normal operating cycle (twelve months) and other criteria set out in the schedule III to the Companies Act, 2013 and Ind AS 1 -''Presentation of Financial Statements''.
All assets and liabilities are classified as current when it is expected to be realized or settled within the Company''s normal operating cycle, i.e. twelve months. All other assets and liabilities are classified as non- current.
Certain comparative figures appearing in these financial statements have been regrouped and/ or reclassified to better reflect the nature of those items.
Deferred tax assets and liabilities are classified as non-current only.
a. Property, Plant and Equipments
Property, plant and equipment are stated at their cost of acquisition, installation or construction less accumulated depreciation and impairment losses, if any, except freehold land which is stated at cost less impairment losses if any.
The cost of property, plant and equipment comprises its purchase price, and any cost directly attributable to bringing the asset to working condition and location for its intended use. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Stores and spare parts are capitalised when they meet the definition of property, plant and equipment. The corresponding old spares are decapitalised on such date with consequent impact in the statement of profit & loss.
Subsequent expenditures on major maintenance or repairs includes the cost of the replacement of parts of assets and overhaul costs are included in the asset''s carrying amount or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other expenses on existing property, plant and equipment, including day-to-day repair and maintenance expenditure are charged to the statement of profit and loss for the period during which such expenses are incurred.
If significant parts of an item of property, plant and equipment have different useful life, then they are accounted for as separate items (major components) of property, plant and equipment. Likewise, expenditure towards major inspections and overhauls are identified as a separate component and depreciated over the expected period till the next overhaul expenditure.
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of PPE, is determined as the difference between the sales proceeds and the carrying amount of the asset, and is recognised in Statement of Profit and Loss. Major inspection and overhaul expenditure is capitalized, if the recognition criteria are met.
Capital work in progress comprises expenditure for acquisition and construction of tangible assets that are not yet ready for their intended use. Costs, net of income, associated with the commissioning of the asset are capitalized until the period of commissioning has been completed and the asset is ready for its intended use. At the point when the asset is capable of operating in the manner intended by the management, the cost of construction is transferred to the appropriate category of property, plant and equipment. Such items are classified to the appropriate category of property, plant and equipment when completed and ready for their intended use. Advances given towards acquisiti''on/constructi''on of property, plant and equipment outstanding at each balance sheet date are disclosed as Capital Advances under "Other non-current assets"
Depreciation on property, plant and equipment is provided on straight line method (SLM), except on Building and Plant & Machineries of Ferro Alloys Unit at Byrnihat and Kalyaneshwari on which depreciation has been provided on written down value (WDV) method.
Depreciation commences when the assets are ready for their intended use. Depreciated assets and accumulated depreciation amounts are retained fully until they are removed/reti''red from active use.
Depreciation is provided to allocate the costs of property, plant and equipment, net of their residual values, over their useful life as specified in Schedule II of the Companies Act, 2013, other than in case of factory building and plant & machinery in Visakhapatnam Unit where useful life has been considered by the management to be of 20 years.
The assets residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed during each financial year and adjusted prospectively, if appropriate. In respect of an asset for which impairment loss is recognized, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
c. Leases
The Company has applied Ind AS 116 "Leases" with effect from 1st April 2019. The Company assesses whether a contract contains a lease, at the inception of the contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration, to assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
⢠the contract involves the use of identified asset;
⢠the Company has substantially all of the economic benefits from the use of the asset through the period of lease; and
⢠the Company has the right to direct the use of the asset.
As a Lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are initially measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the initial amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are subsequently depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. The estimated useful lives of right of- use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or lower and leases of low value assets. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Intangible assets acquired separately are, on initial recognition, measured at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for intangible asset with a finite useful life are reviewed at the end each reporting period.
Intangible assets with infinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash generating unit level. The assessment of infinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
A Summary of the policies applied to the Company''s intangible assets is, as follows:
Intangible assets |
Amortization Method Used |
Mining rights |
Over the period of respective mining agreement |
Software |
Amortized on a straight-line basis over the useful life. |
The amortisation period and the amortisation method are reviewed at each financial year end, if the expected useful life of the asset is different from previous estimates; the change is accounted for prospectively as a change in accounting estimate.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised.
A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets and disposal groups classified as held for sale are not depreciated and are measured at the lower of carrying amount and fair value less costs to sell except for those assets that are specifically exempt under relevant Ind AS. Once the assets are classified as "Held for sale", those are not subjected to depreciation till disposal. Such assets and disposal groups are presented separately on the face of the Balance Sheet.
The Company assesses at the end of each reporting period the carrying amounts of non-financial assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, then an impairment review is undertaken and an impairment loss, if any, is recognized in the statement of profit and loss wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of the asset''s fair value less costs of disposal and the asset''s value in use. In case, where it is not possible to estimate the recoverable amount of an individual non-financial asset, the Company estimates the recoverable amount for the smallest cash generating unit to which the non-financial asset belongs.
Fair value less costs of disposal is the price that would be received to sell the asset in an orderly transaction between market participants and does not reflect the effect of factors that may be specific to the entity and not applicable to entities in general. Value in use is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and its eventual disposal.
Impairment charges and reversals are assessed at the level of cash-generating unit (CGU). A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.
A cash generating unit is treated as impaired when the carrying amount of the assets or cash generating unit exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the period in which asset or cash generating unit is identified as impaired.
Impairment loss recognised in prior accounting period(s) is reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment. Post impairment, depreciation is provided on the revised carrying value of the impaired asset over its remaining useful life. A reversal of an impairment loss is recognised immediately in the Statement of Profit and 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.
Grants and subsidies from the Government are recognized when there is reasonable assurance that the grant/subsidy will be received and the Company will comply with the conditions attached to them. When the grant relates to an expense item, it is recognised in the Statement of Profit and Loss by way of a deduction to the related expense on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in profit or loss over the periods necessary to match them with the related costs, which they are intended to compensate. When the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related assets and presented within other income.
In the unlikely event that a grant previously recognized is ultimately not received, it is treated as a change in estimate and the amount cumulatively recognised is expensed in the Statement of Profit and Loss. When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset. The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and is being recognised in the Statement of Profit and Loss. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
Foreign currency transactions are translated into the functional currency at the exchange rates that approximates the rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies outstanding at the end of the reporting period are translated into the functional currency at the
exchange rates prevailing on the reporting date. Non-monetary items are translated using the exchange rates prevailing on the transaction date, subsequently measured at historical cost and not retranslated at period end.
All exchange differences on monetary items are recognized in the Statement of Profit and Loss except any exchange differences on monetary items designated as an effective hedging instrument which are recognized in the Other Comprehensive Income.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets 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 the statement of profit and loss) are added 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 the statement of profit and loss are recognized immediately in the statement of profit and loss.
The Company''s financial assets comprise:
a. Current financial assets mainly consist of trade receivables, investments in liquid mutual funds, nonconvertible debenture, cash and bank balances, fixed deposits with banks and financial institutions and other current receivables.
b. Non-current financial assets mainly consist of financial investments in equity, bond and fixed deposits, noncurrent receivables from related party and employees and non-current deposits.
0 Recognition and Initial Measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset are added to fair value. Transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
0 Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
⢠Financial assets at Amortized Cost;
⢠Financial assets at Fair Value Through Other Comprehensive Income (FVOCI);
⢠Financial assets at Fair Value Through Profit or Loss (FVTPL); and
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
o Financial assets at Amortized Cost: A ''financial assets'' is measured at the amortized cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows; and
⢠The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets at amortised cost category is the most relevant to the Company. It comprises of current financial assets such as trade receivables, cash and bank balances, fixed deposits with bank and financial institutions, other current receivables and non-current financial assets such as financial investments - fixed deposits. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. The EIR amortisation is included in other income in the statement of profit and loss. The losses arising from impairment, if any are recognised in the statement of profit and loss.
o Financial assets at FVOCI: A ''financial assets'' is measured at the FVOCI if both of the following conditions are met:
⢠The objective of the business model is achieved by collecting contractual cash flows and selling the financial assets; and
⢠The asset''s contractual cash flows represent SPPI on the principal amount outstanding
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognized in Other Comprehensive Income. However, the interest income, impairment losses & reversals, and foreign exchange gains and losses are recognised in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in other comprehensive income is reclassified from the equity to statement of profit and loss. Interest earned whilst holding fair value through other comprehensive income debt instrument is reported as interest income using the EIR method.
For equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to the statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
o Financial assets at FVTPL: FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL, if such designation reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').
Debt instruments included within the FVTPL category are measured at fair value with any gains and losses arising on re-measurement are recognized in the Statement of Profit and Loss.
o Equity Instruments: Any equity investments instruments in the scope of Ind AS 109 "Financial Instruments" are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified at cost.
For equity instruments which are classified as FVTPL, all subsequent fair value changes are recognised in the statement of profit and loss.
0 Financial Assets -derecognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred and the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. On derecognition of a financial asset, 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 other equity is recognised in Standalone Statement of Profit and Loss.
0 Impairment of Financial Assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period.
In case of financial assets, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments - for recognition of impairment loss allowance. The application of simplified approach does not
require the Company to track changes in credit risk of trade receivable. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
0 Recognition And Initial Measurement
The Company recognises a financial liability in its balance sheet when it becomes party to the contractual provisions of the instrument. All financial liabilities are recognised initially at fair value and, in the case of financial liabilities at amortised cost, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables and borrowings including bank overdrafts and derivative financial instruments.
0 Subsequent Measurement
Financial liabilities are measured subsequently at amortized cost or FVTPL.
Financial liabilities at FVTPL
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. These gains/ losses are not subsequently transferred to the statement of profit and loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss. The Company has not designated any financial liability as at fair value through profit or loss.
Further, the provisionally priced trade payables are marked to market using the relevant forward prices for the future period specified in the contract and is adjusted in costs.
Financial liabilities at amortised cost (Borrowings and Trade and Other payables)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR (Effective Rate Interest) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR (Effective Rate Interest) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.
0 Financial Liabilities- derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
0 Equity Instruments
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.
0 OffseWng Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is a
legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
The Company enters into forward contracts to mitigate the risk of changes in interest rates and exchange rates. The Company does not hold derivative financial instruments for speculative purposes. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value with changes in fair value recognized in the Statement of Profit and Loss in the period when they arise. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Inventories are valued after providing for obsolescence, as follows:
1. Raw materials, stores and spare parts, fuel and packing material:
These are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. Cost is determined on weighted average basis and includes purchase price, other costs incurred in bringing the inventories to their present location and condition, and taxes for which credit is not available. However, materials and other items held for use in production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
2. Work-in-progress, finished goods and stock in trade:
These are valued at the lower of cost and net realisable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. Cost of finished goods and Work-in-progress includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity, but excluding borrowing costs. Cost of Stock-in-trade is determined on weighted average basis and includes cost of purchase and other cost incurred in bringing the inventories in the present location and condition.
Obsolete, defective, slow moving and unserviceable inventories, if any, are identified at the time of physical verification and where necessary, they are duly provided for.
The Company is primarily engaged in the manufacturing of Ferro Alloys and generate revenue from the sale of the product.
(i) Revenue from Operation
Revenue from sale of product is recognised at the point in time when control of the goods is transferred to the customer, generally on delivery of the product.
At contract inception, the Company assess the goods promised in a contract with a customer and identifies as a performance obligation of each promise to transfer to the customer. Revenue from contracts with customers is recognized when control of goods is transferred to customers and the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration and excluding taxes or duties collected on behalf of the Government.
Certain of the Company''s sales contracts provide for provisional pricing based on the price on the Commodity Research Unit (CRU), as specified in the contract. Revenue in respect of such contracts is recognised when control passes to the customer and is measured at the amount the entity expects to be entitled - being the estimate of the price expected to be received at the end of the measurement period. Post transfer of control. of goods, provisional pricing features are accounted in accordance with Ind AS 109 ''Financial Instruments'' rather than Ind AS 115 ''Revenue from contracts with customers'' and therefore the Ind AS 115 rules on variable consideration do not apply. These ''provisional pricing'' adjustments i.e. the consideration adjusted post transfer of control are included in total revenue from operations. Final settlement of the price is based on the applicable price for a specified future period. The Company''s provisionally priced sales are marked to market using the relevant forward prices for the relevant period specified in the contract and is adjusted in revenue.
Sale of goods is recognised at the point in time when control of the goods is transferred to the customer. The revenue is measured on the basis of the consideration defined in the contract with a customer, including variable consideration, such as discounts, volume rebates, or other contractual reductions. As the period between the date on which the Company transfers the promised goods to the customer and the date on which the customer pays for these goods is generally one year or less, no financing components are taken into account.
In contracts involving the rendering of services, revenue is measured using the completed service method.
Export incentive and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions and the incentive will be received. Insurance & other claims, where quantum of accruals cannot be ascertained with reasonable certainty are recognised as income only when revenue is virtually certain which generally coincides with receipt/acceptance.
(ii) Other Income
a) Interest income is recognized using the effective interest rate method. For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.
b) Dividend Income is recognised only when the right to receive payment is established.
l. Employee Benefits
a) Short-Term Benefits
Short term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized as an expense at the undiscounted amount in the statement of profit and loss of the period in which the related service is rendered.
Accumulated compensated absences, which are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are treated as short term employee benefits. The Company measure the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlements that has accumulated at the reporting date.
b) Defined Contribution Plans
Employee benefits in the form of contribution Provident Fund managed by Government Authorities, Employee State Insurance Corporation and Labour Welfare Fund are considered as defined contribution plans and the same are charged to the statement of profit and loss for the period in which the employee renders the related services.
c) Defined Benefit Plans
The Company''s gratuity fund scheme and post-employment benefits scheme are considered as defined benefit plans. The Company''s liability is determined on the basis of actuarial valuation using the projected unit credit method as at the balance sheet date.
Past service costs are recognized in the statement of profit and loss on the earlier of:
⢠The date of plan amendment or curtailment, and
⢠The date that the company recognizes related restructuring costs
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation. The Company recognizes the following changes in the statement of profit and loss:
⢠Service costs comprising current service costs, past service costs, gains and losses on curtailments and nonroutine settlements; and
⢠Net interest expense or income
Re-measurements comprising actuarial gains and losses, the effect of asset ceiling (if any), and the return on the plan assets (excluding net interest), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to the statement of profit and loss in subsequent periods.
m. Taxation
Income tax expense represents the sum of current tax and deferred tax and includes any adjustments related to past periods in current and/or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant period. Tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised directly in Equity or Other Comprehensive Income.
a) Current Tax
Current income tax is measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and the tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Interest expenses and penalties, if any, related to income tax are included in finance cost and other expenses respectively. Interest Income, if any, related to income tax is included in other income.
Current tax relating to the items recognized outside the statement of profit and loss is recognized in correlation to the underlying transaction either in OCI or directly in other equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.
b) Deferred Tax
Deferred tax is recognized on all temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Company''s financial statements except when the deferred tax arises from the initial recognition of goodwill or initial recognition of an asset or liability in a transaction that is not a business combination and affects neither the accounting nor taxable profits or loss at the time of transaction. Deferred tax assets and liabilities 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 Balance Sheet date.
Deferred tax assets are recognized for deductible temporary differences, the carry forward of unused tax credits and unused tax losses to the extent it is probable that future taxable profits will be available against which the deductible temporary difference, the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted 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 assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities, and the deferred taxes relate to the same taxable entity and the same taxation authority.
Current and deferred tax are recognised in the Statement of Profit and Loss, except when the same relate to items that are recognised in Other Comprehensive Income or directly in Equity, in which case, the current and deferred tax relating to such items are also recognised in Other Comprehensive Income or directly in Equity respectively.
Borrowing cost includes interest expense as per Effective Interest Rate (EIR), amortisation of discounts, hedge related cost incurred in connection with foreign currency borrowings, ancillary costs incurred in connection with borrowing of funds and exchange difference, arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets until such time as the assets are substantially ready for their intended use. Borrowing costs relating to the construction phase of a service concession arrangement is capitalised as part of the cost of the intangible asset.
Where surplus funds are available out of money borrowed specifically to finance a project are invested temporarily and the money generated from such current investments is deducted from the total borrowing cost to be capitalised. If any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing then becomes part of general borrowing. Where the funds used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant general borrowings of the Company during the year. Capitalisation of borrowing costs is suspended and charged to profit and loss during the extended periods when the active development on the qualifying assets is interrupted. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use. All other borrowing costs are recognised as expense in the Statement of Profit and Loss in the period in which they are incurred. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial liability or a shorter period, where appropriate, to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options).
Cash and cash equivalents consist of cash on hand, cash at banks, fixed deposits and short-term highly liquid investments with an original maturity of three months or less.
For the purpose of presentation in the statement of cash flows, cash and cash equivalent includes cash on hand, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash, cash at bank and bank overdraft which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.
Provisions
Provisions represent liabilities for which the amount or timing is uncertain. Provisions are recognized when the Company has a present obligation (legal or constructive), as a result of a past events, and it is probable that an outflow of resources will be required to settle such an obligation and the amount can be estimated reliably. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognized in statement of profit and loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
Contingent Liabilities
Contingent liabilities are possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that arises from past events is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. Contingent Liabilities are not recognized but disclosed in the financial statements when the possibility of an outflow of resources embodying economic benefits is more.
Contingent Assets
Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and is recognised.
Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. Partly paidup shares are included as fully paid equivalents according to the fraction paid-up.
Diluted earnings per share are computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on conversion of all dilutive potential equity shares .
Dividends paid are recognised in the period in which the dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders and is recognised directly in other equity.
Operating segment is reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM). The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Inter-segment revenues have been accounted for based on prices normally negotiated between the segments with reference to the costs, market prices and business risks, within an overall optimization objective for the Company. Revenue and expenses are identified with segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis, will be included under "Unallocated/ Others".
Exceptional items are those items that management considers, by virtue of their size or incidence should be disclosed separately to ensure that the financial information allows an understanding of the underlying performance of the business in the year, so as to facilitate comparison with prior periods. Such items are material by nature or amount to the year''s result and require separate disclosure in accordance with Ind AS.
The preparation of the financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses, and disclosures of contingent assets and liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed in the paragraphs that follow.
(i) Useful Economic Lives and Impairment of Other Assets
The estimated useful life of property, plant and equipment (PPE) and intangible asset is based on a number of factors including the effects of obsolescence, usage of the asset and other economic factors (such as known technological advances).
The Company reviews the useful life of PPE and intangibles at the end of each reporting date and any changes could affect the depreciation rates prospectively.
The Company also reviews its property, plant and equipment for possible impairment if there are events or changes in circumstances that indicate that the carrying value of the assets may not be recoverable. In assessing the property, plant and equipment for impairment, factors leading to significant reduction in profits, such as the Company''s business plans and changes in regulatory environment are taken into consideration.
(ii) Contingencies and Commitments
In the normal course of business, contingent liabilities may arise from litigation, taxation and other claims against the Company. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management''s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such liabilities are disclosed in the notes but are not provided for in the financial statements.
Although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a materially adverse impact on the Company''s financial position or profitability.
(iii) Actuarial Valuation
The determination of Company''s liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognized in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depend on assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.
(iv) Fair Value Measurements and Valuation Processes
Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in the notes to the financial statements.
(v) Recognition of Deferred Tax Assets For Carried Forward Tax Losses
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
(vi) Assessment of Impairment of investments in subsidiaries, associates and joint ventures
The Company reviews its carrying value of investments in subsidiaries, associates and joint ventures annually, or more frequently when there is indication for impairment.
If the recoverable amount is less than its carrying amount,
Mar 31, 2021
1. Corporate Information
Maithan Alloys Limited (âthe Companyâ) is a public company domiciled in India limited by shares, and itâs incorporated under the provisions of the Companies Act applicable in India on 19 September 1985. Its shares are listed on Calcutta Stock Exchange (CSE) and the National Stock Exchange (NSE) and are traded on Bombay Stock Exchange (BSE) under Permitted category. The Company is engaged in the business of manufacturing and exporting of all three bulk Ferro alloys- Ferro Manganese, Silico Manganese and Ferro Silicon. It is also engaged in the generation and supply of Wind Power and has a Captive Power Plant.
2. Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 ofthe Companies Act, 2013 (âthe Actâ) read with rule 4A of the Companies (Indian Accounting Standards) Rules, 2015, Companies (Indian Accounting Standards), as amended, and other relevant provisions of the Companies Act, 2013 (âthe Actâ).
The financial statements have been prepared on historical cost and on accrual method of accounting, except for certain financial assets and liabilities that are measured at fair value/ amortised cost. (Refer note 3(j) below).
Historical cost is based on the fair value of the consideration given in exchange for goods and services at the time of their acquisition.
The accounting policies are applied consistently to all the periods presented in the financial statements.
The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
The financial statements are prepared in Indian Rupees (Rs.) which is the Companyâs functional currency for all its operations.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle (twelve months) and other criteria set out in the schedule III to the Companies Act, 2013 and Ind AS 1 - âPresentation of Financial Statements''.
All assets and liabilities are classified as current when it is expected to be realized or settled within the Companyâs normal operating cycle, i.e. twelve months. All other assets and liabilities are classified as non- current.
Deferred tax assets and liabilities are classified as non-current only.
Property, plant and equipment are stated at their cost of acquisition, installation or construction (net of taxes and other recoverable, wherever applicable) less accumulated depreciation and impairment losses, if any, except freehold land which is carried at cost
The cost of property, plant and equipment comprises its purchase price, including inward freight, import duties and non-refundable purchase taxes, and any cost directly attributable to bringing the asset to working condition and location for its intended use. Stores and spare parts are capitalised when they meet the definition of property, plant and equipment. The corresponding old spares are decapitalised on such date with consequent impact in the statement of profit & loss.
Subsequent expenditures are included in the assetâs carrying amount or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
If significant parts of an item of property, plant and equipment have different useful life, then they are accounted for as separate items (major components) of property, plant and equipment. Likewise, expenditure towards major inspections and overhauls are identified as a separate component and depreciated over the expected period till the next overhaul expenditure.
Depreciation on property, plant and equipment is provided on straight line method (SLM), except on additions made after 1 April, 2006 to Building and Plant & Machineries of Ferro Alloys Unit at Byrnihat and Kalyaneshwari on which depreciation has been provided on written down value (WDV) method.
Depreciation is provided to allocate the costs of property, plant and equipment, net of their residual values, over their useful life as specified in Schedule II of the Companies Act, 2013, other than in case of factory building and plant & machinery in Visakhapatnam Unit where useful life has been considered by the management to be of 20 years.
The assets residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed during each financial year and adjusted prospectively, if appropriate. In respect of an asset for which impairment loss is recognized, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
The Company has applied Ind AS 116 âLeasesâ with effect from 1 April 2019.
As a Lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
As a Lessor
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
Capital work in progress comprises expenditure for acquisition and construction of assets that are not yet ready for their intended use. Costs, net of income, associated with the commissioning of the asset are capitalized until the period of commissioning has been completed and the asset is ready for its intended use. At the point when the asset is capable of operating in the manner intended by the management, the cost of construction is transferred to the appropriate category of property, plant and equipment. Such items are classified to the appropriate category of property, plant and equipment when completed and ready for their intended use. Advances given towards acquisition/construction of property, plant and equipment outstanding at each balance sheet date are disclosed as Capital Advances under âOther non-current assetsâ.
Intangible assets acquired separately are, on initial recognition, measured at cost. The cost ofintangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or infinite.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for intangible asset with a finite useful life are reviewed during each reporting period.
Intangible assets with infinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash generating unit level. The assessment of infinite life is reviewed annually to determine whether the infinite life continues to be supportable. If not, the change in useful life from infinite to finite is made on a prospective basis.
A Summary of the policies applied to the Companyâs intangible assets is, as follows: |
|
Intangible assets |
Amortization Method Used |
Mining rights |
Over the period of respective mining agreement |
Software |
Amortized on a straight-line basis over the useful life. |
The amortisation period and the amortisation method are reviewed at each financial year end, if the expected useful life of the asset is different from previous estimates; the change is accounted for prospectively as a change in accounting estimate.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets and disposal groups classified as held for sale are not depreciated and are measured at the lower of carrying amount and fair value less costs to sell. Such assets and disposal groups are presented separately on the face of the Balance Sheet.
The Company assesses at each reporting date to determine if there is any indication of impairment, based on internal/ external factors. If any such indication exists, then an impairment review is undertaken and an impairment loss, if any, is recognized in the statement of profit and loss wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of the assetâs fair value less costs of disposal and the assetâs value in use. . In case, where it is not possible to estimate the recoverable amount of an individual non-financial asset, the Company estimates the recoverable amount for the smallest cash generating unit to which the non-financial asset belongs.
Fair value less costs of disposal is the price that would be received to sell the asset in an orderly transaction between market participants and does not reflect the effect of factors that may be specific to the entity and not applicable to entities in general. Value in use is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and its eventual disposal.
Impairment charges and reversals are assessed at the level of cash-generating unit (CGU). A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.
A cash generating unit is treated as impaired when the carrying amount of the assets or cash generating unit exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which asset or cash generating unit is identified as impaired.
Impairment loss recognised in prior accounting period(s) is reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment. Post impairment, depreciation is provided on the revised carrying value of the impaired asset over its remaining useful life.
Grants and subsidies from the Government are recognized when there is reasonable assurance that the grant/subsidy will be received and the Company will comply with the conditions attached to them. When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in profit or loss over the periods necessary to match them with the related costs, which they are intended to compensate. When the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related assets and presented within other income.
In the unlikely event that a grant previously recognized is ultimately not received, it is treated as a change in estimate and the amount cumulatively recognised is expensed in the Statement of Profit and Loss.
Foreign currency transactions are translated into the functional currency at the exchange rates that approximates the rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies outstanding at the end of the reporting period are translated into the functional currency at the exchange rates prevailing on the reporting date. Non-monetary items are translated using the exchange rates prevailing on the transaction date, subsequently measured at historical cost and not retranslated at period end.
All exchange differences on monetary items are recognized in the Statement of Profit and Loss except any exchange differences on monetary items designated as an effective hedging instrument which are recognized in the Other Comprehensive Income.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets 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 the statement of profit and loss) are added 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 the statement of profit and loss are recognized immediately in the statement of profit and loss.
The Companyâs financial assets comprise:
a. Current financial assets mainly consist of trade receivables, investments in liquid mutual funds, cash and bank balances, fixed deposits with banks and financial institutions and other current receivables.
b. Non-current financial assets mainly consist of financial investments in equity, bond and fixed deposits, noncurrent receivables from related party and employees and non-current deposits.
> Recognition And Initial Measurement
The Company recognises a financial asset when it becomes party to the contractual provisions of the instrument. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
^ Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
⢠Financial assets at Amortized Cost;
⢠Debt Instruments at Fair Value Through Other Comprehensive Income (FVOCI);
⢠Debt Instruments at Fair Value Through Profit or Loss (FVTPL); and
⢠Equity Instruments measured at Fair Value Through Other Comprehensive Income (FVOCI).
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
o Financial assets at Amortized Cost: A debt instrument is measured at the amortized cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows; and
⢠The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets at amortised cost category is the most relevant to the Company. It comprises of current financial assets such as trade receivables, cash and bank balances, fixed deposits with bank and financial institutions, other current receivables and non-current financial assets such as financial investments - fixed deposits and non-current receivables. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. The EIR amortisation is included in other income in the statement of profit and loss. The losses arising from impairment, if any are recognised in the statement of profit and loss.
The effective interest rate 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.
o Debt Instruments at FVOCI: A debt instrument is measured at the FVOCI if both of the following conditions are met:
⢠The objective of the business model is achieved by collecting contractual cash flows and selling the financial assets; and
⢠The assetâs contractual cash flows represent SPPI.
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognized in Other Comprehensive Income. However, the interest income, losses & reversals, and foreign exchange gains and losses are recognised in the Statement of Profit and Loss. Interest calculated using the EIR (Effective Rate Interest) method is recognized in the Statement of Profit and Loss as investment income.
o Debt Instruments and Equity Instruments at FVTPL: FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL, if such designation reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ). The Company has not designated any debt instrument at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with any gains and losses arising on re-measurement are recognized in the Statement of Profit and Loss.
All equity investments in scope of Ind AS 109 âFinancial Instrumentsâ are measured at FVTPL with all changes in fair value recognised in the statement of profit and loss.
Equity Instruments measured at FVOCI: For all equity instruments other than held for trading, the Company may make an irrevocable election to present in Other Comprehensive Income subsequent changes in the fair value. The Company makes such election on an instrument-by instrument basis. The classification is made on initial recognition and is irrevocable.
In case the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument are recognized in the Other Comprehensive Income. There is no reclassification of the amounts from Other Comprehensive Income to profit or loss, even on sale of investment. Dividends on investments are credited to profit or loss.
The Company has designated its investments in equity instruments as FVTOCI category.
o Investments in subsidiaries and associates
A. Subsidiaries
Subsidiaries are entities that are controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the investee. Investments in subsidiaries are accounted at cost less impairment, if any.
B. Associates
Associates are all entities 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. This is generally the case where the Company holds between 20% and 50% of the voting rights. Investments in associates are accounted at cost less impairment, if any.
> Derecognition
The Company derecognizes a financial asset on trade date only 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 entity.
> Impairment of Financial Assets
The Company assesses at the end of the reporting period whether a financial asset or a group of financial assets is impaired. Ind AS - 109 requires expected credit losses (ECL) to be measured through a loss allowance. The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables resulting from transactions within the scope of Ind-AS 115 âRevenue from Contracts with Customersâ, if they do not contain a significant financing component. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls) discounted at the original EIR. ECL impairment loss allowance (or reversal) recognised during the period is recognised as income / expense in the statement of profit and loss. For financial assets measured as at amortised cost, ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-offâ criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(ii) Financial Liabilities
> Recognition And Initial Measurement
The Company recognises a financial liability in its balance sheet when it becomes party to the contractual provisions of the instrument. All financial liabilities are recognised initially at fair value and, in the case of financial liabilities at amortised cost, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables and borrowings including bank overdrafts and derivative financial instruments.
> Subsequent Measurement
Financial liabilities are measured subsequently at amortized cost or FVTPL.
A financial liability is classified as FVTPL if it is classified as held for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR (Effective Rate Interest) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR (Effective Rate Interest) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.
> Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
> Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
The Company enters into forward contracts to mitigate the risk of changes in interest rates and exchange rates. The Company does not hold derivative financial instruments for speculative purposes. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value with changes in fair value recognized in the Statement of Profit and Loss in the period when they arise, except for the effective portion of cash flow hedges which is recognized in Other comprehensive Income and
accumulated under the heading of cash flow hedging reserve. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Amounts previously recognised in Other comprehensive Income and accumulated in equity relating to effective portion as described above are reclassified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the nonfinancial asset or non-financial liability.
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 the Statement of Profit and Loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the Statement of Profit and Loss.
Inventories are valued after providing for obsolescence, as follows:
1. Raw materials, stores and spare parts, fuel and packing material:
Lower of cost and net realizable value. Cost includes purchase price, other costs incurred in bringing the inventories to their present location and condition, and taxes for which credit is not available. However, materials and other items held for use in production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on weighted average basis.
2. Work-in-progress, finished goods and stock in trade:
Lower ofcost and net realizable value. Cost includes direct materials and labour and a proportion ofmanufacturing overheads based on normal operating capacity, but excluding borrowing costs. Cost of Stock-in-trade includes cost of purchase and other cost incurred in bringing the inventories in the present location and condition. Cost is determined on weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Obsolete, slow moving and defective inventories are identified at the time of physical verification and where necessary, provision is made for such inventories.
(i) Revenue from Operation
Revenue is recognized on the basis of approved contracts regarding the transfer of goods or services to a customer for an amount that reflects the consideration to which the entity expects to be entitled in exchange of those goods or services.
a) Revenue from sales of goods is recognized when all significant risks and rewards of ownership of goods are transferred to the customer, and when there is no longer any unfulfilled obligation which generally coincides with delivery. Revenue from sale of power is recognised when delivered and measured based on rates as per bilateral contractual agreements with buyers and at rate arrived at based on the principles laid down under the relevant Tariff Regulations as notified by the regulatory bodies, as applicable. The customer obtains control of the goods when the significant risks and reward of products sold are transferred according to the specific delivery term that has been agreed with the customer.
Revenue is measured at fair value of the consideration received or receivable, net of returns and discounts to customers. Revenue from the sale of goods includes duties which the Company pays as a principal but excludes amounts collected on behalf of third parties. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur.
b) Revenue from rendering of services is recognised in the periods in which the services are rendered and there is no unfulfilled obligation.
c) Export entitlements in the form of Duty Drawback and MEIS/RODTEP scheme are recognized in the Statement of Profit and Loss Account when right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
(ii) Other Income
a) Interest income is recognized using the effective interest rate method.For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.
b) Dividend Income is recognised only when the right to receive payment is established, provided it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
a) Short-Term Benefits
Short term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
Accumulated compensated absences, which are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are treated as short term employee benefits. The Company measure the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlements that has accumulated at the reporting date.
b) Defined Contribution Plans
Employee benefits in the form of contribution to Superannuation Fund, Provident Fund managed by Government Authorities, Employee State Insurance Corporation and Labour Welfare Fund are considered as defined contribution plans and the same are charged to the statement of profit and loss for the year in which the employee renders the related services.
c) Defined Benefit Plans
The Companyâs gratuity fund scheme and post-employment benefits scheme are considered as defined benefit plans. The Companyâs liability is determined on the basis of actuarial valuation using the projected unit credit method as at the balance sheet date.
Past service costs are recognized in the statement of profit and loss on the earlier of:
⢠The date of plan amendment or curtailment, and
⢠The date that the company recognizes related restructuring costs
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. The Company recognizes the following changes in the statement of profit and loss:
⢠Service costs comprising current service costs, past service costs, gains and losses on curtailments and nonroutine settlements; and
⢠Net interest expense or income
Re-measurements comprising actuarial gains and losses, the effect of asset ceiling (if any), and the return on the plan assets (excluding net interest), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to the statement of profit and loss in subsequent periods.
Income tax expense represents the sum of current tax and deferred tax and includes any adjustments related to past periods in current and/or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant period. Tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised directly in Equity or Other Comprehensive Income.
a) Current Tax
Current income tax is measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and the tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current tax relating to the items recognized outside the statement of profit and loss is recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.
b) Deferred Tax
Deferred tax is recognized on all temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Companyâs financial statements except when the deferred tax arises from the initial recognition of goodwill or initial recognition of an asset or liability in a transaction that is not a business combination and affects neither the accounting nor taxable profits or loss at the time of transaction. Deferred tax assets and liabilities 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 Balance Sheet date.
Deferred tax assets are recognized for deductible temporary differences, the carry forward of unused tax credits and unused tax losses to the extent it is probable that future taxable profits will be available against which the deductible temporary difference, the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets (including MAT credit available) is reviewed at each reporting date and is adjusted 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 assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Minimum Alternate Tax credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
Current and deferred tax are recognised in the Statement of Profit and Loss, except when the same relate to items that are recognised in Other Comprehensive Income or directly in Equity, in which case, the current and deferred tax relating to such items are also recognised in Other Comprehensive Income or directly in Equity respectively.
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are added to the cost ofthose assets until such time as the assets are substantially ready for their intended use. Where surplus funds are available out of money borrowed specifically to finance a project are invested temporarily and the money generated from such current investments is deducted from the total borrowing cost to be capitalised. Capitalisation of borrowing costs is suspended and charged to profit and loss during the extended periods when the active development on the qualifying assets is interrupted. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
Cash and cash equivalents consist of cash on hand, cash at banks, demand deposits from banks and short-term, highly liquid instruments.
For the purpose of presentation in the statement of cash flows, cash and cash equivalent includes cash on hand, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash, cash at bank and bank overdraft which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive), as a result of a past events, and it is probable that an outflow of resources will be required to settle such an obligation and the amount can be estimated reliably. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate.
Contingent Liabilities
Contingent liabilities are possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent Liabilities are not recognized but disclosed in the financial statements when the possibility of an outflow of resources embodying economic benefits is more.
Contingent Assets
Contingent assets are not recognized but disclosed in the financial statements when an inflow of economic benefits is probable.
Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share are computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on conversion of all dilutive potential equity shares .
Dividends paid are recognised in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders and is recognised directly in equity.
Operating segment is reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM).The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Inter-segment revenues have been accounted for based on prices normally negotiated between the segments with reference to the costs, market prices and business risks, within an overall optimization objective for the Company. Revenue and expenses are identified with segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis, will be included under âUnallocated/ Othersâ.
The preparation of the financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses, and disclosures of contingent assets and liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed in the paragraphs that follow.
(i) Useful Economic Lives and Impairment of Other Assets
The estimated useful life of property, plant and equipment (PPE) and intangible asset is based on a number of factors including the effects of obsolescence, usage of the asset and other economic factors (such as known technological advances).
The Company reviews the useful life of PPE and intangibles at the end of each reporting date and any changes could affect the depreciation rates prospectively.
The Company also reviews its property, plant and equipment for possible impairment if there are events or changes in circumstances that indicate that the carrying value of the assets may not be recoverable. In assessing the property, plant and equipment for impairment, factors leading to significant reduction in profits, such as the Companyâs business plans and changes in regulatory environment are taken into consideration.
(ii) Contingencies and Commitments
In the normal course of business, contingent liabilities may arise from litigation, taxation and other claims against the Company. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on managementâs assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such liabilities are disclosed in the notes but are not provided for in the financial statements.
Although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a materially adverse impact on the Companyâs financial position or profitability.
(iii) Actuarial Valuation
The determination of Companyâs liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognized in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depend on assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.
(iv) Fair Value Measurements and Valuation Processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in the notes to the financial statements.
(v) Recognition of Deferred Tax Assets For Carried Forward Tax Losses and Unused Tax Credit
The extent to which deferred tax assets can be recognised is based on an assessment ofthe probability ofthe Companyâs future taxable income against which the deferred tax assets can be utilised. In addition significant judgement is required in assessing the impact of any legal or economic limits.
Effective from 1st April 2021, the Company has adopted the following new Standard and amendments to certain Ind AS relevant to the Company:
i. Amendment to Ind AS 116 âLeasesâ - COVID-19 related rent concessions
The amendment provides a practical expedient which permits a lease not to assess whether a COVID-19 related rent concession is a lease modification. The Company had not applied the practical expedient.
ii. Amendment to Ind AS 1 and Ind AS 8 â definition of âmaterialâ
The amendment is not intended to change the underlying âmaterialityâ concept rather it provides broader guidance and make it easy to understand the meaning of âmaterialâ.
iii. Amendment to Ind AS 10 and Ind AS 37 â material non adjusting event
The amendment requires an entity to disclose the nature and estimate of financial effect of a material non-adjusting event after the reporting period. Ind AS 37 specifically requires such disclosure of a non-adjusting material restructuring plan.
The above amendments do not have material impact on the Company.
Mar 31, 2018
1. Significant Accounting Policies
a. Property, Plant and Equipments
Property, plant and equipment are stated at their cost of acquisition, installation or construction (net of taxes and other recoverable, wherever applicable) less accumulated depreciation and impairment losses, if any, except freehold land which is carried at cost. For this purpose, cost includes deemed cost which represents the carrying value of property, plant and equipment measured as per the previous GAAP as at 1 April 2016.
The cost of property, plant and equipment comprises its purchase price, including inward freight, import duties and non-refundable purchase taxes, and any cost directly attributable to bringing the asset to working condition and location for its intended use. Stores and spare parts are capitalised when they meet the definition of property, plant and equipment.
If significant parts of an item of property, plant and equipment have different useful life, then they are accounted for as separate items (major components) of property, plant and equipment. Likewise, expenditure towards major inspections and overhauls are identified as a separate component and depreciated over the expected period till the next overhaul expenditure.
b. Depreciation
Depreciation on property, plant and equipment is provided on straight line method (SLM), except on additions made after 1 April, 2006 to Building and Plant & Machineries of Ferro Alloys Unit at Byrnihat and Kalyaneshwari on which depreciation has been provided on written down value (WDV) method.
Depreciation is provided to allocate the costs of property, plant and equipment, net of their residual values, over their useful life as specified in Schedule II of the Companies Act, 2013, other than in case of factory building and plant & machinery in Visakhapatnam Unit where useful life has been considered by the management to be of 20 years.
The assets residual values and useful lives are reviewed at the end of each reporting period, and adjusted if appropriate.
c. Leases
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a Finance Lease. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as Operating Leases. A lease is classified at the inception date as a finance lease or an operating lease.
Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized. Contingent rentals are recognized as expenses in the periods in which they are incurred.
A leased asset is amortised over the lease term.
Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.
d. Capital Work in Progress
Capital work in progress comprises expenditure for acquisition and construction of assets that are not yet ready for their intended use. Costs, net of income, associated with the commissioning of the asset are capitalised until the period of commissioning has been completed and the asset is ready for its intended use. At the point when the asset is capable of operating in the manner intended by the management, the cost of construction is transferred to the appropriate category of property, plant and equipment.
e. Intangible Assets and Amortisation
Intangible assets acquired separately are initially measured at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Computer software is amortised over its estimated useful life of 3 years on a straight line basis.
The carrying value of intangible assets includes deemed cost which represents the carrying value of intangible assets recognised as at 1 April, 2016 measured as per the previous GAAP.
The amortisation period and the amortisation method are reviewed at least at each financial year end, if the expected useful life of the asset is different from previous estimates, the change is accounted for prospectively as a change in accounting estimate.
f. Non-Current Assets Held for Sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets and disposal groups classified as held for sale are not depreciated and are measured at the lower of carrying amount and fair value less costs to sell. Such assets and disposal groups are presented separately on the face of the Balance Sheet.
g. Impairment of Non- Financial Assets
The Company assesses at each reporting date to determine if there is any indication of impairment, based on internal/external factors. If any such indication exists, then an impairment review is undertaken and the recoverable amount is calculated as the higher of fair value less costs of disposal and the assetâs value in use.
Fair value less costs of disposal is the price that would be received to sell the asset in an orderly transaction between market participants and does not reflect the effect of factors that may be specific to the entity and not applicable to entities in general. Value in use is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and its eventual disposal.
Impairment charges and reversals are assessed at the level of cash-generating unit (CGU). A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.
A cash generating unit is treated as impaired when the carrying amount of the assets or cash generating unit exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which asset or cash generating unit is identified as impaired.
Impairment loss recognised in prior accounting period(s) is reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment. Post impairment, depreciation is provided on the revised carrying value of the impaired asset over its remaining useful life.
h. Foreign Currency Translation
Foreign currency transactions are translated into the functional currency at the exchange rates that approximates the rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies outstanding at the end of the reporting period are translated into the functional currency at the exchange rates prevailing on the reporting date. Non-monetary items are translated using the exchange rates prevailing on the transaction date, subsequently measured at historical cost and not retranslated at period end.
All exchange differences on monetary items are recognized in the Statement of Profit and Loss except any exchange differences on monetary items designated as an effective hedging instrument which are recognized in the Other Comprehensive Income.
The Company had applied paragraph 46A of AS 11 under previous GAAP. Ind AS 101 gives an option, which has been exercised by the Company, whereby a first time adopter can continue its previous GAAP policy for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the previous GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period. Accordingly, exchange difference arising on translation/settlement of long term foreign currency monetary items pertaining to the acquisition of depreciable assets, recognized upto March 31, 2017 has been amortised over the remaining useful lives of the assets.
From accounting period commencing on or after 1st April, 2017, exchange difference arising on translation/ settlement of long term foreign currency monetary items, acquired post 1st April, 2017, pertaining to the acquisition of a depreciable asset are charged to the Statement of Profit and Loss.
i. Government Grants and Subsidies
Grants and subsidies from the Government are recognized when there is reasonable assurance that the grant/ subsidy will be received and the Company will comply with the conditions attached to them. When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in profit or loss over the periods necessary to match them with the related costs, which they are intended to compensate. When the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related assets and presented within other income.
In the unlikely event that a grant previously recognized is ultimately not received, it is treated as a change in estimate and the amount cumulatively recognised is expensed in the Statement of Profit and Loss.
j. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Financial Assets -
¦ Recognition And Initial Measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
¦ Classification and Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Debt Instruments at Amortized Cost;
- Debt Instruments at Fair Value Through Other Comprehensive Income (FVOCI);
- Debt Instruments at Fair Value Through Profit or Loss (FVTPL); and
- Equity Instruments measured at Fair Value Through Other Comprehensive Income (FVOCI).
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
o Debt Instruments at Amortized Cost: A debt instrument is measured at the amortized cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows; and
- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method.
o Debt Instruments at FVOCI: A debt instrument is measured at the FVOCI if both of the following conditions are met:
- The objective of the business model is achieved by collecting contractual cash flows and selling the financial assets; and
- The assetâs contractual cash flows represent SPPI.
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognized in other comprehensive income. However, the interest income, losses & reversals, and foreign exchange gains and losses are recognised in the Statement of Profit and Loss. Interest calculated using the EIR (Effective Rate Interest) method is recognized in the Statement of Profit and Loss as investment income.
o Measured at FVTPL: FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as FVTPL. In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
o Equity Instruments measured at FVOCI: All equity investments in scope of Ind AS - 109 are measured at fair value. Equity instruments which are, held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in Other Comprehensive Income subsequent changes in the fair value. The Company makes such election on an instrument-by instrument basis. The classification is made on initial recognition and is irrevocable. In case the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument are recognized in the Other Comprehensive Income. There is no reclassification of the amounts from Other Comprehensive Income to profit or loss, even on sale of investment. Dividends on investments are credited to profit or loss.
Equity Investments: Investments in subsidiaries, associates and joint ventures are carried at cost less accumulated impairment, if any.
¦ Derecognition
The Company derecognizes a financial asset on trade date only 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 entity.
¦ Impairment of Financial Assets
The Company assesses at the end of the reporting period whether a financial asset or a group of financial assets is impaired. Ind AS - 109 requires expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected losses for all contract assets and/ or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
(ii) Financial Liabilities
¦ Recognition And Initial Measurement
Financial liabilities are initially measured at fair value. All financial liabilities are recognised initially at fair value and, in the case of financial liabilities at amortised cost, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables and borrowings including bank overdrafts and derivative financial instruments.
¦ Subsequent Measurement
Financial liabilities are measured subsequently at amortized cost or FVTPL.
A financial liability is classified as FVTPL if it is classified as held for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR (Effective Rate Interest) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR (Effective Rate Interest) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.
¦ Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
¦ Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
(iii) Derivative Financial Instruments and Hedge Accounting
The Company enters into interest rate swaps and forward contracts to mitigate the risk of changes in interest rates and exchange rates. The Company does not hold derivative financial instruments for speculative purposes. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value with changes in fair value recognized in the Statement of Profit and Loss in the period when they arise, except for the effective portion of cash flow hedges which is recognized in Other comprehensive income and accumulated under the heading of cash flow hedging reserve. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Amounts previously recognised in Other comprehensive income and accumulated in equity relating to effective portion as described above are reclassified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
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 the statement of profit and loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the Statement of Profit and Loss.
k. Inventories
Inventories (including work-in-progress) are stated at cost and net realisable value, whichever is lower. Cost is determined on weighted average method and comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition and includes, where applicable, appropriate overheads based on normal level of activity. Net realisable value is determined based on estimated selling price, less further costs expected to be incurred to completion and disposal. Obsolete, slow moving and defective inventories are identified at the time of physical verification and where necessary, provision is made for such inventories.
l. Revenue Recognition
Revenues are measured at fair value of the consideration received or receivable, net of returns and discounts to customers. Revenue from the sale of goods includes duties which the Company pays as a principal but excludes amounts collected on behalf of third parties.
a) Revenue from sales of goods is recognized when all significant risks and rewards of ownership of goods are transferred to the customer, which generally coincides with delivery. Revenue from sale of power is recognised when delivered and measured based on rates as per bilateral contractual agreements with buyers and at rate arrived at based on the principles laid down under the relevant Tariff Regulations as notified by the regulatory bodies, as applicable.
b) Revenue from rendering of services is recognised in the periods in which the services are rendered.
c) Export entitlements in the form of Duty Drawback and Duty Entitlement Pass book (DEPB) scheme are recognized in the Statement of Profit and Loss Account when right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant exports proceeds.
d) Interest income is recognized basis using the effective interest rate method.
e) For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.
f) Dividend Income is recognised only when the right to receive payment is established, provided it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
m. Employee Benefits
a) Short-Term Benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by the employees are recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
b) Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which the Company pays specified monthly contributions to Provident Fund. The Companyâs contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
c) Defined Benefit Plans
The Company provides for gratuity and leave encashment, a defined benefit plan (the âGratuity Plan and Leave Encashment Planâ) covering eligible employees. The cost of providing defined benefits plan is determined by actuarial valuation separately for each plan using the Projected Unit Credit Method by independent qualified actuaries as at the year end. Actuarial gains/losses arising in the year are recognized in full in other comprehensive income and are not reclassified in the profit or loss. Re-measurement gains and losses arising from changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity. Change in the present value of defined benefit obligations resulting from plan adjustments or curtailments are recognised immediately in the Statement of Profit and Loss as past service cost.
n. Tax Expense
Income tax expense represents the sum of current tax and deferred tax. Tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income.
a) Current Tax
The current tax is based on taxable profit for the year under the Income Tax Act, 1961. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance Sheet date.
b) Deferred Tax
Deferred tax is recognized on all temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Companyâs financial statements except when the deferred tax arises from the initial recognition of goodwill or initial recognition of an asset or liability in a transaction that is not a business combination and affects neither the accounting nor taxable profits or loss at the time of transaction. Deferred tax assets and liabilities 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 Balance Sheet date.
Deferred tax assets are recognized for deductible temporary differences, the carry forward of unused tax credits and unused tax losses to the extent it is probable that future taxable profits will be available against which the deductible temporary difference, the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets (including MAT credit available) is reviewed at each reporting date and is adjusted 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 assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Minimum Alternate Tax credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
Current and deferred tax are recognised in the Statement of Profit and Loss, except when the same relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax relating to such items are also recognised in other comprehensive income or directly in equity respectively.
o. Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets until such time as the assets are substantially ready for their intended use. Where surplus funds are available out of money borrowed specifically to finance a project are invested temporarily and the money generated from such current investments is deducted from the total borrowing cost to be capitalised. Capitalisation of borrowing costs is suspended and charged to profit and loss during the extended periods when the active development on the qualifying assets is interrupted. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
p. Cash and Cash Equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalent includes cash on hand, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash, cash at bank, and bank overdraft and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.
q. Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.
r. Provisions, Contingent Liabilities and Contingent Assets Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive), as a result of a past events, and it is probable that an outflow of resources will be required to settle such an obligation and the amount can be estimated reliably. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate.
Contingent Liabilities
Contingent liabilities are possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent Liabilities are not recognized but disclosed in the financial statements when the possibility of an outflow of resources embodying economic benefits is more.
Contingent Assets
Contingent assets are not recognized but disclosed in the financial statements when an inflow of economic benefits is probable.
s. Earnings Per Share
Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
t. Dividends
Dividends paid (including dividend distribution tax thereon) are recognised in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders and is recognised directly in equity.
u. Segment Reporting
The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Inter-segment revenues have been accounted for based on prices normally negotiated between the segments with reference to the costs, market prices and business risks, within an overall optimization objective for the Company. Revenue and expenses are identified with segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis, will be included under âUnallocated/ Othersâ.
v. Critical Accounting Estimates, Assumptions and Judgments
The preparation of the financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses, and disclosures of contingent assets and liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed in the paragraphs that follow.
(i) Useful Economic Lives and Impairment of Other Assets
The estimated useful life of property, plant and equipment (PPE) and intangible asset is based on a number of factors including the effects of obsolescence, usage of the asset and other economic factors (such as known technological advances).
The Company reviews the useful life of PPE and intangibles at the end of each reporting date and any changes could affect the depreciation rates prospectively.
The Company also reviews its property, plant and equipment for possible impairment if there are events or changes in circumstances that indicate that the carrying value of the assets may not be recoverable. In assessing the property, plant and equipment for impairment, factors leading to significant reduction in profits, such as the Companyâs business plans and changes in regulatory environment are taken into consideration.
(ii) Contingencies and commitments
In the normal course of business, contingent liabilities may arise from litigation, taxation and other claims against the Company. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on managementâs assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such liabilities are disclosed in the notes but are not provided for in the financial statements.
Although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a materially adverse impact on the Companyâs financial position or profitability.
(iii) Actuarial Valuation
The determination of Companyâs liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognized in the Statement of Profit and Loss and in other comprehensive income. Such valuation depend on assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.
(iv) Fair Value Measurements and Valuation Processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in the notes to the financial statements.
(v) Recognition of Deferred Tax Assets for Carried Forward Tax Losses and Unused Tax Credit
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilised. In addition significant judgement is required in assessing the impact of any legal or economic limits.
w. Recent Accounting Developments: Standards issued but not yet effective (i) Ind AS 115: Revenue from Contracts with Customers
The Company is in the process of assessing the detailed impact of Ind AS 115. Presently, the Company is not able to reasonably estimate the impact that application of Ind AS 115 is expected to have on its financial statements, except that adoption of Ind AS 115 is not expected to significantly change the timing of the Companyâs revenue recognition for product sales. Consistent with the current practice, recognition of revenue will continue to occur at a point in time when products are dispatched to customers, which is also when the control of the asset is transferred to the customer under Ind AS 115.
The Company intends to adopt the standard using the modified retrospective approach which means that the cumulative impact of the adoption will be recognised in retained earnings as of 1 April 2018 and that comparatives will not be restated.
(ii) Ind AS 21: Foreign Currency Transactions and Advance Consideration
Management has assessed the effects of applying the appendix to its foreign currency transactions for which consideration is received in advance. The Company expects this change to impact its accounting for revenue contracts involving advance payments in foreign currency.
The Company intends to adopt the amendments prospectively to items in scope of the appendix that are initially recognised on or after the beginning of the reporting period in which the appendix is first applied (i.e. from 1 April 2018).
Mar 31, 2017
1. GENERAL INFORMATION
Maithan Alloys Limited is a public company domiciled in India. The Company is engaged in the manufacture and export of all three bulks Ferro alloys, namely Ferro Silicon, Ferro Manganese and Silico Manganese. It is also engaged in the generation and supply of wind power and has a captive power plant. Its shares are listed on Calcutta Stock Exchange (CSE) and National Stock Exchange and are also traded on Bombay Stock Exchange (BSE) under Permitted Category.
2. SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Preparation of Financial Statements:
These financial statements have been prepared to comply with the Generally Accepted Accounting Principles in India (Indian GAAPs) including the Accounting Standards specified under Section 133 of the Companies Act, 2013.
These financial statements have been prepared on accrual basis under historical cost convention. The accounting policies are consistently followed by the Company.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities.
b. Use of Estimates:
The preparation of financial statements in conformity with Indian GAAPs requires judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosures of Contingent Liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results materialize/are known.
c. Fixed Assets:
Tangible Assets:
Tangible Assets are stated at cost net of recoverable taxes, less accumulated depreciation and impairment loss, if any. The cost of tangible asset comprises its purchase price, borrowing cost and any cost directly attributable to bringing the asset to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rates variations attributable to the assets.
Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realizable value and are shown separately in the financial statements. Any expected loss is recognized immediately in the Statement of Profit and Loss.
Losses arising from the retirement of and gains or losses arising from disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss.
Loss or gain on conversion of foreign currency liabilities for acquisition of fixed assets are added to or deducted from the cost of fixed assets.
Intangible Assets:
Intangible Assets are stated at cost of acquisition, net of recoverable taxes less accumulated amortization/depletion and impairment losses, if any. The cost comprises purchase price, borrowing cost and any cost directly attributable to bringing the asset to the working condition for its intended use.
Capital Work-in-Progress:
Projects under which assets are not ready for their intended use are disclosed under Capital Work-in-Progress. It is stated at cost and is inclusive of preoperative expenses and other project development expenses.
d. Depreciation, Amortization and Depletion:
Tangible Assets:
Depreciation on Fixed Assets is provided on Straight Line Method (SLM), except on additions made after 1st April 2006 to Building and Plant & Machineries of Ferro Alloys Units at Kalyaneshwari and Byrnihat on which depreciation has been provided on Written Down Value (WDV) method.
Depreciation is provided based on the useful life of the assets as prescribed in Schedule II to the Companies Act, 2013, other than in case of one unit in Visakhapatnam, Andhra Pradesh where:
i) Factory Building and Plant & Machinery are being depreciated over their useful life of 12 years.
ii) Leasehold land is amortized under SLM over the period of lease.
Intangible Assets:
Intangible assets such as software are amortized based upon their estimated useful lives of 3 years.
e. Impairment:
The carrying amount of assets is reviewed at each Balance Sheet date to determine if there is any indication of impairment, based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which asset is identified as impaired. Impairment loss recognized in prior accounting period(s) is reversed if there has been a change in the estimate of recoverable amount. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment.
f. Investments:
Investments that are readily realizable and are intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with Accounting Standard 13 on ''Accounting for investmentsâ. All other investments are classified as Non-Current investments. Current investments are carried at cost or fair value, whichever is lower. Non-Current investments are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the Non-Current investments, such reduction being determined and made for each investment individually.
g. Inventories:
Inventories are stated at cost (net of CENVAT credit) or net realizable value, whichever is lower. Cost is determined on weighted average method and comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition and includes, where applicable, appropriate overheads. Obsolete, slow moving and defective inventories are identified at the time of physical verification and where necessary, provision is made for such inventories.
h. Revenue Recognition:
Revenue is recognized only when risks and rewards incidental to ownership are transferred to the customer, it can be reliably measured and it is reasonable to expect ultimate collection.
i. Revenue From Operations:
Sale of Goods:
Revenue is recognized when the significant risks and rewards of ownership of goods are transferred to the customer, which generally coincides with delivery. It includes excise duty but excludes value added tax/sales tax.
Export Benefits:
Export Entitlements in the form of Duty Drawback and Merchandise Export from India Scheme are recognized in the Statement of Profit and Loss Account when right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant exports proceeds.
ii. Other income:
Interest:
Income is recognized proportionately on time-basis taking into account the amount outstanding and the rate applicable.
Dividend income:
Income is recognized only when the right to receive the same is established by the reporting date.
i. Insurance Claim Receivable:
Insurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that there is no uncertainty in receiving the claims.
j. Employee Benefits:
Short term employee benefits:
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by the employees are recognized as an expense in the Statement of Profit and Loss of the year in which the employees render the services. These benefits include performance incentive and compensated absences.
Post-employment benefits:
Defined contribution plans:
A defined contribution plan is a post-employment benefit plan under which the Company pays specified monthly contributions to Provident Fund. The Companyâs contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
Defined benefit plans:
The Company provides for gratuity and leave encashment, a defined benefit plan (the "Gratuity Plan and Leave Encashment Plan") covering eligible employees. The Companyâs liability is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees services. Actuarial losses/ gains are recognized in the Statement of Profit and Loss in the year in which they arise.
k. Foreign Currency transaction:
Initial Recognition:
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate or that approximates the actual rate between the reporting currency and the foreign currency on the date of the transaction.
Subsequent Recognition:
Monetary items denominated in foreign currencies at the yearend are re-stated at the yearend rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Foreign currency assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the period and exchange loss/gain arising there from is adjusted to the cost of fixed assets or charged to the statement of Profit & Loss, as the case may be.
Forward Exchange Contracts:
In case of transactions covered by forward contracts, the difference between the contract rate and exchange rate prevailing on the date of transaction, is adjusted to the cost of fixed assets or charged to the Statement of Profit & Loss, as the case may be, proportionately over the life of the contract. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or expense for the period.
l. Borrowing Cost:
General and specific 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 Statement of Profit and Loss in the period in which they are incurred.
m. Income Taxes:
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized only if there is virtual certainty that sufficient future taxable income will be available against which these can be realized. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their reliability.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
n. Financial derivatives and Commodity Hedging Transactions:
In respect of derivative contracts , premium paid, gains / losses on settlement and losses on restatement are recognized in the Statement of profit and loss except in case where they relate to the acquisition or construction of Fixed assets , in which case, they are adjusted to the carrying cost of such assets.
o. Government grants and subsidies:
Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, these are deducted from related expense which it is intended to compensate. Where the grants or subsidy relates to an asset, its value is deducted in arriving at the carrying amount of the related asset.
p. Leases
Where the Company, as a less or, leases assets under finance leases, such amounts are recognized as receivables at an amount equal to the net investment in the lease and the finance income is recognized based on a constant rate of return on the outstanding net investment. Assets leased by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalized at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis.
q. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Contingent Assets are neither recognized nor disclosed in the financial statements.
r. Segment Reporting :
The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Inter-segment revenues have been accounted for based on prices normally negotiated between the segments with reference to the costs, market prices and business risks, within an overall optimization objective for the Company. Revenue and expenses are identified with segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis will be included under "Unallocated/ Others."
s. Cash and Cash Equivalents :
Cash and cash equivalents for the purpose of the Cash Flow Statement comprises cash in hand, cash at bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an in-significant risk of change in value.
t. Earnings Per Share:
i) Basic Earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares outstanding during the year.
ii) Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income 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.
iii) Weighted average number of Equity Shares for previous period is changed for events other than the conversion of potential equity shares that have changed the number of equity shares outstanding without a corresponding change in resources.
a 14,555,775 (14,555,775) Shares out of the Issued, Subscribed & Paid up capital were allotted as Bonus Shares in the last five years by capitalization of Share Premium, Capital Redemption Reserve and General Reserves.
b Rights, preferences and restrictions attached to Equity share:
The Company has only one class of Equity shares having a face value of '' 10/- per share with one vote per Equity share. The company declares and pays dividend in INR. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in the case of interim dividend.
In the event of liquidation of the company, the holders of Equity shares will be entitled to receive remaining assets of the company, after settling of all outside liabilities. The distribution will be in proportion to the number of Equity shares held by the shareholders.
Mar 31, 2015
A. Basis of Preparation of Financial Statements:
These financial statements have been prepared to comply with the
generally accepted Accounting Principles in India (Indian GAAP),
including the Accounting Standards notified under the relevant
provisions of the Companies Act, 2013. These financial statements have
been prepared on accrual basis under historical cost convention. The
accounting policies are consistently followed by the Company.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in Schedule III to the Companies Act, 2013. Based on
the nature of products and the time between the acquisition of assets
for processing and their realization in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current - non-current classification of assets and
liabilities.
b. Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP
requires judgments, estimates and assumptions to be made that affect the
reported amount of assets and liabilities, disclosures of Contingent
Liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period in
which the results are known /materialized.
c. Fixed Assets:
Tangible Assets:
Tangible Assets are stated at cost net of recoverable taxes, less
accumulated depreciation and impairment loss, if any. The cost of
tangible asset comprises its purchase price, borrowing cost and any cost
directly attributable to bringing the asset to its working condition for
its intended use, net charges on foreign exchange contracts and
adjustments arising from exchange rates variations attributable to the
assets.
Subsequent expenditures related to an item of tangible asset are added
to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.
Projects under which assets are not ready for their intended use are
disclosed under Capital Work-in-Progress.
Items of fixed assets that have been retired from active use and are
held for disposal are stated at the lower of their net book value and
net realizable value and are shown separately in the financial
statements. Any expected loss is recognized immediately in the
Statement of Profit and Loss.
Losses arising from the retirement of, and gains or losses arising from
disposal of fixed assets which are carried at cost are recognized in
the Statement of Profit and Loss.
Intangible Assets:
Intangible Assets are stated at cost of acquisition, net of recoverable
taxes less accumulated amortization/depletion and impairment losses, if
any. The cost comprises purchase price, borrowing cost and any cost
directly attributable to bringing the asset to the working condition for
its intended use, and net charges on foreign exchange contracts and
adjustments arising from exchange rates variations attributable to the
intangible assets.
d. Depreciation, Amortization and Depletion:
Tangible Assets:
Depreciation on Fixed Assets is provided on Straight Line Method (SLM),
except on additions made after 1st April 2006 to Building and Plant &
Machineries of Ferro Alloys Units on which depreciation has been
provided on Written Down Value (WDV) method. Depreciation is provided
based on the basis of useful life of the assets as prescribed in
Schedule II to the Companies Act, 2013.
Intangible Assets:
Intangible assets such as software, etc. are amortized based upon their
estimated useful lives of 6 years.
e. Impairment:
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the Statement
of Profit and Loss in the year in which asset is identified as
impaired. Impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
f. Investments:
Investments that are readily realizable and are intended to be held for
not more than one year from the date, on which such investments are
made, are classified as current investments. All other investments are
classified as long term investments. Current investments are carried at
cost or fair value, whichever is lower. Long-term investments are
carried at cost. However, provision for diminution is made to recognize
a decline, other than temporary, in the value of the investments, such
reduction being determined and made for each investment individually.
g. Inventories:
Inventories are stated at cost (net of CENVAT credit) or net realisable
value, whichever is lower. Cost is determined on weighted average method
and comprises expenditure incurred in the normal course of business in
bringing such inventories to their present location and condition and
includes, where applicable appropriate overheads. Obsolete, slow moving
and defective inventories are identified at the time of physical
verification and where necessary, provision is made for such
inventories.
h. Revenue Recognition:
Revenue is recognized only when risks and rewards incidental to
ownership are transferred to the customer, it can be reliably measured
and it is reasonable to expect ultimate collection.
i. Revenue From Operations:
Sale of Goods:
Revenue is recognized when the significant risks and rewards of
ownership of goods are transferred to the customer, which generally
coincides with delivery. It includes excise duty but excludes value
added tax/sales tax.
Export Benefits:
Export Entitlements in the form of Duty Drawback and Duty Entitlement
Pass book (DEPB) scheme are recognized in the Statement of Profit and
Loss Account when right to receive credit as per the terms of the scheme
is established in respect of exports made and when there is no
significant uncertainty regarding the ultimate collection of the
relevant exports proceeds.
ii. Other income:
Interest:
Income is recognized on a time proportion basis taking into account the
amount outstanding and the rate applicable.
Dividend income:
Income is recognised only when the right to receive the same is
established by the reporting date.
i. Employee Benefits:
Short term employee benefits:
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by the employees are
recognized as an expense during the period when the employees render the
services. These benefits include performance incentive and compensated
absences.
Post-employment benefits:
Defined contribution plans:
A defined contribution plan is a post-employment benefit plan under
which the Company pays specified monthly contributions to Provident
Fund. The Company's contribution is recognized as an expense in the
Statement of Profit and Loss during the period in which the employee
renders the related service.
Defined benefit plans:
The Company provides for gratuity and leave encashment, a defined
benefit plan (the "Gratuity Plan and Leave Encashment Plan") covering
eligible employees. The Company's liability is calculated using the
Projected Unit Credit Method and spread over the period during which the
benefit is expected to be derived from employees services. Actuarial
losses/ gains are recognized in the Statement of Profit and Loss in the
year in which they arise.
j. Foreign Currency transaction:
Initial Recognition:
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction or that approximates the actual rate at the date of the
transaction.
Subsequent Recognition:
Monetary items denominated in foreign currencies at the year end are
re-stated at the year end rates. Non-monetary items which are carried
in terms of historical cost denominated in a foreign currency are
reported using the exchange rate at the date of the transaction;
Exchange Differences:
Foreign currency assets and liabilities as on the Balance Sheet date
are revalued in the accounts on the basis of exchange rates prevailing
at the close of the period and exchange loss/gain arising there from,
is adjusted to the cost of fixed assets or charged to the statement of
Profit & Loss, as the case may be.
Forward Exchange Contracts:
In case of transactions covered by forward contracts, the difference
between the contract rate and exchange rate prevailing on the date of
transaction, is adjusted to the cost of fixed assets or charged to the
Statement of Profit & Loss, as the case may be, proportionately over
the life of the contract.
k. Borrowing Cost:
General and specific 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 Statement of
Profit and Loss in the period in which they are incurred.
l. Income Taxes:
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised only if there is virtual certainty that sufficient
future taxable income will be available against which these can be
realised. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each Balance Sheet date for their realisability.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
m. Financial derivatives and Commodity Hedging Transactions:
In respect of derivative contracts , premium paid, gains / losses on
settlement and losses on restatement are recognized in the Statement of
profit and loss except in case where they relate to the acquisition or
construction of Fixed assets, in which case , they are adjusted to the
carrying cost of such assets.
n. Government grants and subsidies:
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, these are
deducted from related expense which it is intended to compensate. Where
the grants or subsidy relates to an asset, its value is deducted in
arriving at the carrying amount of the related asset.
o. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized when there is a present obligation as a
result of a past event it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and there is a reliable estimate of the amount of the obligation.
Provisions are measured at the best estimate of the expenditure
required to settle the present obligation at the Balance sheet date and
are not discounted to its present value.
Contingent liabilities are disclosed when there is a possible obligation
arising from past events, the existence of which will be confirmed only
by the occurrence or non occurrence of one or more uncertain future
events not wholly within the control of the company or a present
obligation that arises from past events where it is either not probable
that an outflow of resources will be required to settle or a reliable
estimate of the amount cannot be made.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
p. Segment Reporting :
The accounting policies adopted for segment reporting are in conformity
with the accounting policies adopted for the Company. Inter-segment
revenues have been accounted for based on prices normally negotiated
between the segments with reference to the costs, market prices and
business risks, within an overall optimisation objective for the
Company. Revenue and expenses have been identified with segments on the
basis of their relationship to the operating activities of the segment.
Revenue and expenses, which relate to the Company as a whole and are not
allocable to segments on a reasonable basis have been included under
"Unallocated/ Others."
q. Cash and Cash Equivalents :
Cash and cash equivalents for the purpose of the Cash Flow Statement
comprises cash on hand, cash in bank, fixed deposits and other
short-term highly liquid investments with an original maturity of three
months or less that are readily convertible into known amount of cash
and which are subject to an in-significant risk of change in value.
r. Earnings Per Share:
i. Basic Earnings per share is computed by dividing the profit after
tax by the weighted average number of equity shares outstanding during
the year.
ii. Diluted earnings per share is computed by dividing the profit after
tax as adjusted for dividend, interest and other charges to expense or
income 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.
Mar 31, 2013
A. FIXED ASSETS: Tangible Assets:
Tangible Assets are stated at cost less accumulated depreciation and
impairment loss, if any. The cost of an asset comprises its purchase
price net of Cenvat credit plus any directly attributable costs of
bringing the asset to the working condition for its intended use.
Preoperative expenses for major projects are also capitalized where
appropriate.
Losses arising from the retirement of, and gains or losses arising from
disposal of fixed assets which are carried at cost are recognized in
the Statement of Profit and Loss.
Depreciation on Fixed Assets is provided on Straight Line Method in the
manner and the rates specified in Schedule XIV to the Companies Act,
1956, except on additions made to Building and Plant & Machineries of
Ferro Alloys Units with effect from 1st April 2006 on which
depreciation has been provided on Written Down Value method in the
manner and the rates specified in Schedule XIV to the Companies Act,
1956.
Intangible Assets:
Intangible Assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any. All costs,
including financing costs till commencement of production, net charges
on foreign exchange contracts and adjustments arising from exchange
rate variations attributable to the intangible assets are capitalized.
Intangible assets such as softwares, etc. are amortized based upon
their estimated useful lives of 5 years.
B. IMPAIRMENT:
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the Statement
of Profit and Loss in the year in which asset is identified as
impaired. Impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
Reversal of impairment losses recognized in prior years is recorded
when there is an indication that the impairment losses recognized for
the asset no longer exist or have deceased.
However, the increase in carrying amount of an asset due to reversal of
an impairment loss is recognized to the extent it does not exceed the
carrying amount that would have been determined (net of depreciation )
had no impairment loss been recognized for the asset in prior years.
C. INVESTMENTS:
Investments that are readily realizable and are intended to be held for
not more than one year from the date on which such investments are made
are classified as Current Investments. All other investments are
classified as Non-current Investments. Non-current Investments are
stated at cost. Provision for diminution in the value of each
non-current investment is made to recognise a decline, other than that
of temporary in nature.
D. INVENTORIES:
Inventories are valued at lower of cost or estimated net realisable
value. Cost of inventories comprises of cost of purchase, cost of
conversion and other costs including manufacturing overheads incurred
in bringing them to their respective present location and condition.
Cost Formula:
Raw Materials : At Weighted Average Cost
Work-In-Process and Finished Goods : At Standard Cost
Trading Stock and Stock-In-Transit : At Acquisition Cost
Packing Materials and Stores and Spares : At Weighted Average Cost
Standard Cost of inventories approximates actual cost.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
Cost of finished goods includes excise duty.
E. REVENUE RECOGNITION:
Revenue is recognized only when it can be reliably measured and it is
reasonable to expect ultimate collection.
i. Sale of Goods:
Revenue is recognised when the significant risks and rewards of
ownership of goods have passed to the buyer, which generally coincides
with delivery. It includes excise duty but excludes value added
tax/sales tax. Excise Duty deducted from turnover (gross) is the amount
that is included in the amount of turnover (gross) and not the entire
amount of liability that arose during the year.
ii. Interest:
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
iii. Dividend on Investment in Subsidiary Companies:
Revenue is recognised only when the right to receive the same is
established by the reporting date.
iv. Export Benefits:
Export Entitlements in the form of Duty Drawback and Duty Entitlement
Pass book (DEPB) scheme are recognized in the Statement of Profit and
Loss Account when right to receive credit as per the terms of the
scheme is established in respect of exports made and when there is no
significant uncertainty regarding the ultimate collection of the
relevant exports proceeds.
v. Purchases:
Purchases are inclusive of freight and net of Cenvat Credit, trade
discount and claims.
F. EXCISE DUTY AND SALES TAX/VALUE ADDED TAX: Excise Duty is accounted
on the basis of both, payments made in respect of goods cleared as also
provision made for goods lying in bonded warehouse. Sales tax / Value
Added Tax paid is charged to the Statement of profit and loss.
G. CENVAT CREDIT: Cenvat Credit on excise duty paid goods /Fixed
Assets is accounted for by reducing the acquisition cost of the related
goods / Fixed Assets.
H. EMPLOYEE BENEFITS:
Short term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of profit and loss of the year in
which the related service is rendered.
Post employment and other long term employee benefits are recognized as
an expense in the Statement of profit and loss for the year in which
the employee has rendered services.
The expense is recognized at the present value of the amount payable
determined using actuarial valuation techniques. Actuarial gains and
losses in respect of post employment and other long term benefits are
charged to the Statement of profit and loss.
In respect of Employee Stock Option, the excess of fair price on the
date of grant, over the exercise price, is recognized as Deferred
Compensation cost and amortised over vesting period.
I. FOREIGN CURRENCY TRANSACTION:
i. Initial Recognition:
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction or that approximates the actual rate at the date of the
transaction.
ii. Subsequent Recognition:
Monetary items denominated in foreign currencies at the year end are
restated at the year end rates. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.
Exchange Differences:
Foreign currency assets and liabilities as on the Balance Sheet date
are revalued in the accounts on the basis of exchange rates prevailing
at the close of the period and exchange loss/gain arising there from,
is adjusted to the cost of fixed assets or charged to the statement of
Profit & Loss, as the case may be.
iii. Forward Exchange Contracts:
In case of transactions covered by forward contracts, the difference
between the contract rate and exchange rate prevailing on the date of
transaction, is adjusted to the cost of fixed assets or charged to the
Statement of Profit & Loss, as the case may be, proportionately over
the life of the contract.
J. BORROWING COST:
Borrowing costs relating to acquisition or construction of fixed assets
which takes substantial period of time to get ready for its intended
use are included in the cost of fixed assets to the extent they relate
to the period till such assets are ready to be put to use. All other
Borrowing costs are recognized as an expense in the year in which they
are incurred.
K. CURRENT AND DEFERRED TAX:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income- Tax Act, 1961.
Deferred tax resulting from ''timing difference'''' between taxable and
accounting income is accounted for using the tax rates and laws that
are enacted or substantively enacted as on the balance sheet date.
Deferred tax asset is recognised and carried forward only to the extent
that there is a virtual certainty that the asset will be realised in
future.
L. FINANCIAL DERIVATIVES AND COMMODITY HEDGING TRANSACTIONS:
In respect of derivative contracts, premium paid and gains / losses on
settlement are recognized in the Statement of profit and loss except in
case where they relate to the acquisition or construction of Fixed
assets , in which case , they are adjusted to the carrying cost of such
assets.
M. GOVERNMENT GRANTS AND SUBSIDIES:
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, these are
deducted from related expense which it is intended to compensate. Where
the grants or subsidy relates to an asset, its value is deducted in
arriving at the carrying amount of the related asset.
N. SEGMENT REPORTING POLICIES: i. Identification of Segments: Primary
Segment: Business Segment:
The company''s operating businesses are organised and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets. The Identified segments are manufacturing of
ferro-alloys and wind power.
Secondary segment: Geographical segment:
The analysis of geographical segment is based on the geographical
location of customers. The geographical segments considered for
disclosure are as follows:
¦ Sales within India include sales to customers located within India.
¦ Sales outside India include sales to customers located outside India.
ii. Allocation of common Costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
iii. Unallocated Items:
The corporate and other segment include general corporate income and
expense items, which are not allocated to any business segment.
O. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
P. EARNINGS PER SHARE:
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
Q. CASH FLOW STATEMENT:
Cash flows are reported using indirect method, whereby profit before
tax is adjusted for the effects of transactions of a non-cash nature
and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, financing and
investing activities of the company are segregated. Cash and cash
equivalents in the balance sheet comprise cash at bank, cash/ cheques
in hand and short-term investments with an original maturity of three
months or less.
R. LEASE TRANSACTION:
Where the company is the lessee: Leases where the lessor effectively
retains substantially all the risks and benefits of ownership of the
leased term, are classified as operating leases.
Operating lease''s payments are recognized as an expense in the
Statement of profit & loss.
Where the Company is a lessor: Assets subject to operating leases are
included in fixed assets. Lease income is recognized in the Statement
of Profit & Loss. Costs including depreciation are recognized as an
expense in the Statement of Profit & Loss.
Mar 31, 2012
A) Basis of Preparation
The financial statements have been prepared under historical cost
convention, on accrual basis and in accordance with generally accepted
accounting principles in India. The accounting policies are
consistently followed by the Company. The financial statements have
been prepared to comply in all material respects, with the accounting
standards notified under Section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the relevant provisions of the
Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in Schedule VI to the Companies Act, 1956. Based on
the nature of products and the time between the acquisition of assets
for processing and their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current à non-current classification of assets and
liabilities.
b) Use of Estimates
The preparation of financial statements require estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which the results are known /materialized.
c) Tangible Assets
Tangible Assets are stated at cost less accumulated depreciation and
impairment loss, if any. The cost of an asset comprises its purchase
price net of Cenvat credit plus any directly attributable costs of
bringing the asset to the working condition for its intended use.
Pre-operative expenses for major projects are also capitalised where
appropriate.
Losses arising from the retirement of, and gains or losses arising from
disposal of fixed assets which are carried at cost are recognised in
the Statement of Profit and Loss.
Depreciation on Fixed Assets is provided on Straight Line Method in the
manner and the rates specified in Schedule XIV to the Companies Act;
1956, except on additions made to Building and Plant & Machineries of
Ferro Alloys Units with effect from 1st April 2006 on which
depreciation has been provided for on Written Down Value method in the
manner and the rates specified in Schedule XIV to the Companies Act;
1956.
d) Intangible Assets
Intangible Assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any. All costs,
including financing costs till commencement of production, net charges
on foreign exchange contracts and at adjustments arising from exchange
rate variations attributable to the intangible assets are capitalised.
Intangible assets such as softwares, etc. are amortised based upon
their estimated useful lives of 5 years.
e) Impairment
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the Profit and
Loss Account in the year in which asset is identified as impaired.
Assessment is also done at each Balance Sheet date as to whether there
is any indication that an impairment loss recognized for an asset in
prior accounting periods may no longer exist or may have decreased.
f) Investments
Investments that are readily realizable and are intended to be held for
not more than one year from the date on which such investments are made
are classified as Current Investments. All other investments are
classified as Non-current Investments. Non-current Investments are
stated at cost. Provision for diminution in the value of each
non-current investment is made to recognise a decline, other than that
of temporary in nature.
g) Inventories
Inventories are valued at lower of cost or estimated net realisable
value. Cost of inventories comprises of cost of purchase, cost of
conversion and other costs including manufacturing overheads incurred
in bringing them to their respective present location and condition.
Cost Formula:
Raw Materials : At Weighted Average Cost
Work-in-Process and Finished Goods : At Standard Cost
Trading Stock and Stock-in-Transit : At Acquisition Cost
Packing Materials and Stores and Spares : At Weighted Average Cost
Standard Cost of inventories approximates actual cost.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
Cost of finished goods includes excise duty.
h) Revenue Recognition
Revenue is recognised only when it can be reliably measured and it is
reasonable to expect ultimate collection.
i) Sale of Goods:
Revenue is recognised when the significant risks and rewards of
ownership of goods have passed to the buyer, which generally coincides
with delivery. It includes excise duty but excludes value added
tax/sales tax. Excise Duty deducted from turnover (gross) is the amount
that is included in the amount of turnover (gross) and not the entire
amount of liability that arose during the year.
ii) Interest:
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
iii) Export Benefits:
Export Entitlements in the form of Duty Drawback and Duty Entitlement
Pass book (DEPB) scheme are recognised in the Profit and Loss Account
when right to receive credit as per the terms of the scheme is
established in respect of exports made and when there is no significant
uncertainty regarding the ultimate collection of the relevant exports
proceeds.
iv) Purchases:
Purchases are inclusive of freight and net of Cenvat Credit, trade
discount and claims.
i) Excise Duty and Sales Tax/Value Added Tax
Excise Duty is accounted on the basis of both, payments made in respect
of goods cleared as also provision made for goods lying in bonded
warehouse. Sales tax / Value Added Tax paid is charged to profit and
loss account.
j) Cenvat Credit
Cenvat Credit on excise duty paid goods /Fixed Assets is accounted for
by reducing the acquisition cost of the related goods / Fixed Assets.
k) Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
Post employment and other long term employee benefits are recognized as
an expense in the profit and loss account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the profit and
loss account.
In respect of Employee Stock Option, the excess of fair price on the
date of grant, over the exercise price, is recognized as Deferred
Compensation cost and amortised over vesting period.
l) Foreign Currency transaction i) Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction or that approximates the actual rate at the date of the
transaction.
ii) Subsequent Recognition
Monetary items denominated in foreign currencies at the year end are
restated at the year end rates. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.
Exchange Differences
Foreign currency assets and liabilities as on the Balance Sheet date
are revalued in the accounts on the basis of exchange rates prevailing
at the close of the period and exchange loss/gain arising there from,
is adjusted to the cost of fixed assets or charged to the Profit & Loss
Account, as the case may be.
iii) Forward Exchange Contracts
In case of transactions covered by forward contracts, the difference
between the contract rate and exchange rate prevailing on the date of
transaction, is adjusted to the cost of fixed assets or charged to the
Profit & Loss Account, as the case may be, proportionately over the
life of the contract.
m) Borrowing Cost
Borrowing costs relating to acquisition or construction of fixed assets
which takes substantial period of time to get ready for its intended
use are included in the cost of fixed assets to the extent they relate
to the period till such assets are ready to be put to use. All other
Borrowing costs are recognized as an expense in the year in which they
are incurred.
n) Current and Deferred Tax
Tax expense for the period, comprising current tax and deferred tax,
are included in the determination of the net profit or loss for the
period. Current tax is determined as the amount of tax payable in
respect of taxable income for the period based on applicable tax rate
and laws.
Deferred tax is recognised subject to consideration of prudence in
respect of deferred tax asset on timing differences being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
period and is measured using tax rates and laws that have been enacted
or substantively enacted by the Balance Sheet date. Deferred tax assets
are reviewed at each Balance Sheet date to re-assess realization.
o) Financial derivatives and Commodity Hedging Transactions
In respect of derivative contracts , premium paid and gains / losses on
settlement are recognised in the profit and loss account except in case
where they relate to the acquisition or construction of Fixed assets ,
in which case , they are adjusted to the carrying cost of such assets.
p) Government grants and subsidies
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, these are
deducted from related expense which it is intended to compensate. Where
the grants or subsidy relates to an asset, its value is deducted in
arriving at the carrying amount of the related asset.
q) Segment Reporting Policies (i) Identification of Segments: Primary
Segment Business Segment:
The company's operating businesses are organised and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets. The Identified segments are manufacturing of
ferro-alloys and wind power.
Secondary segment Geographical segment:
The analysis of geographical segment is based on the geographical
location of customers. The geographical segments considered for
disclosure are as follows:
à Sales within India include sales to customers located within India.
à Sales outside India include sales to customers located outside India.
(ii) Allocation of common Costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
(iii) Unallocated Items:
The corporate and other segment include general corporate income and
expense items, which are not allocated to any business segment.
r) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
s) Earnings Per Share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted Earning Per Share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average no. of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
t) Cash Flow Statement
Cash flows are reported using indirect method, whereby profit before
tax is adjusted for the effects of transactions of a non- cash nature
and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, financing and
investing activities of the company are segregated. Cash and cash
equivalents in the balance sheet comprise cash at bank, cash/ cheques
in hand and short-term investments with an original maturity of three
months or less.
u) Lease Transaction
Where the company is the lessee: Leases where the lessor effectively
retains substantially all the risks and benefits of ownership of the
leased term, are classified as operating leases. Operating lease's
payments are recognized as an expense in the profit & loss Account.
Where the Company is a lessor: Assets subject to operating leases are
included in fixed assets. Lease income is recognized in the Profit &
Loss Account. Costs including depreciation are recognized as an expense
in the Profit & Loss Account.
Mar 31, 2011
A) Nature of Operation
Company is engaged in the business of manufacturing and trading of
Ferro Alloys and generation and supply of Wind Power.
b) Basis of Accounting
The financial statements have been prepared under historical cost
convention, on accrual basis and in accordance with generally accepted
accounting principles in India. The accounting policies are
consistently followed by the Company.
The financial statements comply, in all material respects, with
accounting standards as notified by Companies Accounting Standards
Rules, 2006 and the relevant provisions of the Companies Act, 1956.
c) Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which the results are known/materialized.
d) Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation and
impairment loss, if any. The cost of an asset comprises its purchase
price net of Cenvat credit plus any directly attributable costs of
bringing the asset to the working condition for itÃs intended use. Pre
-operative expenses for major projects are also capitalised, where
appropriate.
e) Intangible Assets
Intangible Assets are stated at cost of acquisition less accumulated
amortization/ depletion. All costs, including financing costs till
commencement of production, net of charges on foreign exchange
contracts and adjustments arising from exchange rate variations
attributable to the intangible assets are capitalised.
f) Depreciation
i) Depreciation on Fixed Assets is provided on Straight Line Method in
the manner and the rates specified in Schedule XIV to the Companies
Act, 1956 over their useful life, except on additions made to Building
and Plant & Machineries of Ferro Alloys Units with effect from 1st
April 2006 on which depreciation has been provided on Written Down
Value method over their useful life.
ii) Intangible assets such as softwares, etc. are amortised based upon
their estimated useful lives of 5 years.
g) Impairment
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
h) Investments
Long term Investments are stated at cost. Provision for diminution in
the value of each long term investment is made to recognise a decline,
other than that of temporary in nature.
i) Inventories
Inventories are valued at lower of cost or estimated net realisable
value. Cost of inventories comprises of cost of purchase, cost of
conversion and other costs including manufacturing overheads incurred
in bringing them to their respective present location and condition.
Cost Formula:
Raw Materials : At Weighted Average Cost
Work-in-Process and
Finished Goods : At Standard Cost
Trading Stock and
Stock-in-Transit : At Acquisition Cost
Packing Materials
and Stores and Spares : At Weighted Average Cost
Standard Cost of inventories approximates actual cost.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
Cost of finished goods includes excise duty.
j) Revenue Recognition
Revenue is recognised only when it can be reliably measured and it is
reasonable to expect ultimate collection.
i) Sale of Goods:
Revenue is recognised when the significant risks and rewards of
ownership of goods have passed to the buyer, which generally coincides
with delivery. It includes excise duty but excludes value added
tax/sales tax. Excise Duty deducted from turnover (gross) is the amount
that is included in the amount of turnover (gross) and not the entire
amount of liability that arose during the year.
ii) Interest:
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
iii) Export Benefits:
Export Entitlements in the form of Duty Drawback and Duty Entitlement
Pass book (DEPB) scheme are recognised in the Profit and Loss Account
when right to receive credit as per the terms of the scheme is
established in respect of exports made and when there is no significant
uncertainty regarding the ultimate collection of the relevant exports
proceeds.
iv) Purchases:
Purchases are inclusive of freight and net of Cenvat Credit, trade
discount and claims.
k) Excise Duty and Sales Tax/Value Added Tax
Excise Duty is accounted on the basis of both, payments made in respect
of goods cleared as also provision made for goods lying in bonded
warehouse. Sales tax / Value Added Tax paid is charged to profit and
loss account.
l) Cenvat Credit
Cenvat Credit on excise duty paid goods /Fixed Assets is accounted for
by reducing the acquisition cost of the related goods/ Fixed Assets.
m) Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
Post employment and other long term employee benefits are recognized as
an expense in the profit and loss account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the profit and
loss account.
In respect of Employee Stock Option, the excess of fair price on the
date of grant, over the exercise price, is recognized as Deferred
Compensation cost and amortised over vesting period.
n) Foreign Currency transaction
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency prevailing at the
date of the transaction or that approximates the actual rate at the
date of the transaction..
ii) Conversion
Monetary items denominated in foreign currencies at the year end are
restated at the year end rates. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction;
Exchange Differences
Foreign currency assets and liabilities as on the Balance Sheet date
are revalued in the accounts on the basis of exchange rates prevailing
at the close of the period and exchange loss/gain arising there from,
is adjusted to the cost of fixed assets or charged to the Profit & Loss
Account, as the case may be.
iii) Forward Exchange Contracts
In case of transactions covered by forward contracts, the difference
between the contract rate and exchange rate prevailing on the date of
transaction, is adjusted to the cost of fixed assets or charged to the
Profit & Loss Account, as the case may be, proportionately over the
life of the contract.
o) Borrowing Cost
Borrowing costs relating to acquisition or construction of fixed assets
which takes substantial period of time to get ready for its intended
use are included in the cost of fixed assets to the extent they relate
to the period till such assets are ready to be put to use. Other
Borrowing costs are recognized as an expense in the year in which they
are incurred.
p) Taxation
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax is recognised subject to consideration of prudence in
respect of deferred tax asset on timing differences being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
period and is measured using tax rates and laws that have been enacted
or substantively enacted by the Balance Sheet date. Deferred tax assets
are reviewed at each Balance Sheet date to re-assess realization.
q) Financial derivatives and Commodity Hedging Transactions
In respect of derivative contracts , premium paid and gains / losses on
settlement are recognised in the profit and loss account except in case
where they relate to the acquisition or construction of Fixed assets,
in which case, they are adjusted to the carrying cost of such assets.
r) Government grants and subsidies
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, these are
deducted from related expense which it is intended to compensate. Where
the grants or subsidy relates to an asset, its value is deducted in
arriving at the carrying amount of the related asset.
s) Segment Reporting Policies
i) Identification of Segments:
Primary Segment
Business Segment:
The CompanyÃs operating businesses are organised and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets. The Identified segments are manufacturing of
ferro-alloys and wind power.
Secondary segment
Geographical segment:
The analysis of geographical segment is based on the geographical
location of customers.
The geographical segments considered for disclosure are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside India.
ii) Allocation of common Costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
iii) Unallocated Items:
The corporate and other segment include general corporate income and
expense items, which are not allocated to any business segment.
t) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
u) Earnings Per Share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted Earning Per Share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average no. of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
v) Cash Flow Statement
Cash flows are reported using indirect method, whereby profit before
tax is adjusted for the effects of transactions of a non- cash nature
and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, financing and
investing activities of the Company are segregated. Cash and cash
equivalents in the balance sheet comprise cash at bank, cash/ cheques
in hand and short-term investments with an original maturity of three
months or less.
w) Lease Transaction
Where the Company is the lessee: Leases where the lessor effectively
retains substantially all the risks and benefits of ownership of the
leased term, are classified as operating leases. Operating leaseÃs
payments are recognized as an expense in the profit & loss Account.
Where the Company is a lessor: Assets subject to operating leases are
included in fixed assets. Lease income is recognized in the Profit &
Loss Account. Costs including depreciation are recognized as an expense
in the Profit & Loss Account.
Mar 31, 2010
A) Nature of Operation
Company is engaged in the business of manufacturing and trading of
Ferro Alloys and generation and supply of Wind Power.
b) Basis of Accounting
The financial statements have been prepared to comply, in all material
respects, with accounting standards as notified by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956.
The financial statements have been prepared under historical cost
convention on accrual basis. The accounting policies have been
consistently followed by the Company and are consistent with those used
in the previous year except where otherwise stated.
c) Use of Estimates
The preparation of financial statements require the management of the
Company to make certain estimates and assumptions to be made that
affect the reported amount of assets and liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Difference between the actual results and
estimates are recognised in the period in which the results are
known/materialized.
d) Fixed Assets
Fixed Assets are stated at cost less Depreciation. The cost of an asset
comprises its purchase price net of Cenvat credit plus any directly
attributable costs of bringing the asset to the working condition for
its intended use. Pre -operative expenses for major projects are also
capitalised, where appropriate.
e) Investments
Long term Investments are stated at cost. Provision for diminution in
the value of each long term investment is made to recognise a decline,
other than that of temporary in nature.
f) Depreciation
i) Depreciation on Fixed Assets is provided on Straight Line Method in
the manner and the rates specified in Schedule XIV to the Companies
Act; 1956, except on additions made to Building and Plant & Machineries
of Ferro Alloys Units with effect from 1 April 2006 on which
depreciation has been provided on Written Down Value method at the rate
specified in Schedule XIV to the Companies Act,1956.
ii) Fixed Assets costing below Rs. 5,000/- are fully depreciated in the
year of acquisition.
iii) Depreciation on Fixed Assets added/deducted during the year is
provided on pro-rata basis.
iv) The depreciation charge for the assets which have been impaired,
are adjusted to allocate the assets revised carrying amount less its
residual value, if any, over its remaining useful life.
v) Intangible assets such as softwares, etc. are amortised based upon
their estimated useful lives of 5 years.
g) Inventories
Inventories are valued at lower of cost or estimated net realisable
value. Cost Formula:
Raw Materials : At Weighted Average Cost
Work-in-Process and Finished Goods : At Standard Cost
Trading Stock and Stock-in-Transit : At Acquisition Cost
Packing Materials and Stores and Spares : At Weighted Average Cost
Standard Cost of inventories approximates actual cost.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
h) Impairment
a. The carrying amounts of assets are reviewed at each balance sheet
date to ascertain if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is greater of the assets net selling price and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value at the weighted average
cost of capital.
b. After Impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
c. A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However the carrying value after
reversal is not increased beyond the carrying value that would have
prevailed by charging usual depreciation if there is no impairment.
i) Excise Duty and Sales Tax
Excise Duty is accounted on the basis of both, payments made in respect
of goods cleared as also provision made for goods lying in bonded
warehouse. Sales tax paid is charged to profit and loss account.
j) Cenvat Credit
Cenvat Credit on excise duty paid goods /Fixed Assets is accounted for
by reducing the acquisition cost of the related goods / Fixed Assets.
k) Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
easily measured.
i) Sale of Goods:
Revenue is recognised when the significant risks and rewards of
ownership of goods have passed to the buyer, which generally coincides
with delivery. It includes excise duty but excludes value added
tax/sales tax. Excise Duty deducted from turnover (gross) is the amount
that is included in the amount of turnover (gross) and not the entire
amount of liability that arose during the year.
ii) Interest:
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
iii) Export Benefits:
Export Entitlements in the form of Duty Drawback and Duty Entitlement
Pass book (DEPB) scheme are recognised in the Profit and Loss Account
when right to receive credit as per the terms of the scheme is
established in respect of exports made and when there is no significant
uncertainty regarding the ultimate collection of the relevant exports
proceeds.
I) Foreign Currency transaction
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
iii) Exchange Differences
Foreign currency assets and liabilities as on the Balance Sheet date
are revalued in the accounts on the basis of
exchange rates prevailing at the close of the period and exchange
loss/gain arising therefrom, is adjusted to the cost of fixed assets or
charged to the Profit & Loss Account, as the case may be.
iv) Forward Exchange Contracts
In case of transactions covered by forward contracts, the difference
between the contract rate and exchange rate prevailing on the date of
transaction, is adjusted to the cost of fixed assets or charged to the
Profit & Loss Account, as the case may be, proportionately over the
life of the contract.
m) Government grants and subsidies
Grants and subsidies from the government are recognised when there is
reasonable assurance that the gram/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, these are
deducted from related expense which it is intended to compensate. Where
the grants or subsidy relates to an asset, its value is deducted in
arriving at the carrying amount of the related asset.
n) Borrowing Cost
Borrowing costs relating to acquisition or construction of fixed assets
which takes substantial period of time to get ready for its intended
use are included in the cost of fixed assets to the extent they relate
to the period till such assets are ready to be put to use. Other
Borrowing costs are recognized as an expense in the year in which they
are incurred.
o) Segment Reporting Policies
i) Identification of Segments: Primary Segment Business Segment:
The Companys operating businesses are organised and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets. The Identified segments are manufacturing of
ferro-alloys and wind power.
Secondary segment
Geographical segment:
The analysis of geographical segment is based on the geographical
location of customers.
The geographical segments considered for disclosure are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside India.
ii) Allocation of common Costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
iii) Unallocated Items:
The corporate and other segment include general corporate income and
expense items, which are not allocated to any business segment.
p) Intangible Assets
Research and Development Costs:
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is carried forward when its future
recoverability can reasonably be regarded as assured. Any expenditure
carried forward is amortised over the period of expected future sales
from the related project, not exceeding ten years.
The carrying value of intangible assets is reviewed for impairment
annually when the asset is not yet in use, and otherwise when events or
changes in circumstances indicate that the carrying value may not be
recoverable.
q) Taxation
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax is recognised subject to consideration of prudence in
respect of deferred tax asset on timing differences being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
period and is measured using tax rates and laws that have been enacted
or substantively enacted by the Balance Sheet date. Deferred tax assets
are reviewed at each Balance Sheet date to re-assess realization.
r) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when there is a present obligation as a
result of past event 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. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates
s) Earnings Per Share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted Earning Per Share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average no. of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
t) Cash Flow Statement
Cash flows are reported using indirect method, whereby profit before
tax is adjusted for the effects of transactions of a non-cash nature
and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, financing and
investing activities of the Company are segregated. Cash and cash
equivalents in the balance sheet comprise cash at bank, cash/ cheques
in hand and short-term investments with an original maturity of three
months or less.
u) Employee Benefits
i) Short term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
ii) Post employment and other long term employee benefits are
recognized as an expense in the profit and loss account for the year in
which the employee has rendered services. The expense is recognized at
the present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the profit and
loss account
iii) In respect of Employee Stock Option, the excess of fair price on
the date of grant, over the exercise price, is recognized as Deferred
Compensation cost and amortised over vesting period.
v) Lease Transaction:
Where the Company is the lessee: Leases where the lessor effectively
retains substantially all the risks and benefits of ownership of the
leased term, are classified as operating leases. Operating leases
payments are recognized as an expense in the profit & loss Account.
Where the Company is a Lessor: Assets subject to operating leases are
included in fixed assets. Lease income is recognized in the Profit &
Loss Account. Cost including depreciation are recognized as an expense
in the Profit & Loss Account.
Mar 31, 2009
A) Basis of Accounting
The financial statements have been prepared to comply, in all material
respects, with accounting standards as notified by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956.
The financial statements have been prepared under historical cost
convention on accrual basis. The accounting policies have been
consistently followed by the Company and are consistent with those used
in the previous year except where otherwise stated.
b) Use of Estimates
The presentation of financial statements require estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which the results are known/materialized.
c) Fixed Assets
Fixed Assets are stated at cost less Depreciation. The cost of an asset
comprises its purchase price net of Cenvat credit plus any directly
attributable costs of bringing the asset to the working condition for
its intended use. Pre -operative expenses for major projects are also
capitalised, where appropriate.
d) Investments
Long term Investments are stated at cost less write down for any
diminution other than temporary, in carrying value.
e) Depreciation
i) Depreciation on Fixed Assets is provided on Straight Line Method in
the manner and the rates specified in Schedule XIV to the Companies
Act; 1956, except on additions made to Building and Plant & Machineries
with effect from 1st April 2006 on which depreciation has been provided
on Written Down Value method at the rate specified in Schedule XIV to
the Companies Act, 1956.
ii) Fixed Assets costing below Rs. 5,000/- are fully depreciated in the
year of acquisition.
iii) Depreciation on Fixed Assets added/deducted during the year is
provided on pro-rata basis.
iv) The depreciation charge for the assets which have been impaired,
are adjusted to allocate the assets revised carrying amount less its
residual value, if any, over its remaining useful life.
v) Intangible assets such as softwares, etc. are amortised based upon
their estimated useful lives of 5 years.
f) Inventories
Inventories are valued at lower of cost or estimated net realisable
value. Cost Formula :
Raw Materials At Weighted Average Cost
Work-in-Process and Finished Goods At Standard Cost
Trading Stock and Stock-in-Transit At Acquisition Cost
Packing Materials and Stores and Spares At Weighted Average Cost
Standard Cost of inventories approximates actual cost.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
g) Impairment
a. The carrying amounts of assets are reviewed at each balance sheet
date to ascertain if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the assets net selling price and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value at the weighted average
cost of capital.
b. After Impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
c. A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However the carrying value after
reversal is not increased beyond the carrying value that would have
prevailed by charging usual depreciation if there is no impairment.
h) Excise Duty and Sales Tax
Excise Duty is accounted on the basis of both, payments made in respect
of goods cleared as also provision made for goods lying in bonded
warehouse. Sales tax paid is charged to profit and loss account.
i) Cenvat Credit
Cenvat Credit on excise duty paid goods /Fixed Assets is accounted for
by reducing the acquisition cost of the related goods / Fixed Assets.
j) Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
easily measured.
k) Sale of Goods:
Revenue is recognised when the significant risks and rewards of
ownership of goods have passed to the buyer, which generally coincides
with delivery. It includes excise duty but excludes value added
tax/sales tax. Excise Duty deducted from turnover (gross) is the amount
that is included in the amount of turnover (gross) and not the entire
amount of liability that arose during the year.
ii) Interest:
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
iii) Export Benefits:
Export Entitlements in the form of Duty Drawback and Duty Entitlement
Pass book (DEPB) scheme are recognised in the Profit and Loss Account
when right to receive credit as per the terms of the scheme is
established in respect of exports made and when there is no significant
uncertainty regarding the ultimate collection of the relevant export
proceeds.
l) Foreign Currency transaction
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing
rate.Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the transaction; and non monetary items which are carried at fair
value or other similar valuation denominated in a foreign currency are
reported using the exchange rates that existed when the values were
determined.
iii) Exchange Differences
Foreign currency assets and liabilities (other than those covered by
forward contracts) as on the Balance Sheet date are revalued in the
accounts on the basis of exchange rates prevailing at the close of the
period and exchange loss/gain arising therefrom, is adjusted to the
cost of fixed assets or charged to the Profit & Loss Account, as the
case may be.
iv) Forward Exchange Contracts
In case of transactions covered by forward contracts, the difference
between the contract rate and exchange rate prevailing on the date of
transaction, is adjusted to the cost of fixed assets or charged to the
Profit & Loss Account, as the case may be, proportinately over the life
of the contract.
m) Government grants and subsidies
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/subsidy will be received and ail
attaching conditions will be complied with. When the grant or subsidy
relates to an expense item, these are deducted from related expense
which it is intended to compensate. Where the grants or subsidy relates
to an asset, its value is deducted in arriving at the carrying amount
of the related asset.
n) Borrowing Cost
Borrowing costs relating to acquisition or construction of fixed assets
which takes substantial period of time to get ready for its intended
use are included in the cost of fixed assets to the extent they relate
to the period till such assets are ready to be put to use. Other
Borrowing costs are recognized as an expense in the year in which they
are incurred.
o) Segment Reporting Policies
(i) Identification of Segments: Primary Segment Business Segment:
The companys operating businesses are organised and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets. The Identified segments are manufacturing of
ferro-alloys and wind power. Secondary segment Geographical segment:
The analysis of geographical segment is based on the geographical
location of customers. The geographical segments considered for
disclosure are as follows:
à Sales within India include sales to customers located within India.
à Sales outside India include sales to customers located outside India.
(ii) Allocation of common Costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
(iii) Unallocated Items:
The corporate and other segment include general corporate income and
expense items, which are not allocated to any business segment.
p) Intangible Assets
Research and Development Costs:
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is carried forward when its future
recoverability can reasonably be regarded as assured. Any expenditure
carried forward is amortised over the period of expected future sales
from the related project, not exceeding ten years.
The carrying value of intangible assets is reviewed for impairment
annually when the asset is not yet in use, and otherwise when events or
changes in circumstances indicate that the carrying value may not be
recoverable.
q) Taxation
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax is recognised subject to consideration of prudence in
respect of deferred tax asset on timing differences being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
period and is measured using tax rates and laws that have been enacted
or substantively enacted by the Balance Sheet date. Deferred tax assets
are reviewed at each Balance Sheet date to re-assess realization.
Fringe Benefit tax is calculated as per the provisions of the Income
Tax Act, 1961.
r) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when there is a present obligation as a
result of past event 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. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
s) Earnings Per Share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted Earning Per Share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average no. of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
t) Cash Flow Statement
Cash flows are reported using indirect method, whereby profit before
tax is adjusted for the effects of transactions of a non-cash nature
and any deferrals or accruals of past or future" cash receipts or
payments. The cash flows from regular revenue generating, financing and
investing activities of the company are segregated. Cash and cash
equivalents in the balance sheet comprise cash at bank, cash/ cheques
in hand and short-term investments with an original maturity of three
months or less.
u) Employee Benefits
(i) Short term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
(ii) Post employment and other long term employee benefits are
recognized as an expense in the profit and loss account for the year in
which the employee has rendered services. The expense is recognized at
the present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the profit and
loss account.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article