Mar 31, 2023
NOTE l| CORPORATE INFORMATION
Uno Minda Limited (Formerly known as Minda Industries Limited) ("the Companyâ) is a public company limited by shares, incorporated and domiciled and headquartered in India. It was incorporated on 16 September 1992 under the Companies Act, 1956 and its shares are listed on the National Stock Exchange of India Limited and BSE Limited having its registered office at B64/1 Wazirpur, Industrial Area, Delhi-1 10052, India.
The Company is engaged in the business of manufacturing of auto components including lighting, alloywheels, horns, seating systems, seatbelts, switches, sensors, controllers, handle bar assemblies, wheel covers etc. The Company caters to both 2 wheelers and 4 wheelers markets and domestic & international markets.
The standalone financial statements were approved for issue in accordance with a resolution of the directors on 18 May 2023.
NOTE 2| SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these Indian Accounting Standards (Ind-AS) financial statements. These policies have been consistently applied to all the years except where newly issued accounting standard is initially adopted.
2.01 Basis of preparation of Standalone Financial Statements
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of schedule III to the Companies Act, 2013 (Ind AS compliant schedule III) as applicable to these standalone financial statements.
These standalone financial statements are presented in '' and all values are rounded to the nearest crore ('' 0,000,000), except when otherwise indicated.
The Company has prepared the standalone financial statements on the basis that it will continue to operate as going concern. These policies have been consistently applied to all the years presented, unless otherwise stated.
The standalone financial statements have been prepared on a historical cost basis, except for the following assets and liabilities
(i) Certain financial assets and liabilities that is measured at fair value
(ii) Assets held for sale-measured at fair value less cost to sell
(iii) Defined benefit plans-plan assets measured at fair value
(iv) Share based payments
2.02 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non- current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non current.
The term of the liability that could, at the option of counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Deferred tax assets and deferred tax liabilities are classified as non- current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
2.03 Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. Capital work in progress is stated at cost, net of accumulated impairment loss, if any. The cost comprises of purchase price, taxes, duties, freight and
other incidental expenses directly attributable and related to acquisition and installation of the concerned assets and are further adjusted by the amount of input tax credit availed wherever applicable.
Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for longterm construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs are included in asset''s carrying amount or recognised as separate assets, as appropriate, only when it is probable that future economic benefit associated with the item will flow to the Company and the cost of item can be measured reliably.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
Capital work- in- progress includes cost of property, plant and equipment under installation / under development as at the balance sheet date.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.
Depreciation on property, plant and equipment is calculated on prorata basis on straight-line method/ written down method as applicable, using the useful lives as technically assessed by the management which is as below with respect to significant class of property, plant and equipments. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
The useful lives have been determined based on technical evaluation done by the management in order to reflect the actual usage of assets.
Lease hold improvements are depreciated on straight line basis over shorter of the asset''s useful life and their lease term. Leasehold land is amortised on a straight line basis over the unexpired period of their respective lease period.
2.04 Investment properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in profit or loss as incurred. The Company depreciates building on a straight line basis over a period of 30 years from the date of original purchase.
Name of assets |
Useful life as assessed by the management |
Life in years as per schedule II of Companies Act, 2013 |
Building |
||
Factory building |
30 |
30 |
Non-factory building |
60 |
60 |
Computers including |
3-6 |
3-6 |
networking equipments |
||
Plant and machinery |
||
Plant and machinery |
8-15 |
15 |
Dies and tools |
1-6 |
15 |
Furniture and fittings |
10 |
10 |
Office equipment |
5 |
5 |
Vehicles |
8 |
8 |
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the international valuation standards committee.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
Transfers are made to (or from) investment properties only when there is a change in use. Transfer between investment property and owner occupied property do not change the carrying amount of the property transferred and they do not change the cost of that property for measurement or disclosure purpose.
Intangible assets acquired separately are measured on initial recognition at cost. Cost of intangible assets acquired in business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Internally generated intangibles, excluding capitalised development cost, are not capitalised and the related expenditure is reflected in statement of Profit and Loss in the period in which the expenditure is incurred. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite 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.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Gains or losses arising from disposal of the intangible assets 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 assets are disposed off.
Intangible assets are amortised on a straight line basis over their estimated useful life as under:
Assets |
Useful life |
Trademark |
10 years |
Technical know how |
6 years |
Computer software |
3-6 years |
Customer relationship |
5-10 years |
Research and development cost
Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognised as an intangible asset when the Company can demonstrate all the following:
i) The technical feasibility of completing the intangible asset so that it will be available for use or sale;
ii) Its intention to complete the asset;
iii) Its ability to use or sale the asset;
iv) How the asset will generate future economic benefits;
v) The availability of adequate resources to complete the development and to use or sale the asset; and
vi) The ability to measure reliably the expenditure attributable to the intangible asset during development.
Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised on straight line basis over the estimated useful life. During the period of development, the asset is tested for impairment annually.
Trademarks
Brand and Trademarks acquired in business combination are initially recognised at fair value at the date of acquisition. Following initial recognition, brand and trademark are carried at the above recognised value less accumulated amortisation and accumulated impairment losses, if any.
Customer relationship
Customer relationship acquired in business combination are initially recognised at fair value at the date of acquisition. Following initial recognition, customer relationship is carried at the above recognised value less accumulated amortisation and accumulated impairment losses, if any. They are amortised on a straight line basis over their estimated useful life of 5-10 years assessed by the management.
Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the fair value of net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in other comprehensive income and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain directly in equity as capital reserve, without routing the same through other comprehensive income. Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Company to the previous owners of the acquiree, and equity interests issued by the Company.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses, if any. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company''s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units.
A cash generating unit to which goodwill has been allocated is tested for impairment annually or when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed off, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained
2.06 Impairment of non- financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the forecast period. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the Company operates, or for the market in which the asset is used.
Impairment losses of continuing operations are recognised in the statement of profit and loss, except for properties previously revalued with the revaluation surplus taken to OCI. For such properties, the impairment is recognised in OCI up to the amount of any previous revaluation surplus.
For assets excluding goodwill and intangible assets having indefinite life, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years Such reversal is recognised in the statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually as at 31 March or when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
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
The Company classifies its financial assets in the
following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss)
- those measured at amortised cost
The classification of financial assets at initial recognition depends on the financial asset''s contractual cash flow characteristics and the Company''s business model for managing them.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset''s contractual cash flow characteristics and the Company''s business model for managing them. With the exception of trade receivables that do not contain a significant financing component , the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under Ind AS 115. Refer to the accounting policies in section "Revenue from contracts with customersâ.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ''solely payments of principal and interest (SPPI)'' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
The Company''s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling.
For purposes of subsequent measurement financial assets are classified in following categories:
- Financial assets at amortised cost (debt instruments)
- Financial assets at fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and losses (debt instruments)
- Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
A ''financial asset'' is measured at the amortised cost if both the following conditions are met:
a) Business Model Test : The objective is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes) and;
b) Cash flow characteristics test: The
contractual terms of the financial asset give rise on specific dates to cash flows that are solely payments of principal and interest on principal amount outstanding.
This category is most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of EIR. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a
shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. The EIR amortisation is included in other income in profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.
Financial assets at fair value through OCI (FVTOCI) (debt instruments)
A ''financial asset'' is classified as at the FVTOCI if both of the following criteria are met:
a) Business Model Test : The objective of financial instrument is achieved by both collecting contractual cash flows and selling the financial assets; and
b) Cash flow characteristics test: The
contractual terms of the Debt instrument give rise on specific dates to cash flows that are solely payments of principal and interest on principal amount outstanding.
Debt instrument included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI), except for the recognition of interest income, impairment gains or losses and foreign exchange gains or losses which are recognised in statement of profit and loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value changes recognised in OCI is reclassified from the equity to profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the statement of profit and loss. This category includes derivative instruments and listed equity investments which the Company had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are recognised in the statement of profit and loss when the right of payment has been established.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under Ind AS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit and loss when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
Embedded Derivatives
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.
A financial asset (or ,where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Company''s statement of financial position) when:
- The rights to receive cash flows from the asset have expired, or
- the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass throughâ arrangement and either;
(a) the Company has transferred substantially all the risks and rewards of the asset, or
(b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with IND AS 109, the Company applies expected credit losses( ECL) model for measurement and recognition of impairment loss on the following financial asset and credit risk exposure
- Financial assets measured at amortised cost;
- Financial assets measured at fair value through other comprehensive income(FVTOCI);
- Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115
- Loan commitments which are not measured as at FVTPL
- Financial guarantee contracts which are not measured as at FVTPL
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For recognition of impairment loss on financial assets other than mentioned below and risk exposure, the Company determines that 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. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
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
The Company follows "simplified approachâ for recognition of impairment loss allowance on:
- Trade receivables or contract revenue receivables;
- All lease receivables resulting from the transactions within the scope of Ind AS 116 -Leases
Under the simplified approach, the Company does not track changes in credit risk. Rather , it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as
income/ expense in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
(a) Financial assets measured as at amortised cost, contractual revenue receivables and lease receivables: ECL is
presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets writeoff criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(b) Loan commitments and financial guarantee contracts: ECL is presented as a provision in the balance sheet, i.e. as a liability.
(c) Debt instruments measured at FVTOCI:
For debt instruments measured at FVTOCI, the expected credit losses do not reduce the carrying amount in the balance sheet, which remains at fair value. Instead, an amount equal to the allowance that would arise if the asset was measured at amortised cost is recognised in other comprehensive income as the accumulated impairment amount.
(ii) Financial liabilities:
Initial recognition and measurement
Financial liabilities are classified at initial recognition as financial liabilities at fair value through profit or loss , loans and borrowings, and payables, net of directly attributable transaction costs. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company financial liabilities include loans and borrowings, trade payables, trade deposits, retention money, liabilities towards services, sales incentive and other payables.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
(i) Financial liabilities at fair value through profit or loss
(ii) Financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationship as defined by Ind AS 109. The separated embedded derivate are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in IND AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognised in OCI. These gains/ loss are not subsequently transferred to 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 or loss. the Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities at amortised cost (Loans and borrowings)
After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the Effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the Effective interest rate 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 Effective interest rate. The Effective interest rate amortisation is included as finance costs in the statement of profit and loss.
Trade Payables
These amounts represents liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually payable basis varying trade term. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at fair value and subsequently measured at amortised cost using Effective interest rate method.
Financial Guarantee Contracts:
Financial guarantee contracts issued by the Company are those contracts that requires payment to be made to reimburse the holders for a loss it incurs because the specified debtors fail to make a payment when due in accordance with the term of debt instrument.
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction cost that are directly attributed to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirement of IND AS 109 and the amount recognised less, when appropriate, the cumulative amount of income recognised in accordance with principles of IND AS 115.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Offsetting of financial instruments
Financials assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Reclassification of financial assets/ financial liabilities
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are
debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
The following table shows various reclassification and how they are accounted for:
Original classification |
Revised classification |
Accounting treatment |
Amortised cost |
FVTPL |
Fair value is measured at reclassification date. Difference between previous amortised cost and fair value is recognised in profit or loss. |
FVTPL |
Amortised Cost |
Fair value at reclassification date becomes its new gross carrying amount. EIR is calculated based on the new gross carrying amount. |
Amortised cost |
FVTOCI |
Fair value is measured at reclassification date. Difference between previous amortised cost and fair value is recognised in OCI. No change in EIR due to reclassification. |
FVTOCI |
Amortised cost |
Fair value at reclassification date becomes its new amortised cost carrying amount. However, cumulative gain or loss in OCI is adjusted against fair value. Consequently, the asset is measured as if it had always been measured at amortised cost. |
FVTPL |
FVTOCI |
Fair value at reclassification date becomes its new carrying amount. No other adjustment is required. |
FVTOCI |
FVTPL |
Assets continue to be measured at fair value. Cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss the reclassification date. |
2.08 Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
The purchase contracts that meet the definition of a derivative under Ind AS 109 are recognised in the statement of profit and loss. Commodity contracts that are entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the Company''s expected purchase, sale or usage requirements are held at cost.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in OCI and later reclassified to profit or loss when the hedge item affects profit or loss or treated as basis adjustment if a hedged forecast transaction
subsequently results in the recognition of a non-financial asset or non-financial liability.
For the purpose of hedge accounting, hedges are classified as:
(i) Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment
(ii) Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.
(iii) Hedges of a net investment in a foreign operation
Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:
The change in the fair value of a hedging instrument is recognised in the statement of profit and loss as finance costs. The change in the fair value of the
hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the statement of profit and loss as finance costs.
For fair value hedges relating to items carried at amortised cost, any adjustment to carrying value is amortised through profit or loss over the remaining term of the hedge using the EIR method. EIR amortisation may begin as soon as an adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.
If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss. When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit and loss.
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit and loss.
The ineffective portion relating to foreign currency contracts is recognised in finance costs and the ineffective portion relating to commodity contracts is recognised in other income or expenses.
Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs When the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognised as OCI are transferred to the initial carrying amount of the non-financial asset or liability.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met.
2.09 Compound financial instruments
Compound financial instruments issued by the Company comprise cumulative redeemable preference shares denominated in Rupees that are mandatorily redeemable at a fixed or determinable amount at a fixed or future date and the payment of dividends is discretionary. Compound financial instruments are separated into liability and equity components based on the terms of the contract.
On issuance of the compound financial instruments, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or redemption.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity since conversion option meets Ind AS 32 criteria for fixed to fixed classification. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not remeasured in subsequent years
Transaction costs are apportioned between the liability and equity components of the convertible preference shares based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
2.10 Investment in Subsidiaries, associates and joint venture
The investment in subsidiary, associates and Joint venture are carried at cost as per IND AS 27. The Company regardless of the nature of its involvement with an entity (the investee), determines whether it is a parent by assessing whether it controls the investee. The Company controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Thus, the Company controls an investee if and only if it has all the following:
(a) power over the investee;
(b) exposure, or rights, to variable returns from its involvement with the investee and
(c) the ability to use its power over the investee to affect the amount of the returns.
Investments are accounted in accordance with IND AS 105 when they are classified as held for sale. On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
a) Basis of valuation:
i) Inventories other than scrap materials are valued at lower of cost and net realisable value after providing cost of obsolescence, if any. The comparison of cost and net realisable value is made on an item-by-item basis.
b) Method of Valuation:
i) Cost of raw materials has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
ii) Cost of finished goods and work-in-progress includes direct labour and an appropriate share of fixed and variable production overheads. Fixed production overheads are allocated on the basis of normal capacity of production facilities. Cost is determined on moving weighted average basis
iii) Cost of traded goods has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
iv) 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. The net realisable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realisable value.
v) Appropriate adjustments are made to the carrying value of damaged, slow moving and obsolete inventories based on management''s current best estimate.
2.12 Non-current assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use.
Such non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell . Any expected loss is recognised immediately in the statement of profit and loss.
The criteria for held for sale classification is regarded as met only when the assets is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets, its sale is highly probable; and it will genuinely be sold. The Company treats sale of the asset to be highly probable when:
i) The appropriate level of management is committed to a plan to sell the asset
ii) An active programme to locate a buyer and complete the plan has been initiated (if applicable)
iii) The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
iv) The sale is expected to qualify for recognition as a completed sale within one year from the date of classification , and
v) Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition and the assets must have actively marketed for sale at a price that is reasonable in relation to its current fair value. Actions required to complete the sale should indicate that it is unlikely that significant changes to the plan to sale these assets will be made. Management must be committed to the sale, which sho
Mar 31, 2022
1 CORPORATE INFORMATION
Minda Industries Limited is a public company limited by shares, incorporated and domiciled and headquartered in India. It was incorporated on September 16, 1992 under the Companies Act, 1956 and its shares are listed on the National Stock Exchange of India Limited and BSE Limited having its registered office at B64/1 Wazirpur, Industrial Area, Delhi-1 10052, India.
The Company is engaged in the business of manufacturing of auto components including lighting, alloywheels, horns, seating systems, seatbelts, switches, sensors, controllers, handle bar assemblies, wheel covers etc. The company caters to both 2 wheelers and 4 wheelers markets and domestic & international markets. The standalone financial statements were approved for issue in accordance with a resolution of the directors on May 24, 2022.
2 SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these Indian Accounting Standards (Ind-AS) financial statements. These policies have been consistently applied to all the years except where newly issued accounting standard is initially adopted.
New and amended standards adopted by the Company
The Company has applied the following amendments to Ind AS for the first time for their annual reporting period commencing 1 April 2021:
- Extension of COVID-19 related concessions -amendments to Ind AS 116
- Interest rate benchmark reform - amendments to Ind AS 109, Financial Instruments, Ind AS 107, Financial Instruments: Disclosures, and Ind AS 116, Leases.
- Amendment to Ind AS 105, Ind AS 16 and Ind AS 28
- Conceptual framework for financial reporting under Ind AS issued by ICAI.
The amendments did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
2.01 Basis of preparation of Standalone Financial Statements
The standalone financial statements of the company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of schedule III to the
Companies Act, 2013 (Ind AS compliant schedule III) as applicable to these standalone financial statements. These standalone financial statements are presented in INR and all values are rounded to the nearest crores (INR 0,000,000), except when otherwise indicated.
The company has prepared the financial statements on the basis that it will continue to operate as going concern. These policies have been consistently applied to all the years presented, unless otherwise stated.
The standalone financial statements have been prepared on a historical cost basis, except for the following assets and liabilities
(i) Certain financial assets and liabilities that is measured at fair value
(ii) Assets held for sale-measured at fair value less cost to sell
(iii) Defined benefit plans-plan assets measured at fair value
(iv) Share based payments
2.02 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non- current classification. An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle
- Held primarily for purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non current.
Deferred tax assets and deferred tax liabilities are classified as non- current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. the Company has identified twelve months as its operating cycle.
2.03 Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. Capital work in progress is stated at cost, net of accumulated impairment loss, if any. The cost comprises of purchase price, taxes, duties, freight and other incidental expenses directly attributable and related to acquisition and installation of the concerned assets and are further adjusted by the amount of input tax credit availed wherever applicable.
Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs are included in asset''s carrying amount or recognised as separate assets, as appropriate, only when it is probable that future economic benefit associated with the item will flow to the Company and the cost of item can be measured reliably.
An item of property, plant and equipment and any significant part initially recognised is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
Capital work- in- progress includes cost of property, plant and equipment under installation / under development as at the balance sheet date.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Depreciation on property, plant and equipment is calculated on prorata basis on straight-line method/ written down method as applicable, using the useful lives as technically assessed by the management which is as below with respect to significant class of property, plant and equipments. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Name of assets |
Useful life as |
Life in years as per |
assessed by the |
schedule II of |
|
management |
Companies Act, 2013 |
|
Building |
||
Factory building |
30 |
30 |
Non-factory building |
60 |
60 |
Computers including |
3-6 |
3-6 |
networking equipments |
||
Plant and machinery |
||
Plant and machinery |
8-15 |
15 |
Dies and tools |
3-6 |
15 |
Furniture and fittings |
10 |
10 |
Office equipment |
5 |
5 |
Vehicles |
8 |
8 |
The useful lives have been determined based on technical evaluation done by the management in order to reflect the actual usage of assets.
Lease hold improvements are depreciated on straight line basis over shorter of the asset''s useful life and their lease term. Leasehold land is amortized on a straight line basis over the unexpired period of their respective lease period.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in profit or loss as incurred.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in notes.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
Intangible assets acquired separately are measured on initial recognition at cost. Cost of intangible assets acquired in business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding capitalized development cost, are not capitalized and the related expenditure is reflected in statement of Profit and Loss in the period in which the expenditure is incurred. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss.
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite 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.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Gains or losses arising from disposal of the intangible assets are measured as the difference between the net disposal proceeds and the carrying amount of
the asset and are recognized in the statement of profit and loss when the assets are disposed off.
Intangible assets are amortized on a straight line basis over their estimated useful life as under:
Assets |
Useful life |
Trademark |
10 years |
Technical know how |
6 years |
Computer software |
3-6 years |
Customer relationship |
10 years |
Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can demonstrate all the following:
i) The technical feasibility of completing the intangible asset so that it will be available for use or sale;
ii) Its intention to complete the asset;
iii) Its ability to use or sale the asset;
iv) How the asset will generate future economic benefits;
v) The availability of adequate resources to complete the development and to use or sale the asset; and
vi) The ability to measure reliably the expenditure attributable to the intangible asset during development.
Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized on straight line basis over the estimated useful life. During the period of development, the asset is tested for impairment annually.
Trademarks
Brand and Trademarks acquired in business combination are initially recognised at fair value at the date of acquisition. Following initial recognition, brand and trademark are carried at the above recognised value less accumulated amortization and accumulated impairment losses, if any.
Customer relationship
Customer relationship acquired in business combination are initially recognised at fair value at the date of acquisition. Following initial recognition, customer relationship is carried at the above recognised value less accumulated amortization and accumulated impairment losses, if any. They are amortised on a straight line basis over their estimated useful life of 10 years assessed by the management.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the fair value of net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in other comprehensive income and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognizes the gain directly in equity as capital reserve, without routing the same through other comprehensive income. Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Company to the previous owners of the acquiree, and equity interests issued by the Company.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses, if any. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company''s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units.
A cash generating unit to which goodwill has been allocated is tested for impairment annually or when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.
Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed off, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained
2.06 Impairment of non- financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If
any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of four to five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the forecast period. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the Company operates, or for the market in which the asset is used.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit and loss, except for properties previously revalued with the revaluation surplus taken to OCI. For such properties, the impairment is recognised in OCI up to the amount of any previous revaluation surplus.
For assets excluding goodwill and intangible assets having indefinite life, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication
exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually as at March 31 or when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.
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
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss)
- those measured at amortized cost
The classification of financial assets at initial recognition depends on the financial asset''s contractual cash flow characteristics and the Company''s business model for managing them.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial
asset''s contractual cash flow characteristics and the Group''s business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under Ind AS 115. Refer to the accounting policies in section "Revenue from contracts with customersâ.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ''solely payments of principal and interest (SPPI)'' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
The Company''s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling.
Subsequent measurement
For purposes of subsequent measurement financial assets are classified in following categories:
- Financial assets at amortised cost (debt instruments)
- Financial assets at fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and losses (debt instruments)
- Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
- Financial assets at fair value through profit or loss Financial assets at amortised cost (debt instruments)
A ''financial asset'' is measured at the amortised cost if both the following conditions are met: a) Business Model Test : The objective is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realize its fair value changes) and;
b) Cash flow characteristics test: The contractual terms of the financial asset give rise on specific dates to cash flows that are solely payments of principal and interest on principal amount outstanding.
This category is most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of EIR. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. The EIR amortization is included in other income in profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
Financial assets at fair value through OCI (FVTOCI) (debt instruments)
A ''financial asset'' is classified as at the FVTOCI if both of the following criteria are met:
a) Business Model Test : The objective of financial instrument is achieved by both collecting contractual cash flows and selling the financial assets; and
b) Cash flow characteristics test: The contractual terms of the Debt instrument give rise on specific dates to cash flows that are solely payments of principal and interest on principal amount outstanding.
Debt instrument included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI), except for the recognition of interest income, impairment gains or losses and foreign exchange gains or losses which are recognized in statement of profit and loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value changes recognised in OCI is reclassified from the equity to profit or loss.
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the statement of profit and loss. This category includes derivative instruments and listed equity investments which the Company had not
irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are recognised in the statement of profit and loss when the right of payment has been established.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under Ind AS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit and loss when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
Embedded Derivatives
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Company''s statement of financial position) when:
- The rights to receive cash flows from the asset have expired, or
- the Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a "pass throughâ arrangement and either;
(a) the Company has transferred substantially all the risks and rewards of the asset, or
(b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with IND AS 109, the Company applies expected credit losses( ECL) model for measurement and recognition of impairment loss on the following financial asset and credit risk exposure
- Financial assets measured at amortized cost;
- Financial assets measured at fair value through other comprehensive income(FVTOCI);
- Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115
- Loan commitments which are not measured as at FVTPL
- Financial guarantee contracts which are not measured as at FVTPL
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash
flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For recognition of impairment loss on financial assets other than mentioned below and risk exposure, the Company determines that 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. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). 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
The Company follows "simplified approachâ for recognition of impairment loss allowance on:
- Trade receivables or contract revenue receivables;
- All lease receivables resulting from the transactions within the scope of Ind AS 116 -Leases
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss. This amount is reflected under the head ''other expenses'' in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
(a) Financial assets measured as at amortised cost, contractual revenue receivables and lease receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(b) Loan commitments and financial guarantee contracts:
ECL is presented as a provision in the balance sheet, i.e. as a liability.
(c) Debt instruments measured at FVTOCI: For debt instruments measured at FVTOCI, the expected credit losses do not reduce the carrying amount in the balance sheet, which remains at fair value. Instead, an amount equal to the allowance that would arise if the asset was measured at amortised cost is recognised in other comprehensive income as the accumulated impairment amount.
(ii) Financial liabilities:
Initial recognition and measurement Financial liabilities are classified at initial recognition as financial liabilities at fair value through profit or loss, loans and borrowings, and payables, net of directly attributable transaction costs. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company financial liabilities include loans and borrowings, trade payables, trade deposits, retention money, liabilities towards services, sales incentive and other payables.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
(i) Financial liabilities at fair value through profit or loss
(ii) Financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationship as defined by Ind AS 109. The separated embedded derivate are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the statement of profit and loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in IND AS 109 are satisfied. For liabilities designated as
FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to profit and loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the statement of profit or loss. the Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities at amortised cost (Loans and borrowings)
After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost using the Effective interest rate method. Gains and losses are recognized in profit or loss when the liabilities are derecognised as well as through the Effective interest rate amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the Effective interest rate. The Effective interest rate amortization is included as finance costs in the statement of profit and loss.
Trade Payables
These amounts represents liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually payable basis varying trade term. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at fair value and subsequently measured at amortized cost using Effective interest rate method.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.
Offsetting of financial instruments
Financials assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Reclassification of financial assets/ financial liabilities
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
The following table shows various reclassification and how they are accounted for:
Original classification |
Revised classification |
Accounting treatment |
Amortised cost |
FVTPL |
Fair value is measured at reclassification date. Difference between previous amortized cost and fair value is recognised in profit or loss. |
FVTPL |
Amortised Cost |
Fair value at reclassification date becomes its new gross carrying amount. EIR is calculated based on the new gross carrying amount. |
Amortised cost |
FVTOCI |
Fair value is measured at reclassification date. Difference between previous amortised cost and fair value is recognised in OCI. No change in EIR due to reclassification. |
FVTOCI |
Amortised cost |
Fair value at reclassification date becomes its new amortised cost carrying amount. However, cumulative gain or loss in OCI is adjusted against fair value. Consequently, the asset is measured as if it had always been measured at amortised cost. |
Original |
Revised |
Accounting treatment |
classification |
classification |
|
FVTPL |
FVTOCI |
Fair value at reclassification date becomes its new carrying amount. No other adjustment is required. |
FVTOCI |
FVTPL |
Assets continue to be measured at fair value. Cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss the reclassification date. |
2.08 Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The purchase contracts that meet the definition of a derivative under Ind AS 109 are recognised in the statement of profit and loss. Commodity contracts that are entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the Company''s expected purchase, sale or usage requirements are held at cost.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in OCI and later reclassified to profit or loss when the hedge item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability.
For the purpose of hedge accounting, hedges are classified as:
(i) Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment
(ii) Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment
(iii) Hedges of a net investment in a foreign operation Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:
The change in the fair value of a hedging instrument is recognised in the statement of profit and loss as finance costs. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the statement of profit and loss as finance costs. For fair value hedges relating to items carried at amortised cost, any adjustment to carrying value is amortised through profit or loss over the remaining term of the hedge using the EIR method. EIR amortization may begin as soon as an adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.
If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss. When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit and loss.
(ii) Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit and loss.
The ineffective portion relating to foreign currency contracts is recognised in finance costs and the ineffective portion relating to commodity contracts is recognised in other income or expenses. Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. When the hedged item is the cost of a non-financial asset or nonfinancial liability, the amounts recognised as OCI are transferred to the initial carrying amount of the nonfinancial asset or liability.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met.
2.09 Compound financial instruments
Compound financial instruments issued by the Company comprise cumulative redeemable preference shares denominated in Ruppees that are mandatorily redeemable at a fixed or determinable amount at a fixed
or future date and the payment of dividends is discretionary. Compound financial instruments are separated into liability and equity components based on the terms of the contract.
On issuance of the compound financial instruments, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or redemption. The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity since conversion option meets Ind AS 32 criteria for fixed to fixed classification.
Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not remeasured in subsequent years. Transaction costs are apportioned between the liability and equity components of the convertible preference shares based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
2.10 Investment in Subsidiaries, associates and joint venture
The investment in subsidiary, associates and Joint venture are carried at cost as per IND AS 27. The Company regardless of the nature of its involvement with an entity (the investee), determines whether it is a parent by assessing whether it controls the investee. The Company controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Thus, the Company controls an investee if and only if it has all the following:
(a) power over the investee;
(b) exposure, or rights, to variable returns from its involvement with the investee and
(c) the ability to use its power over the investee to affect the amount of the returns.
Investments are accounted in accordance with IND AS 105 when they are classified as held for sale. On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss
a) Basis of valuation:
i) Inventories other than scrap materials are valued at lower of cost and net realizable value after providing cost of obsolescence, if any. The comparison of cost and net realizable value is made on an item-by-item basis.
i) Cost of raw materials has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
ii) Cost of finished goods and work-in-progress includes direct labour and an appropriate share of fixed and variable production overheads. Fixed production overheads are allocated on the basis of normal capacity of production facilities. Cost is determined on moving weighted average basis
iii) Cost of traded goods has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
iv) 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. The net realisable value of work-inprogress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realisable value.
v) Appropriate adjustments are made to the carrying value of damaged, slow moving and obsolete inventories based on management''s current best estimate.
2.12 Non-current assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Such non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Any expected loss is recognized immediately in the statement of profit and loss.
The criteria for held for sale classification is regarded as met only when the assets is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets, its sale is highly probable; and it will genuinely be sold. The Company treats sale of the asset to be highly probable
when:
i) The appropriate level of management is committed to a plan to sell the asset
ii) An active programme to locate a buyer and complete the plan has been initiated (if applicable)
iii) The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
iv) The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
v) Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition and the assets must have actively marketed for sale at a price that is reasonable in relation to its current fair value. Actions required to complete the sale should indicate that it is unlikely that significant changes to the plan to sale these assets will be made. 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.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortized. Assets and liabilities classified as held for sale are presented separately as current items in the balance sheet.
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Tax expense for the year comprises of current tax and deferred tax.
a) Current income tax
Mar 31, 2021
1. CORPORATE INFORMATION
Minda Industries Limited is a public Company domiciled and headquartered in India. It was incorporated on September 16, 1992 under the Companies Act, 1956 and its shares are listed on the National Stock Exchange of India Limited and BSE Limited having its registered office at B64/1 Wazirpur, Industrial Area, Delhi-1 10052, India.
The Company is engaged in the business of manufacturing of auto components including auto electrical parts and its accessories and caters to both domestic and international markets.
a. Statement of compliance
The standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) notified under Section 133 of Companies Act, 2013, (the ''Act'') and other relevant provisions of the Act.
The standalone financial statements were authorised for issue by the Company''s Board of Directors on June 13, 2021. Details of the Company''s accounting policies are included in Note 2(b).
b. Functional and presentation currency
These standalone financial statements are
presented in Indian Rupees (''), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest Crores, unless otherwise indicated.
The standalone financial statements have been prepared on the historical cost basis except for the following items:
(a) Certain financial assets and liabilities (including derivative financial instruments) |
Fair value |
(b) Net defined benefit (asset)/ liability |
Fair value of plan assets less present value of defined benefit obligations |
d. Use of estimates and judgements
In preparing the standalone financial statements, management has made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. Critical estimates and judgement This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the standalone financial statements.
Areas involving critical estimates or judgements are:
- Estimation of current tax expense and payable -Note 44
- Estimation of fair value of unlisted securities - Note 53
- Estimation of defined benefit obligation - Note 43
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources - Note 39
- Lease- Note 47
- Impairment of Financial Assets
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
A number of the Company''s accounting policies and disclosures require measurement of fair values, for both financial and non-financial assets and liabilities.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the
(All amounts in Indian '' Crore, unless otherwise stated)
fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
- Note 48 - share-based payment
- Note 53- fair value measurements
2. (B) SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to the period presented in these standalone financial statements.
a. Foreign currency transactions:
Transactions in foreign currencies are initially recorded into the functional currency of the Company at the exchange rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange at the reporting date.
Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction. Exchange differences are recognised in profit or loss, except exchange differences arising from the translation of the following items which are recognised in OCI
- equity investments at fair value through OCI (FVOCI);
- qualifying cash flow hedges to the extent that the hedges are effective.
b. Financial instruments:i. Initial Recognition and Measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions
of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
ii. Classification and subsequent measurement and gain and losses Financial assets
On initial recognition, a financial asset is classified as measured at:
Financial Assets at FVPL |
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss. |
Financial Assets at amortized cost |
These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gains or loss or derecognition is are recognized in profit or loss. |
Debt investments at FVOCI |
These assets are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other income and net gains and losses accumulated in OCI are reclassified to profit or loss. |
Equity investments at FVOCI |
These assets are subsequently measured at fair value. Dividend income are recognized in profit or loss unless dividend clearly represents a recovery of part of cost of investment. Other income and net gains and losses are recognized in OCI and are not reclassified to profit or loss. |
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.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect 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 on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment-byinvestment basis.
Investments in Subsidiaries, Associates and Joint Ventures:
Investments in Subsidiaries, Associates and Joint Ventures are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, associates and joint venture, the difference between net disposal proceeds and the carrying amounts are recognized in the Standalone Statement of Profit and Loss.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL. Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at 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 recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial
liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
iv. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
v. Derivative financial instruments and hedge accounting
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.
vi. Financial guarantee contracts
The Company on a case to case basis elects to account for financial guarantee contracts as a financial instrument or as an insurance contract, as specified in Ind AS 109 on Financial Instruments and Ind AS 104 on Insurance Contracts. The Company has regarded all its financial guarantee contracts as insurance contracts. At the end of each reporting period the Company performs a liability adequacy test, (i.e. it assesses the likelihood of a payout based on current undiscounted estimates of future cash flows), and any deficiency is recognized in profit or loss.
vii. Compound financial instruments
Compound financial instruments issued by the Company comprise cumulative redeemable preference shares denominated in '' that are mandatorily redeemable at a fixed or determinable amount at a fixed or future date and the payment of dividends is discretionary. The liability component of a compound
financial instrument is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequently. Interest related to the financial liability is recognised in profit or loss (unless it qualifies for inclusion in the cost of an asset).
c. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is treated as current when it is:
(a) expected to be realised in, or is intended to be sold or consumed in Company''s normal operating cycle;
(b) held primarily for the purpose of being traded;
(c) expected to be realised within twelve months after the reporting date; or
(d) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
All other assets are classified as non-current.
A Liability is current when:
(a) it is expected to be settled in Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within twelve months after the reporting date; or
(d) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
All other liabilities are classified as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The Company has identified twelve months as its operating cycle.
d. Property, plant and equipmenti. Initial Recognition and Measurement
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located. The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
iii. Depreciation
Depreciation on plant and equipment, tools and dies and on other tangible property, plant and equipment is provided on SLM/ WDV basis, based on the rates as per useful life prescribed in Schedule II to the Companies
Act, 2013 except in the case of tools and dies, the useful life based on technical advice is 3 to 6 years.
Leasehold land and leasehold improvements are amortised on a straight line basis over the period of lease or their useful lives, whichever is shorter. Freehold land is not depreciated.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (upto) the date on which asset is ready for use (disposed off).
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. In case of a revision, the unamortized depreciable amount is charged over the revised remaining useful life.
Losses arising from retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognized in the Standalone Statement of Profit and Loss.
e. Intangible assets
Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortization and accumulated impairment loss.
Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it relates.
Intangible assets are amortised in the Statement of Profit or Loss over their estimated useful lives, from the date that they are available for use based on the expected pattern of consumption of economic benefits of the asset. Accordingly, at present, these are being amortised on straight line basis. Intangible assets are amortised over the best estimate of the respective useful lives as under: -
i) Technical know-how: Amortized over the period of 6 years or over the period of agreement, as applicable.
ii) Computer software: Amortized over the period of 6 years.
iii) Trademark: Amortized over the period of 10 years
iv) Customer relationship: Amortized over the period of 10 years or over the period of agreement, as applicable.
Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate. An intangible
asset is derecognized on disposal or when no future economic benefits are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Standalone Statement of Profit and Loss.
Internally generated: Research and development
a) Expenditure on research activities is recognised in profit or loss as incurred.
b) Development expenditure is capitalised as part of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in profit or loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortisation and any accumulated impairment losses.
i. Impairment of financial instruments
The Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost.
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
The Company measures loss allowances at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company''s historical experience and informed credit assessment and including forward-looking information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the financial asset is 90 days or more past due.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.
ii. Impairment of non-financial assets
The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment.
If any such indication exists, then the asset''s recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash- generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the Standalone Statement of Profit and Loss. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets of the CGU (or group of CGUs) on a pro rata basis.
vAn impairment loss in respect of goodwill is not subsequently reversed. In respect of other assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
g. Non-current assets or disposal group held for sale
Non-current assets, or disposal groups comprising assets and liabilities are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any resultant loss on a disposal group is allocated first to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, and employee benefit assets, which continue to be measured in accordance with the Company''s other accounting policies. Losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognised in profit or loss.
Once classified as held-for-sale, intangible assets, property and plant and equipment are no longer amortised or depreciated.
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
i. Leases
(i) Determining whether a contract contains lease
At inception of a contract, the Company determines whether the contract is, or contains, a lease. The contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset or assets for a period of time in exchange for consideration, even if that right is not explicitly specified in a contract.
At inception or on reassessment of a contract that contains lease component and one or more additional lease or non-lease components, the Company separates payments and other consideration required by the contract into those for each lease component on the basis of their relative stand-alone price and those for non-lease components on the basis of their relative aggregate stand-alone price. If the Company concludes that it is impracticable to separate the payments reliably, then right-of-use asset and Lease liability are recognised
at an amount equal to the present value of future lease payments; subsequently the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Company''s incremental borrowing rate.
The previous determination pursuant to Ind AS 17 and its ''Appendix C'' of whether a contract is a lease has been maintained for existing contracts.
(ii) Company as a lessee
At inception, the Company assesses whether a contract is or contains a lease. This assessment involves the exercise of judgement about whether it depends on an identified asset, whether the Company obtains substantially all the economic benefits from the use of that asset, and whether the Company has the right to direct the use of that asset.
The Company has elected to separate lease and non-lease components of contracts, wherever possible.
The Company recognizes a right-of-use (ROU) asset and a lease liability at the transition date/ lease commencement date. The right-of-use asset is initially measured based on the present value of future lease payments, plus initial direct costs, and cost to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, and lease payments made at or before the commencement date, less any incentives received. The right-of-use asset is depreciated over the shorter of the lease term or the useful life of the underlying asset. The right-of-use asset is subject to testing for impairment if there is an indicator for impairment.
At the commencement date, Company measures the lease liability at the present value of the future lease payments that are not yet paid at that date discounted using interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. Generally, the Company''s uses its incremental borrowing rate as the discount rate. 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 the 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.
Contingent rents payments are recognised as an expense in the period in which they are incurred. Lease payments generally include fixed payments and variable payments that depend on an index (such as an inflation index). When the lease contains an extension or purchase option that the Company considers reasonably certain to be exercised, the cost of the option is included in the lease payments.
The Company presents right-of-use assets that do not meet the definition of investment property and lease liabilities in separately from other assets/liabilities in the balance sheet.
The Company has elected not to recognize right-of-use assets and liabilities for leases where the total lease term is less than or equal to 12 months, or for leases of low value assets. The payments for such leases are recognized in the Standalone Statement of Profit and Loss on a straight-line basis over the lease term.
(iii) Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an underlying assets are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease unless the payments are structured to increase in line with the general inflation to compensate for the lessor''s expected inflationary cost increase. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards
incidental to ownership of underlying asset is transferred from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Inventories which comprise raw materials, work-inprogress, finished goods, stock-in-trade, stores and spares, and loose tools are carried at the lower of cost and net realisable value.
Cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
In determining the cost, weighted average cost method is used. In the case of manufactured inventories and work in progress, fixed production overheads are allocated on the basis of normal capacity of production facilities.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
The net realisable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realisable value.
The comparison of cost and net realisable value is made on an item-by-item basis.
Inventories in transit are valued at cost.
Appropriate adjustments are made to the carrying value of damaged, slow moving and obsolete inventories based on management''s current best estimate.
k. Revenue recognition(i) Revenue from contract with customer
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to
which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer.
Sale of goods (including moulds and scrap)
Revenue from sale of goods is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the equipment. The normal credit term is upto 90 days.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated (e.g., warranties, customer loyalty points). In determining the transaction price for the sale of equipment, the Company considers the effects of variable consideration, the existence of significant financing components, noncash consideration, and consideration payable to the customer (if any). Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers except for sales till June 30, 2017 where excise duty is included in the revenue.
Variable Consideration
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customers. Where customers are provided with discounts, rebates, etc., such discounts and rebates will give rise to variable consideration. The Company follows the most likely amount method in estimating the amount of variable consideration.
(ii) Management fees, designing fees and service revenue is recognized on an accrual basis as and when the services are rendered in accordance with the terms of the underlying contract.
(iii) Interest income is recognised using the effective interest method.
(iv) Dividend income is recognised when the right to receive dividend is established.
(v) Royalty income is recognised based on the terms of the underlying agreement.
(vi) Claims lodged with insurance companies are accounted for on an accrual basis, to the extent these are measurable and the ultimate collection is reasonably certain.
(vii) Export entitlement under Duty Entitlement Passbook Scheme (''DEPB'') is recognized on accrual basis and when the right to entitlement has been established.
(viii) Share of profit from partnership firms is recognized on accrual basis.
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivables
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (b) Financial instruments - initial recognition and subsequent measurement.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
Government grants are recognized where there is reasonable assurance that the grant will be received,
and all the attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
When the Company receives grants of non-monetary assets, the assets 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. When loans or similar assistance are provided by Governments related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as Government grant. The loan or assistance is initially recognized and measured at fair value and the Government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
m. Provisions (other than employee benefits)
(i) General
A provision is recognized if, as a result of a past event, the Company has a present obligation (legal or constructive) that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the legal or contractual obligation. If the effect of time value of money is material, provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre- tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
(ii) Warranties
Warranty costs are estimated on the basis of a technical evaluation and past experience. Provision is made for estimated liability in respect of warranty costs in the year of sale of goods and is included in the Standalone Statement of Profit and Loss. The estimates
used for accounting for warranty costs are reviewed periodically and revisions are made, as and when required.
n. Retirement and other employee benefits
(i) Short term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
(ii) Share-based payment transactions (Equity settled)
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised, together with a corresponding increase in employee stock option (ESOP) reserves in other equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense.
The amount recognised as expense is based on the estimate of the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and nonmarket vesting conditions at the vesting date. For share-based payment awards with nonvesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
(iii) Defined contribution plans
A defined contribution plan is a postemployment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund, employee''s state insurance corporation and superannuation fund which is a defined contribution plan. The Company''s contribution is recognized as
an expense in the Standalone Statement of Profit and Loss during the period in which the employee renders the related service.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iv) Defined benefit plans
The Company''s gratuity benefit scheme is a defined benefit plan. The Company''s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of plan assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis. The calculation of the Company''s obligation is performed annually by a qualified actuary using the projected unit credit method.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest), are recognised immediately in the balance sheet with a corresponding debit or credit to other equity through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent period.
The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (''past service cost'' or ''past service gain'') or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
The Company''s gratuity fund is administered and managed by the Life Insurance Corporation of India ("LICâ).
(v) Other long term employee benefits Compensated absences
The employees can carry-forward a portion of the unutilised accrued compensated absences and utilise it in future service periods or receive cash compensation on termination of employment. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilized wholly within twelve months after the end of such period, the benefit to such extent is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method.
Actuarial gains and losses are recognized in the Standalone Statement of Profit and Loss.
(vi) Termination benefits
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the
rQnnrtinn rlo a
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Tax benefits of deductions earned on exercise of employee stock options in excess of compensation charged to income are credited to other comprehensive income.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that affects neither accounting nor taxable profit or loss at the time of the transaction;
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate. Minimum alternate tax (MAT) paid in a year is charged to the Standalone Statement of Profit and Loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset, it is created by way of credit to the Standalone Statement of Profit and Loss and shown as part of deferred tax asset. The Company reviews the "MAT credit entitlementâ asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average numbers of equity shares outstanding during the year are adjusted for events of bonus issue and share split that have changed the numbers of equity share outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed to be converted as of the beginning of the period, unless they have been issued at a later date.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and shortterm deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and shortterm deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
r. Cash dividend to equity holders
The Company recognises a liability to make cash to equity holders when the distribution is authorised, and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity. Interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
s. Business Combination, Goodwill and intangible assets
Business combinations, other than through common control transactions, are accounted for using the purchase (acquisition) method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. The cost of acquisition also includes the fair value of any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition.
Business combinations through common control transactions are accounted on a pooling of interest method. Under pooling of interest method, the assets and liabilities of the combining entities are reflected at their carrying amounts, with adjustments only to harmonise accounting policies.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for noncontrolling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in Other Comprehensive Income (OCI) and accumulated in other equity as capital reserve. However, if there is no clear evidence
of bargain purchase, the entity recognises the gain directly in other equity as capital reserve, without routing the same through OCI. Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Company to the previous owners of the acquiree, and equity interests issued by the Company.
Consideration transferred also includes the fair value of any contingent consideration. Consideration
Mar 31, 2018
The accounting policies set out below have been applied consistently to the period presented in these financial statements.
a. Foreign currency transactions:
Transactions in foreign currencies are translated into the functional currency of the Company at the exchange rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange differences are recognised in profit or loss, except exchange differences arising from the translation of the following items which are recognised in OCI:
- equity investments at fair value through OCI (FVOCI);
- qualifying cash flow hedges to the extent that the hedges are effective.
b. Financial instruments:
i. Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
ii. Classification and subsequent measurement and gain and losses Financial assets
On initial recognition, a financial asset is classified as measured at:
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.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect 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 on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investmentâs fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at 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 recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
iii. Derecognition Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
iv. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
v. Derivative financial instruments and hedge accounting
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.
vi. Financial guarantee contracts
The Company on a case to case basis elects to account for financial guarantee contracts as a financial instrument or as an insurance contract, as specified in Ind AS 109 on Financial Instruments and Ind AS 104 on Insurance Contracts. The Company has regarded all its financial guarantee contracts as insurance contracts. At the end of each reporting period the Company performs a liability adequacy test, (i.e. it assesses the likelihood of a pay-out based on current undiscounted estimates of future cash flows), and any deficiency is recognized in profit or loss.
vii. Compound financial instruments
Compound financial instruments issued by the Company comprise cumulative redeemable preference shares denominated in INR that are mandatory redeemable at a Axed or determinable amount at a Axed or future date and the payment of dividends is discretionary.
The liability component of a compound financial instrument is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequently
Interest related to the financial liability is recognised in profit or loss (unless it qualifies for inclusion in the cost of an asset).
c. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is treated as current when it is:
(a) expected to be realised in, or is intended to be sold or consumed in Companyâs normal operating cycle;
(b) held primarily for the purpose of being traded;
(c) expected to be realised within 12 months after the reporting date; or
(d) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
All other assets are classified as non-current.
A Liability is current when:
(a) it is expected to be settled in Companyâs normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date; or
(d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The Company has identified twelve months as its operating cycle.
d. Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
ii. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment (see Note 55).
Accordingly, all items of property, plant and equipment as at 1 April 2016 and subsequent deletion thereof, have been disclosed at carrying values(net of accumulated depreciation/ impairment asat31March 2017).
iii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
iv. Depreciation
Depreciation on plant and equipment and tools and dies is provided on SLM/WDV basis and on other tangible property, plant and equipment on SLM/WDV basis, based on the rates as per useful life prescribed in Schedule II to the Companies Act, 2013 except in the case of tools and dies, the life based on technical advice is 6 years.
Leasehold land and leasehold improvements are amortised on a straight line basis over the period of lease or their useful lives, whichever is shorter. Freehold land is not depreciated.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (upto) the date on which asset is ready for use (disposed of).
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
^ case of a revision, the unamortized depreciable amount is charged over the revised remaining useful life.
Losses arising from retirement or gains or losses arising from disposal of Axed assets which are carried at cost are recognized in the Statement of Profit and Loss.
e. Other intangible assets
Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortization and any accumulated impairment loss.
Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it relates.
Intangible assets are amortised in the Statement of Profit or Loss over their estimated useful lives, from the date that they are available for use based on the expected pattern of consumption of economic benefits of the asset. Accordingly, at present, these are being amortised on straight line basis. Intangible assets are amortised over the best estimate of the resepective useful lives as under:-
i) Technical know-how: Amortized over the period of agreement.
ii) Computer software: Amortized over the period of 6 years.
Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.
An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss.
Internally generated: Research and development
a) Expenditure on research activities is recognised in profit or loss as incurred.
b) Development expenditure is capitalised as part of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in profit or loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortisation and any accumulated impairment losses.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such intangible assets. Accordingly, all items of other intangible assets as at 1 April 2016 and subsequent deletion thereof, have been disclosed at carrying values(net of accumulated depreciation/ impairment asat31March 2017).
f. Impairment
i. Impairment of financial instruments
The Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost.
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is âcredit-impairedâ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
The Company measures loss allowances at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Companyâs historical experience and informed credit assessment and including forward looking information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the financial asset is 90 days or more past due.
Expected credit losses are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of amounts due.
ii. Impairment of non-financial assets
The Companyâs non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assetâs recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets of the CGU (or group of CGUs) on a pro rata basis.
An impairment loss in respect of goodwill is not subsequently reversed. In respect of other assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
g. Non-current assets or disposal group held for sale
Non-current assets, or disposal groups comprising assets and liabilities are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any resultant loss on a disposal group is allocated first to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, and employee benefit assets, which continue to be measured in accordance with the Companyâs other accounting policies. Losses on initial classification as held for sale and subsequent gains and losses on remeasurement are recognised in profit or loss.
Once classified as held-for-sale, intangible assets, property and plant and equipment are no longer amortised or depreciated.
h. Borrowing cost
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
i. Leases
i. Determining whether an arrangement contains a lease
At inception of an arrangement, it is determined whether the arrangement is or contains a lease.
At inception or on reassessment of the arrangement that contains a lease, the payments and other consideration required by such an arrangement are separated into those for the lease and those for other elements on the basis of their relative fair values. If it is concluded for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. The liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the incremental borrowing rate.
ii. Assets held under leases
Leases of property, plant and equipment that transfer to the Company substantially all the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to similar owned assets.
Assets held under leases that do not transfer to the Company substantially all the risks and rewards of ownership (i.e. operating leases) are not recognised in the Companyâs Balance Sheet.
iii. Lease payments
Payments made under operating leases are generally recognised in profit or loss on a straight-line basis over the term of the lease unless such payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. Lease incentives received are recognised as an integral part of the total lease expense over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
j. Inventories
Inventories which comprise raw materials, work-in-progress, finished goods, stock-in-trade, stores and spares, and loose tools are carried at the lower of cost and net realisable value.
Cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
In determining the cost, weighted average cost method is used. In the case of manufactured inventories and work in progress, fixed production overheads are allocated on the basis of normal capacity of production facilities.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
The net realisable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realisable value.
The comparison of cost and net realisable value is made on an item-by-item basis.
Finished goods inventory is inclusive of excise duty as at 31 March 2017and 1 April 2016.
Inventories in transit are valued at cost.
Appropriate adjustments are made to the carrying value of damaged, slow moving and obsolete inventories based on managementâs current best estimate.
k. Revenue recognition
(i) Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. The amount recognized as revenue is inclusive of excise duty and exclusive of sales tax, value added taxes (VAT), goods and services tax (GST). This inter alia involves discounting of the consideration due to the present value if payment extends beyond normal credit terms. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing effective control over, or managerial involvement with, the goods, and the amount of revenue can be measured reliably.
(ii) Management fees, designing fees and service revenue is recognized on an accrual basis as and when the services are rendered in accordance with the terms of the underlying contract.
(iii) Interest income is recognised using the effective interest method.
(iv) Dividend income is recognized when the right to receive dividend is established.
(v) Royalty income is recognised based on the terms of the underlying agreement.
(vi) Claims lodged with insurance companies are accounted for on an accrual basis, to the extent these are measurable and the ultimate collection is reasonably certain.
(vii) Export entitlement under Duty Entitlement Pass Book Scheme (âDEPBâ) is recognized on accrual basis and when the right to entitlement has been established.
(viii) Share of profit from partnership Arms is recognized on accrual basis.
l. Government grants
Government grants are recognized where there is reasonable assurance that the grant will be received and all the attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
When the Company receives grants of non-monetary assets, the assets 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. When loans or similar assistance are provided by Governments related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as Government grant. The loan or assistance is initially recognized and measured at fair value and the Government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
m. Provisions (other than employee benefits)
A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the legal or contractual obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Expected future operating losses are not provided for...
(i) Warranties
Warranty costs are estimated on the basis of a technical evaluation and past experience. Provision is made for estimated liability in respect of warranty costs in the year of sale of goods and is included in the statement of profit and loss. The estimates used for accounting for warranty costs are reviewed periodically and revisions are made, as and when required.
(ii) Contingencies
Provision in respect of loss contingencies relating to claims, litigation, assessment, fines, penalties, etc. are recognized when it is probable that a liability has been incurred, and the amount can be estimated reliably.
n. Employee benefits
(i) Short term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
(ii) Share-based payment transactions
The grant date fair value of equity settled share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as expense is based on the estimate of the number of awards for which the related service and nonmarket vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market vesting conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
(iii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund, employeeâs state insurance corporation and superannuation fund which is a defined contribution plan. 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.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iv) Defined benefit plans
The Companyâs gratuity benefit scheme is a defined benefit plan. The Companyâs net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of plan assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis. The calculation of the Companyâs obligation is performed annually by a qualified actuary using the projected unit credit method.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest), are recognised in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (âpast service costâ or âpast service gainâ) or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
The Companyâs gratuity fund is administered and managed by the Life Insurance Corporation of India (âLICâ).
(v) Other long term employee benefits Compensated absences
The employees can carry-forward a portion of the unutilised accrued compensated absences and utilise it in future service periods or receive cash compensation on termination of employment. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilized wholly within twelve months after the end of such period, the benefit to such extent is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method.
Actuarial gains and losses are recognized in the Statement of Profit and Loss.
(vi) Termination benefits
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.
o. Income taxes
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Tax benefits of deductions earned on exercise of employee stock options in excess of compensation charged to income are credited to other comprehensive income.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that affects neither accounting nor taxable profit or loss at the time of the transaction;
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate.
Minimum Alternative Tax (MAT) is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset the said asset is created by way of credit to the statement of profit and loss and included in deferred tax assets. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.
p. Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average numbers of equity shares outstanding during the year are adjusted for events of bonus issue and share split. For the purpose of calculating diluted earnings/ (loss) per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed to be converted as of the beginning of the period, unless they have been issued at a later date.
q. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
r. Recent accounting pronouncement
Standards issued but not yet effective
On 28 March 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendments Rules, 2018 containing appendix B to Ind AS 21, foreign currency transactions and advance consideration which clarifies the date of transaction for the purpose of determining the exchange rate to use on initial recognition of the related assets, expense or income, when an entity has received or paid advance consideration in a foreign currency.The amendment will come into force from 1 April 2018 and the Company is in the process of evaluating the impact on the standalone financial statements.
Ind AS 115, Revenue from contracts with customers:
On 28 March 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from contract with customers. The core principle of the new standard is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Under Ind AS 115, an entity recognizes revenue when (or as) a performance obligation is satisfied, i.e. when âcontrolâ of the goods or services underlying the particular performance obligation is transferred to the customer.
Moreover, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1 April 2018. The Company will adopt the standard on 1 April 2018.
The Company is in process of evaluating the impact on the standalone financial statements.
Mar 31, 2017
1. Company overview
Minda Industries Limited is a public company domiciled and headquartered in India. It was incorporated on 16 September 1992 under the Companies Act, 1956 and its shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Company is engaged in the business of manufacturing of auto components including auto electrical parts and its accessories. The Company caters to both domestic and international markets.
2. Significant accounting policies
The accounting policies set out below have been applied consistently to the period presented in these financial statements.
A. Basis of preparation of financial statements
These financial statements have been prepared and presented on the accrual basis of accounting and comply with the Accounting Standards referred to in section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Companies Act, 2013, pronouncements of the Institute of Chartered Accountants of India and other accounting principles generally accepted in India, to the extent applicable. The financial statements are presented in Indian rupees.
B. Use of estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
C. Current-non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
(a) it is expected to be realized in, or is intended for sale or consumption in, the Companyâs normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realized within 12 months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in the Companyâs normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date; or
(d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. The Companyâs operating cycle has been estimated not to exceed one year in all cases.
D. Fixed assets and depreciation
a) Tangible fixed assets
Tangible fixed assets except revalued assets are carried at cost of acquisition or construction less accumulated depreciation and/ or accumulated impairment loss, if any. The cost of an item of tangible fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price.
Subsequent expenditures related to an item of tangible fixed 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.
Tangible fixed assets acquired wholly or partly with specific grant/subsidy from government, if any, are recorded at the net acquisition cost to the Company.
Borrowing costs are interest and other costs (including exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred by the Company in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of those tangible fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.
Exchange differences (favourable as well as unfavorable) arising in respect of translation/settlement of long term foreign currency borrowings attributable to the acquisition of a depreciable asset are also included in the cost of the asset.
Tangible fixed assets under construction are disclosed as capital work-in-progress.
Depreciation on plant & machinery and tools & dies is provided on WDV basis and on other tangible fixed assets on SLM basis, based on the rates as per useful life prescribed in Schedule II to the Companies Act, 2013 except in the case of tools & dies, the life based on technical advice ranges between 3 to 8 years in case of additions up to 31 March 2015 and 6 years in case of additions from 1 April 2015 onwards.
Leasehold land and leasehold improvements are amortized on a straight line basis over the period of lease or their useful lives, whichever is shorter. Freehold land is not depreciated.
Depreciation is provided on a pro-rata basis i.e. from the date on which asset is ready for use.
Assets acquired under finance leases are depreciated over the shorter of the lease term and their useful lives (not being greater than the useful life envisaged in Schedule II to the Companies Act, 2013) unless it is reasonably certain that the Company will obtain ownership by the end of the lease term, in which case the depreciation rates applicable for similar assets owned by the Company are applied.
Assets costing up to H5,000 are fully depreciated in the year of purchase.
Depreciation for the year is recognized in the Statement of Profit and Loss.
The useful lives are reviewed by the management at each financial year-end and revised, if appropriate. In case of a revision, the unamortized depreciable amount is charged over the revised remaining useful life.
A fixed asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal.
Assets retired from active use and held for disposal, if any, are stated at the lower of their net book value and net realizable value and shown under âOther current assetsâ.
Losses arising from retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss.
b) Intangible fixed assets and amortization
(i) Goodwill
Goodwill that arises on the acquisition of a business is presented as an intangible asset. Goodwill arising from amalgamation is measured at cost less accumulated amortization and any accumulated impairment loss. Such goodwill is amortized over its estimated useful life or five years whichever is shorter. Goodwill arising on acquisition of a business is measured at cost less any accumulated impairment loss. Goodwill is tested for impairment annually.
(ii) Acquired intangible assets
Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortization and any accumulated impairment loss.
Subsequent expenditure is capitalized only when it increases the future economic benefits from the specific asset to which it relates.
Intangible assets are amortized in the Statement of Profit or Loss over their estimated useful lives, from the date that they are available for use based on the expected pattern of consumption of economic benefits of the asset. Accordingly, at present, these are being amortized on straight line basis. In accordance with the applicable Accounting Standard, the Company follows a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. However, if there is persuasive evidence that the useful life of an intangible asset is longer than ten years, it is amortized over the best estimate of its useful life. Such intangible assets and intangible assets that are not yet available for use are tested annually for impairment.
i) Technical know-how: Amortized over the period of agreement.
ii) Computer software: Amortized over the period of 6 years.
Amortization method and useful lives are reviewed at each reporting date. If the useful life of an asset is estimated to be significantly different from previous estimates, the Amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the Amortization method is changed to reflect the changed pattern.
An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss.
c) Capital work-in-progress
Fixed assets under construction and cost of assets not put to use before the year-end, are disclosed as capital work-in-progress.
E. Impairment
The carrying values of all assets are reviewed at each reporting date to determine if there is an indication of any impairment. If any indication exists, the assetâs recoverable amount is estimated. For assets that are not yet available for use, the recoverable amount is estimated at each reporting date. An impairment loss is recognized whenever the carrying amount of an asset, or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the Statement of Profit and Loss. An impairment loss is reversed if there is a change in the estimate used to determine the recoverable amount. An impairment loss is reversed only to the extent the carrying amount of the asset does not exceed the carrying amount that would have been determined net off depreciation or Amortization, if no impairment loss had been recognized .
F. Leases
a) Operating leases
Assets acquired under leases other than finance leases are classified as operating leases. The total lease rentals (including scheduled rental increases) in respect of an asset taken on operating lease are charged to the Statement of Profit and Loss on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern of the benefit.
b) Finance leases
Assets acquired under finance leases are recognized as an asset and a liability at the lower of the fair value of the leased assets at the inception of the lease and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability and charged to the Statement of Profit and Loss.
G. Investments
Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long term investments which is expected to be realized within 12 months after the reporting date is also presented under âcurrent assetsâ as âcurrent portion of long term investmentsâ in consonance with the current-non-current classification under Schedule III.
Long-term investments (including current portion thereof) are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment.
Current investments are carried at the lower of cost and fair value.
Any reductions in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.
Investment in the capital of a partnership firm is shown by reference to the capital of the firm on the balance sheet date. The Companyâs share of profit or loss in a partnership firm is recognized in the Statement of Profit and Loss as and when it accrues i.e. when it is computed and credited or debited to the capital/current/any other account of the Company in the books of the partnership firm.
H. Inventories
Inventories which comprise raw materials, work-in-progress, finished goods, stock-in-trade, stores and spares, and loose tools are carried at the lower of cost and net realizable value.
Cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
In determining the cost, weighted average cost method is used. In the case of manufactured inventories and work in progress, fixed production overheads are allocated on the basis of normal capacity of production facilities.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value.
The comparison of cost and net realizable value is made on an item-by-item basis.
Finished goods inventory is inclusive of excise duty.
Inventories in transit are valued at cost.
Appropriate adjustments are made to the carrying value of damaged, slow moving and obsolete inventories based on managementâs current best estimate.
I. Revenue recognition
a) Revenue from sale of goods in the course of ordinary activities is recognized when the property in the goods or all significant risks and rewards of ownership are transferred to the customer and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods and regarding its collection. The amount recognized as revenue is inclusive of excise duty and exclusive of sales tax, value added taxes (VAT) and is net of returns, trade discounts and quantity discounts.
b) Management fees, Designing fees and service revenue is recognized on an accrual basis as and when the services are rendered in accordance with the terms of the underlying contract.
c) Interest income is recognized on a time proportionate basis taking into account the amount outstanding and the interest rate applicable.
d) Dividend income is recognized when the right to receive dividend is established.
e) Royalty income is recognized based on the terms of the underlying agreement.
f) Claims lodged with insurance companies are accounted for on an accrual basis, to the extent these are measurable and the ultimate collection is reasonably certain.
g) Export entitlement under Duty Entitlement Pass Book Scheme (âDEPBâ) is recognized on accrual basis and when the right to entitlement has been established.
h) Share of profit from partnership firms is recognized on accrual basis.
J. Government grants
Government grants in the nature of promotersâ contribution are credited to capital reserve and treated as a part of shareholdersâ funds. Grants from State Government towards revenue expenditure are recognized as income either till the period of benefit expires or the financial cap is reached, whichever occurs earlier.
K. Research and development
a) Revenue expenditure on research and development is charged off under the respective heads of account in the year in which it is incurred.
b) Capitalized development expenditure is stated at cost less accumulated Amortization and impairment losses, if any. Fixed assets used for research and development are depreciated in accordance with the Companyâs policy as stated above.
L. Foreign currency transactions
(a) 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.
(b) Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. 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.
Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are, translated using the exchange rates that existed when such values were determined.
(c) Exchange differences
The Company accounts for exchange differences arising on translation / settlement of foreign currency monetary items as below:
i) Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalized and depreciated over the remaining useful life of the asset.
ii) Exchange differences arising on other long-term foreign currency monetary items are accumulated in the âForeign Currency Monetary Item Translation Difference Accountâ and amortized over the remaining life of the concerned monetary item.
iii) All other exchange differences are recognized as income or as expense in the period in which they arise.
For the purpose of i) and ii) above, the Company treats a foreign currency monetary item as âlong-term foreign currency monetary itemâ, if it has a term of 12 months or more at the date of its origination. In accordance with MCA circular dated 09 August 2012, exchange differences for this purpose, are total differences arising on long-term foreign currency monetary items for the period.
(d) Forward exchange contracts not intended for trading or speculation purposes
The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense / income over the life of the contract. Exchange differences on such contracts, except the contract which are long-term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on calculation or renewal of such forward exchange contract is also recognized as income or as expense for the period. Any gain/loss arising on forward contracts which are long-term foreign currency monetary items is recognized in accordance with paragraph (c) (i) above.
M. Provisions
A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognized at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. The provisions are measured on an undiscounted basis.
Warranties
Warranty costs are estimated on the basis of a technical evaluation and past experience. Provision is made for estimated liability in respect of warranty costs in the year of sale of goods and is included in the statement of profit and loss. The estimates used for accounting for warranty costs are reviewed periodically and revisions are made, as and when required.
Contingencies
Provision in respect of loss contingencies relating to claims, litigation, assessment, fines, penalties, etc. are recognized when it is probable that a liability has been incurred, and the amount can be estimated reliably.
N. Contingent liabilities and contingent assets
A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognized nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs.
O. Employee benefits
a) Short term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognized as an expense as the related service is rendered by employees.
b) Post-employment benefits Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund and ESI to Government administered fund which is a defined contribution plan. 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.
The Company makes specified monthly contribution towards superannuation fund which is managed by the Life Insurance Corporation of India (âLICâ).
Defined benefit plan
The Companyâs gratuity benefit scheme is a defined benefit plan. The Companyâs net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of plan assets is reduced from the gross obligation under the defined benefit plans, to recognize the obligation on net basis. The calculation of the Companyâs obligation is performed annually by a qualified actuary using the projected unit credit method.
The Company recognizes all actuarial gains and losses arising from defined benefit plans immediately in the Statement of Profit and Loss. All expenses related to defined benefit plans are recognized in employee benefits expense in the Statement of Profit and Loss. The Company recognizes gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.
The Companyâs gratuity fund is administered and managed by the Life Insurance Corporation of India (âLICâ).
c) Long term employee benefits Compensated absences
The employees can carry-forward a portion of the unutilized accrued compensated absences and utilize it in future service periods or receive cash compensation on termination of employment. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilized wholly within twelve months after the end of such period, the benefit to such extent is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method.
Actuarial gains and losses are recognized in the Statement of Profit and Loss.
d) Termination benefits
Termination benefits are recognized as an expense when, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
P. Income taxes
Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). Income-tax expense is recognized in Statement of Profit or Loss except that tax expense related to items recognized directly in reserves is also recognized in those reserves.
Current tax is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the applicable tax rates and tax laws. Deferred tax is recognized in respect of timing differences between taxable income and accounting income i.e. differences that originate in one period and are capable of reversal in one or more subsequent periods. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realized.
Minimum Alternative Tax (âMATâ) under the provisions of the Income-tax Act, 1961 is recognized as current tax in the Statement of Profit and Loss. The credit available under the Act in respect of MAT paid is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognized as an asset is reviewed at each balance sheet date and written down to the extent, the aforesaid convincing evidence no longer exists.
Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate.
Q. Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average numbers of equity shares outstanding during the year are adjusted for events of bonus issue and share split. For the purpose of calculating diluted earnings/ (loss) per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed to be converted as of the beginning of the period, unless they have been issued at a later date.
R. Cash and cash equivalents
Cash and cash equivalents include cash balance on hand, cash balances with bank, demand deposits with banks with original maturities of three months or less and highly liquid investments.
S. Employee share based payments
Equity settled stock options granted are accounted for under the intrinsic value method as per the accounting treatment prescribed by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, issued by Securities and Exchange Board of India and the Guidance Note on Employee Share-based Payments issued by the Institute of Chartered Accountants of India.
The Company has only one class of equity shares having par value of Rs,2/- per share (previous year Rs,10/- per share). Each shareholder is entitled to one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential assets, in proportion to their shareholding. During the year, the Board, declared an interim dividend of Rs, 1.2/- per equity share of Rs, 2/- each i.e. 60% (previous year Rs, 7/- per equity share of Rs, 10/- each i.e. 70% ). Further, the Board, in its meeting on 16 May 2017, has recommended a final dividend of Rs, 1/- per equity share for the financial year ended 31 March 2017. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on 29 August 2017 and, if approved, would result in a cash outflow of approximately Rs, 10.45 Crore including corporate dividend distribution tax.
The Company issued 3% cumulative redeemable preference shares of class âCâ having par value of Rs,10/- per share on 17 February 2010. Each Shareholder had right to receive fixed preferential dividend at a rate of 3% on the paid up capital of the Company. Preference shareholders also had right to receive all notices of general meetings of the Company but no right to vote at any meetings of the Company save to the extent and in the manner provided in the Companies Act, 2013. Preference shareholders neither had right to participate in any offer or invitation by way of right or otherwise to subscribe additional shares nor they had right to participate in any issue of bonus shares or shares issued by way of capitalization of reserves. The Board, in its meeting held on 7 February 2017, declared and paid the interim dividend of Rs, 0.30/- (previous year Rs, 0.30/-) per share. The preference shares were redeemed on 20 February 2017 at par.
(f) Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash for the period of five years immediately preceding the balance sheet date:
Equity shares includes
(i) 5,600,820 equity shares of Rs, 2/- each (previous year 1,120,164 equity shares of Rs,10/- each) fully paid up issued during the year 2011-12 for consideration other than cash to the shareholders of Minda Acoustic Limited, pursuant to the scheme of amalgamation.
(ii) 9,175,000 equity shares of Rs, 2/- each (previous year 1,835,000 equity shares of Rs,10/- each) fully paid up issued during the year 2011-12 on conversion of 3% cumulative compulsorily convertible preference shares of Rs, 2,187/- each (Class âBâ).
(g) The Company has not allotted any bonus shares or bought back any shares during the current year or for a period of five years immediately preceding the balance sheet date.
(h) Pursuant to the shareholders approval dated 11 August 2016, the Company has sub-divided its equity shares of Rs, 10/- each into equity shares of Rs, 2/- each for which 14 September 2016 was fixed as the record date. Accordingly, the basic and diluted earnings per share and the number of shares disclosed in note 30 have been computed for the current year and re-computed for the previous year based on the revised number of shares and face value of Rs, 2/- per equity shares.
Mar 31, 2016
1. Company overview
Minda Industries Limited is a public company domiciled and
headquartered in India. It was incorporated on 16 September 1992 under
the Companies Act, 1956 and its shares are listed on the National Stock
Exchange (NSE) and Bombay Stock Exchange (BSE)
Company is engaged in the business of manufacturing of auto components
including auto electrical parts and its accessories. The Company caters
to both domestic and international markets.
A. Basis of preparation of financial statements
These financial statements have been prepared and presented on the
accrual basis of accounting and comply with the Accounting Standards
referred to in section 133 of the Companies Act, 2013 read with Rule 7
of the Companies (Accounts) Rules, 2014, the relevant provisions of the
Companies Act, 2013, pronouncements of the Institute of Chartered
Accountants of India and other accounting principles generally accepted
in India, to the extent applicable. The financial statements are
presented in Indian rupees.
B. Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of the financial statements. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognized
prospectively in current and future periods.
C. Current-non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be realised in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting
date; or
(d) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets. All other assets are classified as non-current. Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be settled in the Company''s normal operating
cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date;
or
(d) the Company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities. All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
D. Fixed assets and depreciation
a) Tangible fixed assets
Tangible fixed assets except revalued assets are carried at cost of
acquisition or construction less accumulated depreciation and / or
accumulated impairment loss, if any. The cost of an item of tangible
fixed asset comprises its purchase price, including import duties and
other non-refundable taxes or levies and any directly attributable cost
of bringing the asset to its working condition for its intended use;
any trade discounts and rebates are deducted in arriving at the
purchase price.
Subsequent expenditures related to an item of tangible fixed 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.
Tangible fixed assets acquired wholly or partly with specific
grant/subsidy from government, if any, are recorded at the net
acquisition cost to the Company.
Borrowing costs are interest and other costs (including exchange
differences arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs) incurred by the
Company in connection with the borrowing of funds. Borrowing costs
directly attributable to acquisition or construction of those tangible
fixed assets which necessarily take a substantial period of time to get
ready for their intended use are capitalised. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
Exchange differences (favourable as well as unfavourable) arising in
respect of translation / settlement of long term foreign currency
borrowings attributable to the acquisition of a depreciable asset are
also included in the cost of the asset.
Tangible fixed assets under construction are disclosed as capital
work-in-progress.
Depreciation on plant & machinery and tools & dies is provided as per
WDV basis and on other tangible fixed assets as per SLM basis, based on
the rates as per useful life prescribed in Schedule II to the Companies
Act, 2013 except in the case of tools & dies, the life based on
technical advice ranges between 3 to 8 years in case of additions up to
31 March 2015 and 6 years in case of additions from 1 April 2015
onwards.
Leasehold land and leasehold improvements are amortised on a straight
line basis over the period of lease or their useful lives, whichever is
shorter. Freehold land is not depreciated.
Depreciation is provided on a pro-rata basis i.e. from the date on
which asset is ready for use.
Assets acquired under finance leases are depreciated over the shorter
of the lease term and their useful lives (not being greater than the
useful life envisaged in Schedule II to the Companies Act, 2013) unless
it is reasonably certain that the Company will obtain ownership by the
end of the lease term, in which case the depreciation rates applicable
for similar assets owned by the Company are applied.
Assets costing up to Rs.5,000 are fully depreciated in the year of
purchase.
Depreciation for the year is recognized in the Statement of Profit and
Loss.
The useful lives are reviewed by the management at each financial
year-end and revised, if appropriate. In case of a revision, the
unamortized depreciable amount is charged over the revised remaining
useful life.
A fixed asset is eliminated from the financial statements on disposal
or when no further benefit is expected from its use and disposal.
Assets retired from active use and held for disposal, if any, are
stated at the lower of their net book value and net realisable value
and shown under ''Other current assets''.
Losses arising from retirement or gains or losses arising from disposal
of fixed assets which are carried at cost are recognized in the
Statement of Profit and Loss.
b) Intangible fixed assets and amortization
(i) Goodwill
Goodwill that arises on the acquisition of a business is presented as
an intangible asset. Goodwill arising from amalgamation is measured at
cost less accumulated amortization and any accumulated impairment loss.
Such goodwill is amortized over its estimated useful life or five years
whichever is shorter. Goodwill arising on acquisition of a business is
measured at cost less any accumulated impairment loss. Goodwill is
tested for impairment annually.
(ii) Acquired intangible assets
Intangible assets that are acquired by the Company are measured
initially at cost. After initial recognition, an intangible asset is
carried at its cost less any accumulated amortization and any
accumulated impairment loss.
Subsequent expenditure is capitalised only when it increases the future
economic benefits from the specific asset to which it relates.
Intangible assets are amortised in the Statement of Profit or Loss over
their estimated useful lives, from the date that they are available for
use based on the expected pattern of consumption of economic benefits
of the asset. Accordingly, at present, these are being amortised on
straight line basis. In accordance with the applicable Accounting
Standard, the Company follows a rebuttable presumption that the useful
life of an intangible asset will not exceed ten years from the date
when the asset is available for use. However, if there is persuasive
evidence that the useful life of an intangible asset is longer than ten
years, it is amortised over the best estimate of its useful life. Such
intangible assets and intangible assets that are not yet available for
use are tested annually for impairment.
i) Technical know-how: Amortized over the period of agreement.
ii) Computer software: Amortized over the period of 6 years.
Amortisation method and useful lives are reviewed at each reporting
date. If the useful life of an asset is estimated to be significantly
different from previous estimates, the amortisation period is changed
accordingly. If there has been a significant change in the expected
pattern of economic benefits from the asset, the amortisation method is
changed to reflect the changed pattern.
An intangible asset is derecognized on disposal or when no future
economic benefits are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from
disposal of an intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are
recognized in the Statement of Profit and Loss.
c) Capital work-in-progress
Fixed assets under construction and cost of assets not put to use
before the year-end, are disclosed as capital work- in-progress.
E. Impairment
The carrying values of all assets are reviewed at each reporting date
to determine if there is an indication of any impairment. If any
indication exists, the asset''s recoverable amount is estimated. For
assets that are not yet available for use, the recoverable amount is
estimated at each reporting date. An impairment loss is recognized
whenever the carrying amount of an asset, or its cash generating unit
exceeds its recoverable amount. Impairment losses are recognized in the
Statement of Profit and Loss. An impairment loss is reversed if there
is a change in the estimate used to determine the recoverable amount.
An impairment loss is reversed only to the extent the carrying amount
of the asset does not exceed the carrying amount that would have been
determined net off depreciation or amortization, if no impairment loss
had been recognized.
F. Leases
a) Operating leases
Assets acquired under leases other than finance leases are classified
as operating leases. The total lease rentals (including scheduled
rental increases) in respect of an asset taken on operating lease are
charged to the Statement of Profit and Loss on a straight line basis
over the lease term unless another systematic basis is more
representative of the time pattern of the benefit.
b) Finance leases
Assets acquired under finance leases are recognized as an asset and a
liability at the lower of the fair value of the leased assets at the
inception of the lease and the present value of minimum lease payments.
Lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated
to periods during the lease term so as to produce a constant periodic
rate of interest on the remaining balance of the liability and charged
to the Statement of Profit and Loss.
G. Investments
Investments that are readily realisable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as long-term
investments. However, that part of long term investments which is
expected to be realized within 12 months after the reporting date is
also presented under ''current assets'' as "current portion of long term
investments" in consonance with the current-non-current classification
under of Schedule III.
Long-term investments (including current portion thereof) are carried
at cost less any other than temporary diminution in value, determined
separately for each individual investment.
Current investments are carried at the lower of cost and fair value.
Any reductions in the carrying amount and any reversals of such
reductions are charged or credited to the Statement of Profit and Loss.
Investment in the capital of a partnership firm is shown by reference
to the capital of the firm on the balance sheet date. The Company''s
share of profit or loss in a partnership firm is recognized in the
Statement of Profit and Loss as and when it accrues i.e. when it is
computed and credited or debited to the capital / current / any other
account of the company in the books of the partnership firm.
H. Inventories
Inventories which comprise raw materials, work-in-progress, finished
goods, stock-in-trade, stores and spares, and loose tools are carried
at the lower of cost and net realisable value.
Cost of inventories comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to
their present location and condition.
In determining the cost, weighted average cost method is used. In the
case of manufactured inventories and work in progress, fixed production
overheads are allocated on the basis of normal capacity of production
facilities.
Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and the
estimated costs necessary to make the sale.
The net realisable value of work-in-progress is determined with
reference to the selling prices of related finished products. Raw
materials and other supplies held for use in the production of finished
products are not written down below cost except in cases where material
prices have declined and it is estimated that the cost of the finished
products will exceed their net realisable value.
The comparison of cost and net realisable value is made on an
item-by-item basis.
Finished goods inventory is inclusive of excise duty.
Inventories in transit are valued at cost.
Appropriate adjustments are made to the carrying value of damaged, slow
moving and obsolete inventories based on management''s current best
estimate.
I. Revenue recognition
a) Revenue from sale of goods in the course of ordinary activities is
recognized when the property in the goods or all significant risks and
rewards of ownership are transferred to the customer and no significant
uncertainty exists regarding the amount of the consideration that will
be derived from the sale of goods and regarding its collection. The
amount recognized as revenue is inclusive of excise duty and exclusive
of sales tax, value added taxes (VAT) and is net of returns, trade
discounts and quantity discounts.
b) Management fees, Designing fees and service revenue is recognized on
an accrual basis as and when the services are rendered in accordance
with the terms of the underlying contract.
c) Interest income is recognized on a time proportionate basis taking
into account the amount outstanding and the interest rate applicable.
d) Dividend income is recognized when the right to receive dividend is
established.
e) Royalty income is recognized based on the terms of the underlying
agreement.
f) Claims lodged with insurance companies are accounted for on an
accrual basis, to the extent these are measurable and the ultimate
collection is reasonably certain.
g) Export entitlement under Duty Entitlement Pass Book Scheme (''DEPB'')
is recognized on accrual basis and when the right to entitlement has
been established.
h) Share of profit from partnership firms is recognized on accrual
basis.
J. Government grants
Government grants in the nature of promoters'' contribution are credited
to capital reserve and treated as a part of shareholders'' funds. Grants
from State Government towards revenue expenditure are recognized as
income either till the period of benefit expires or the financial cap
is reached, whichever occurs earlier.
K. Research and development
a) Revenue expenditure on research and development is charged off under
the respective heads of account in the year in which it is incurred.
b) Capitalized development expenditure is stated at cost less
accumulated amortization and impairment losses, if any. Fixed assets
used for research and development are depreciated in accordance with
the Company''s policy as stated above.
L. Foreign currency transactions
(a) 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.
(b) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. 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.
Non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are, translated using
the exchange rates that existed when such values were determined.
(c) Exchange differences
The Company accounts for exchange differences arising on translation /
settlement of foreign currency monetary items as below:
i) Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset.
ii) Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the Foreign Currency Monetary Item
Translation Difference Account'' and amortized over the remaining life
of the concerned monetary item.
iii) All other exchange differences are recognized as income or as
expense in the period in which they arise. For the purpose of i) and
ii) above, the Company treats a foreign currency monetary item as
"long-term foreign currency monetary item", if it has a term of 12
months or more at the date of its origination. In accordance with MCA
circular dated 09 August 2012, exchange differences for this purpose,
are total differences arising on long-term foreign currency monetary
items for the period.
(d) Forward exchange contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense / income over the
life of the contract. Exchange differences on such contracts, except
the contract which are long-term foreign currency monetary items, are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on calculation or
renewal of such forward exchange contract is also recognized as income
or as expense for the period. Any gain / loss arising on forward
contracts which are long-term foreign currency monetary items is
recognized in accordance with paragraph (c)(i) above.
(e) Derivative Instruments
In accordance with the ICAI Announcement, derivative contracts, other
than foreign currency forward contracts covered under Accounting
Standard 11, are marked to market on a portfolio basis, and the net
loss, if any, after considering the offsetting effect on the underlying
hedge item, is charged to the Statement of Profit and Loss and the net
gain, if any, is ignored.
M. Provisions
A provision is recognized if, as a result of a past event, the Company
has a present obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are recognized at the best estimate
of the expenditure required to settle the present obligation at the
balance sheet date. The provisions are measured on an undiscounted
basis.
Warranties
Warranty costs are estimated on the basis of a technical evaluation and
past experience. Provision is made for estimated liability in respect
of warranty costs in the year of sale of goods and is included in the
statement of profit and loss. The estimates used for accounting for
warranty costs are reviewed periodically and revisions are made, as and
when required.
Contingencies
Provision in respect of loss contingencies relating to claims,
litigation, assessment, fines, penalties, etc. are recognized when it
is probable that a liability has been incurred, and the amount can be
estimated reliably.
N. Contingent liabilities and contingent assets
A contingent liability exists when there is a possible but not probable
obligation, or a present obligation that may, but probably will not,
require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant
provisions, but are disclosed unless the possibility of outflow of
resources is remote. Contingent assets are neither recognized nor
disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are
recognized in the period in which the change occurs.
O. Employee Benefits
a) Short term employee benefits
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short- term employee benefits.
These benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short-term employee benefits to be paid in
exchange for employee services is recognized as an expense as the
related service is rendered by employees.
b) Post-employment benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The Company makes
specified monthly contributions towards employee provident fund and ESI
to Government administered fund which is a defined contribution plan.
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.
The Company makes specified monthly contribution towards superannuation
fund to Superannuation Trust which is managed by the Life Insurance
Corporation of India ("LIC").
Defined benefit plan
The Company''s gratuity benefit scheme is a defined benefit plan. The
Company''s net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value.
The fair value of plan assets is reduced from the gross obligation
under the defined benefit plans, to recognise the obligation on net
basis. The calculation of the Company''s obligation is performed
annually by a qualified actuary using the projected unit credit method.
The Company recognises all actuarial gains and losses arising from
defined benefit plans immediately in the Statement of Profit and Loss.
All expenses related to defined benefit plans are recognized in
employee benefits expense in the Statement of Profit and Loss. The
Company recognises gains and losses on the curtailment or settlement of
a defined benefit plan when the curtailment or settlement occurs.
The Company''s gratuity fund is administered and managed by the Life
Insurance Corporation of India ("LIC"). Actuarial gains and losses are
recognized immediately in the Statement of Profit and Loss.
Compensated absences
The employees can carry-forward a portion of the unutilised accrued
compensated absences and utilise it in future service periods or
receive cash compensation on termination of employment. Since the
compensated absences do not fall due wholly within twelve months after
the end of the period in which the employees render the related service
and are also not expected to be utilized wholly within twelve months
after the end of such period, the benefit to such extent is classified
as a long-term employee benefit. The Company records an obligation for
such compensated absences in the period in which the employee renders
the services that increase this entitlement. The obligation is measured
on the basis of independent actuarial valuation using the projected
unit credit method.
Actuarial gains and losses are recognized in the Statement of Profit
and Loss.
Termination benefits
Termination benefits are recognized as an expense when, as a result of
a past event, the Company has a present obligation that can be
estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation.
P. Income Taxes
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income-tax law) and deferred
tax charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the period).
Income-tax expense is recognized in Statement of Profit or Loss except
that tax expense related to items recognized directly in reserves is
also recognized in those reserves.
Current tax is measured at the amount expected to be paid to (recovered
from) the taxation authorities, using the applicable tax rates and tax
laws. Deferred tax is recognized in respect of timing differences
between taxable income and accounting income i.e. differences that
originate in one period and are capable of reversal in one or more
subsequent periods. The deferred tax charge or credit and the
corresponding deferred tax liabilities or assets are recognized using
the tax rates and tax laws that have been enacted or substantively
enacted by the balance sheet date. Deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realised in future; however, where there is unabsorbed depreciation or
carried forward loss under taxation laws, deferred tax assets are
recognized only if there is a virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets are reviewed as at each balance sheet date and written down or
written-up to reflect the amount that is reasonably / virtually certain
(as the case may be) to be realised.
Minimum Alternative Tax (''MAT'') under the provisions of the Income-tax
Act, 1961 is recognized as current tax in the Statement of Profit and
Loss. The credit available under the Act in respect of MAT paid is
recognized as an asset only when and to the extent there is convincing
evidence that the Company will pay normal income tax during the period
for which the MAT credit can be carried forward for set-off against the
normal tax liability. MAT credit recognized as an asset is reviewed at
each balance sheet date and written down to the extent, the aforesaid
convincing evidence no longer exists.
Deferred tax in respect of timing differences which reverse after the
tax holiday period is recognized in the year in which the timing
differences originate.
Q. Earnings per share
Basic earnings / (loss) per share are calculated by dividing the net
profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
The weighted average numbers of equity shares outstanding during the
year are adjusted for events ''of bonus issue and share split. For the
purpose of calculating diluted earnings / (loss) per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. The
dilutive potential equity shares are deemed to be converted as of the
beginning of the period, unless they have been issued at a later date.
R. Cash and cash equivalents
Cash and cash equivalents include cash balance on hand, cash balances
with bank, demand deposits with banks with original maturities of three
months or less and highly liquid investments.
Mar 31, 2014
1. Company overview
Minda Industries Limited is a public company domiciled and
headquartered in India. It was incorporated on 16 September 1992 under
the Companies Act, 1956 and its shares are listed on the National Stock
Exchange (NSE), Bombay Stock Exchange (BSE) and Delhi Stock Exchange
(DSE). The Company is engaged in the business of manufacturing of auto
components including auto electrical parts and its accessories. The
Company caters to both domestic and international markets.
The accounting policies set out below have been applied consistently to
the period presented in these financial statements.
A. Basis of preparation of financial statements
These financial statements have been prepared and presented on the
accrual basis of accounting and comply with the Accounting Standards
prescribed in the Companies (Accounting Standards) Rules, 2006 issued
by the Central Government, the relevant provisions of the Companies
Act, 1956 and other accounting principles generally accepted in India,
to the extent applicable. The financial statements are presented in
Indian rupees rounded off to the nearest lacs.
B. Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of the financial statements. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in current and future periods.
C. CurrentÂnon-current classification
All assets and liabilities are classified into current and non- current.
Assets
An asset is classified as current when it satisfies any of the following
criteria:
(a) it is expected to be realised in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting
date; or
(d) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be settled in the Company''s normal operating
cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date;
or
(d) the Company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities. All other liabilities are classified as non- current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
D. Fixed assets and depreciation
a) Tangible fixed assets
Tangible fixed assets except revalued assets are carried at cost of
acquisition or construction less accumulated depreciation and/or
accumulated impairment loss, if any. The cost of an item of tangible
fixed asset comprises its purchase price, including import duties and
other non- refundable taxes or levies and any directly attributable
cost of bringing the asset to its working condition for its intended
use; any trade discounts and rebates are deducted in arriving at the
purchase price.
Subsequent expenditures related to an item of tangible fixed 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.
Tangible fixed assets acquired wholly or partly with specific
grant/subsidy from government, if any, are recorded at the net
acquisition cost to the Company.
Borrowing costs are interest and other costs (including exchange
differences arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs) incurred by the
Company in connection with the borrowing of funds. Borrowing costs
directly attributable to acquisition or construction of those tangible
fixed assets which necessarily take a substantial period of time to get
ready for their intended use are capitalised. Other borrowing costs are
recognised as an expense in the period in which they are incurred.
Exchange differences (favorable as well as unfavorable) arising in
respect of translation/settlement of long term foreign currency
borrowings attributable to the acquisition of a depreciable asset are
also included in the cost of the asset.
The rates of depreciation prescribed in Schedule XIV to the Companies
Act, 1956 are considered as the minimum rates. If the management''s
estimate of the useful life of a fixed asset at the time of acquisition
of the asset or of the remaining useful life on a subsequent review is
shorter than that envisaged in the aforesaid schedule, depreciation is
provided at a higher rate based on the management''s estimate of the
useful life/remaining useful life. Depreciation is accordingly provided
at the rates which are equal to or higher than the rates prescribed in
Schedule XIV to the Companies Act, 1956 and are as stated below:
- on plant and machinery: on written down value method as per rates
specified in Schedule XIV.
- on tools and dies : 30/40 % per annum on written down value method on
all tools except those used in Acoustic (Horn) division which are
depreciated at the rate of 30% per annum on straight line method basis
- on other fixed assets: on straight line method as per rates specified
in Schedule XIV.
Leasehold land and leasehold improvements are amortised on a straight
line basis over the period of lease or their useful lives, whichever is
shorter. Freehold land is not depreciated.
Depreciation is provided on a pro-rata basis i.e. from the date on
which asset is ready for use.
Assets acquired under finance leases are depreciated over the shorter of
the lease term and their useful lives (not being greater than the
useful life envisaged in Schedule XIV to the Companies Act, 1956)
unless it is reasonably certain that the Company will obtain ownership
by the end of the lease term, in which case the depreciation rates
applicable for similar assets owned by the Company are applied.
Assets costing up to rupees five thousand are fully depreciated in the
year of purchase.
Depreciation for the year is recognised in the Statement of Profit and
Loss.
The useful lives are reviewed by the management at each financial
year-end and revised, if appropriate. In case of a revision, the
unamortized depreciable amount is charged over the revised remaining
useful life.
A fixed asset is eliminated from the financial statements on disposal or
when no further benefit is expected from its use and disposal.
Assets retired from active use and held for disposal, if any, are
stated at the lower of their net book value and net realisable value
and shown under ''Other current assets''.
Losses arising from retirement or gains or losses arising from disposal
of fixed assets which are carried at cost are recognised in the
Statement of Profit and Loss.
b) Intangible fixed assets and amortization
(i) Goodwill
Goodwill that arises on an amalgamation or on the acquisition of a
business is presented as an intangible asset. Goodwill arising from
amalgamation is measured at cost less accumulated amortisation and any
accumulated impairment loss. Such goodwill is amortised over its
estimated useful life or fve years whichever is shorter. Goodwill
arising on acquisition of a business is measured at cost less any
accumulated impairment loss, and such goodwill is tested for impairment
annually
(ii) Acquired intangible assets
Intangible assets that are acquired by the Company are measured
initially at cost. After initial recognition, an intangible asset is
carried at its cost less any accumulated amortization and any
accumulated impairment loss.
Subsequent expenditure is capitalised only when it increases the future
economic benefits from the specific asset to which it relates.
Intangible assets are amortised in the Statement of Profit or Loss over
their estimated useful lives, from the date that they are available for
use based on the expected pattern of consumption of economic benefits of
the asset. Accordingly, at present, these are being amortised on
straight line basis. In accordance with the applicable Accounting
Standard, the Company follows a rebuttable presumption that the useful
life of an intangible asset will not exceed ten years from the date
when the asset is available for use. However, if there is persuasive
evidence that the useful life of an intangible asset is longer than ten
years, it is amortised over the best estimate of its useful life.
The amortization rates are as follows:
a) Technical knowhow: Amortised over the period of agreement
b) Computer software : 16.21% straight line method (except in the case
of Enterprise Resource Planning (ERP) system, which is depreciated over
a period not exceeding four years)
Amortisation method and useful lives are reviewed at each reporting
date. If the useful life of an asset is estimated to be significantly
different from previous estimates, the amortisation period is changed
accordingly. If there has been a signifcant change in the expected
pattern of economic benefits from the asset, the amortisation method is
changed to reflect the changed pattern.
An intangible asset is derecognised on disposal or when no future
economic benefts are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from
disposal 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.
c) Capital work-in-progress
Fixed assets under construction and cost of assets not put to use
before the year-end, are disclosed as capital work-in-progress.
E. Impairment
The carrying values of all assets are reviewed at each reporting date
to determine if there is an indication of any impairment. If any
indication exists, the asset''s recoverable amount is estimated. For
assets that are not yet available for use, the recoverable amount is
estimated at each reporting date. An impairment loss is recognised
whenever the carrying amount of an asset, or its cash generating unit
exceeds its recoverable amount. Impairment losses are recognised in the
Statement of Profit and Loss. An impairment loss is reversed if there is
a change in the estimate used to determine the recoverable amount. An
impairment loss is reversed only to the extent the carrying amount of
the asset that does not exceed the carrying amount that would have been
determined net of depreciation or amortisation, if no impairment loss
had been recognised.
F. Leases
a) Operating leases
Assets acquired under leases other than finance leases are classified as
operating leases. The total lease rentals (including scheduled rental
increases) in respect of an asset taken on operating lease are charged
to the Statement of Profit and Loss on a straight line basis over the
lease term unless another systematic basis is more representative of
the time pattern of the benefit.
b) Finance leases
Assets acquired under finance leases are recognised as an asset and a
liability at the lower of the fair value of the leased assets at the
inception of the lease and the present value of minimum lease payments.
Lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated
to periods during the lease term so as to produce a constant periodic
rate of interest on the remaining balance of the liability and charged
to the Statement of Profit and Loss.
G. Investments
Investments that are readily realisable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as long-term
investments. However, that part of long term investments which is
expected to be realized within 12 months after the reporting date is
also presented under ''current assets'' as "current portion of long term
investments" in consonance with the currentÂnon-current classification
scheme of revised Schedule VI.
Long-term investments (including current portion thereof) are carried
at cost less any other-than temporary diminution in value, determined
separately for each individual investment.
Current investments are carried at the lower of cost and fair value.
Any reductions in the carrying amount and any reversals of such
reductions are charged or credited to the Statement of Profit and Loss.
Investment in the capital of a partnership form is shown by reference to
the capital of the firm on the balance sheet date. The Company''s share
of profit or loss in a partnership firm is recognised in the Statement of
Profit and Loss as and when it accrues i.e. when it is computed and
credited or debited to the capital/current/any other account of the
company in the books of the partnership frm.
H. Inventories
Inventories which comprise raw materials, work-in-progress, finished
goods, stock-in-trade, stores and spares, and loose tools are carried
at the lower of cost and net realisable value.
Cost of inventories comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to
their present location and condition.
In determining the cost, moving average cost method is used. In the
case of manufactured inventories and work in progress, fixed production
overheads are allocated on the basis of normal capacity of production
facilities.
Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and the
estimated costs necessary to make the sale.
The net realisable value of work-in-progress is determined with
reference to the selling prices of related finished products. Raw
materials and other supplies held for use in the production of finished
products are not written down below cost except in cases where material
prices have declined and it is estimated that the cost of the finished
products will exceed their net realisable value.
The comparison of cost and net realisable value is made on an
item-by-item basis.
Finished goods inventory is inclusive of excise duty.
Inventories in transit are valued at cost.
Appropriate adjustments are made to the carrying value of damaged, slow
moving and obsolete inventories based on management''s current best
estimate.
I. Revenue recognition
a) Revenue from sale of goods in the course of ordinary activities is
recognised when the property in the goods or all significant risks and
rewards of ownership are transferred to the customer and no significant
uncertainty exists regarding the amount of the consideration that will
be derived from the sale of goods and regarding its collection. The
amount recognized as revenue is exclusive of sales tax, value added
taxes (VAT) and is net of returns, trade discounts and quantity
discounts.
b) Designing and service revenue is recognised on an accrual basis as
and when the services are rendered in accordance with the terms of the
underlying contract.
c) Interest income is recognised on a time proportionate basis taking
into account the amount outstanding and the interest rate applicable.
d) Dividend income is recognised when the right to receive dividend is
established.
e) Royalty income is recognised based on the terms of the underlying
agreement.
f) Claims lodged with insurance companies are accounted for on an
accrual basis, to the extent these are measurable and the ultimate
collection is reasonably certain.
g) Export entitlement under Duty Entitlement Pass Book Scheme (''DEPB'')
is recognised on accrual basis and when the right to entitlement has
been established.
h) Share of profit from partnership forms is recognised on accrual basis.
J. Government grants
Government grants in the nature of promoters'' contribution are credited
to capital reserve and treated as a part of shareholders'' funds. Grants
from State Government towards revenue expenditure are recognised as
income either till the period of benefit expires or the financial cap is
reached, whichever occurs earlier.
K. Research and development
a) Revenue expenditure on research and development is charged off under
the respective heads of account in the year in which it is incurred.
b) Capitalised development expenditure is stated at cost less
accumulated amortisation and impairment losses, if any. Fixed assets
used for research and development are depreciated in accordance with
the Company''s policy as stated above.
L. Foreign currency transactions
a) Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of the respective transactions. Monetary foreign
currency assets and liabilities remaining unsettled at the balance
sheet date are translated at the closing rates of exchange prevailing
on that date. The resultant exchange differences are recognised in the
Statement of Profit and Loss except exchange differences pertaining to
long term foreign currency monetary items that are related to
acquisition of depreciable assets and are adjusted in the carrying
amount of the related fixed assets.
b) In the cases of exchange difference on reporting long term monetary
items, the company has opted to avail the option provided under
paragraph 46A of Accounting Standard 11 "The Effects of Changes in
Foreign Exchange Rates" inserted vide notification dated 29 December
2011. Consequently, the exchange differences arising on reporting of
long term foreign
currency monetary items on account of a depreciable asset is adjusted
in the cost of depreciable asset and would be depreciated over the
balance life of the asset.
In cases other then the depreciable assets exchange differences is
accumulated in a Foreign Currency Monetary Item Translation Difference
Account, and amortized over the balance period of such long term
liability.
c) The Company uses forward contracts to hedge its foreign currency
risk relating to an existing asset/ liability, which are covered under
Accounting Standard ''Accounting for the effects of changes in foreign
exchange rates''.
Exchange difference on a forward exchange contract is the difference
between:
(i) the foreign currency amount of the contract translated at the
exchange rate at the reporting date, or the settlement date where the
transaction is settled during the reporting period; and
(ii) the same foreign currency amount translated at the latter of the
date of inception of the forward exchange contract and the last
reporting date;
and is recognised in the Statement of Profit and Loss over the period of
the contract.
The forward exchange contracts taken to hedge existing assets/
liabilities are translated at the closing exchange rates and the
resultant exchange differences are recognised in the same manner as
those on the underlying foreign currency asset or liability. Any profit
or loss arising on cancellation/ renewal of such contracts is
recognised in the Statement of Profit and Loss for the year.
The premium or discount on all such contracts arising at the inception
of each contract is amortized over the life of the contract.
d) Investments in foreign entities are recorded at the exchange rate
prevailing on the date of making the investments.
e) Derivative Transactions
The Company has entered into cross currency cum interest swap to hedge
foreign currency risk and interest risk. In respect of forward
contracts, which are covered under Accounting Standard (AS) 11,
''Effects of Changes in Foreign Exchange Rates'', the difference between
the spot rate and forward rate on the date the forward exchange
contract is entered into, is amortised over the tenure of the contract.
The foreign currency receivable or payable arising under the forward
contract is revalued using the closing rate, and any resultant gain or
loss is taken to the Statement of Profit and Loss. In respect of
derivative contract, which are not covered by AS 11, pursuant to the
announcement on "Accounting for Derivatives" made by the Institute of
Chartered Accountants of India (''ICAI'') on 29 March 2008, such
contracts are marked to market and provision for loss, if any, is
recognised in the Statement of Profit and
Loss and resultant gains, if any, on account of mark to market are
ignored. The Company does not enter into derivative transactions for
trading or speculative purposes.
M. Provisions
A provision is recognised if, as a result of a past event, the Company
has a present obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are recognised at the best estimate of the
expenditure required to settle the present obligation at the balance
sheet date. The provisions are measured on an undiscounted basis.
Warranties
Warranty costs are estimated on the basis of a technical evaluation and
past experience. Provision is made for estimated liability in respect
of warranty costs in the year of sale of goods and is included in the
statement of proft and loss. The estimates used for accounting for
warranty costs are reviewed periodically and revisions are made, as and
when required.
Contingencies
Provision in respect of loss contingencies relating to claims,
litigation, assessment, fines, penalties, etc. are recognised when it is
probable that a liability has been incurred, and the amount can be
estimated reliably.
N. Contingent liabilities and contingent assets
A contingent liability exists when there is a possible but not probable
obligation, or a present obligation that may, but probably will not,
require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant
provisions, but are disclosed unless the possibility of outflow of
resources is remote. Contingent assets are neither recognised nor
disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are
recognised in the period in which the change occurs.
O. Employee Benefits
a) Short term employee benefits
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short- term employee benefits. These
benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short-term employee benefits to be paid in
exchange for employee services is recognised as an expense as the
related service is rendered by employees.
b) Post employment benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which
an entity pays specified contributions to a separate entity and has no
obligation
to pay any further amounts. The Company makes specified monthly
contributions towards employee provident fund to Government
administered provident fund scheme which is a defined contribution plan.
The Company''s contribution is recognised as an expense in the Statement
of Profit and Loss during the period in which the employee renders the
related service.
The Company makes specified monthly contribution towards superannuation
fund to Superannuation Trust which is managed by the Life Insurance
Corporation of India ("LIC").
Defined benefit plan
The Company''s gratuity benefit scheme is a defined benefit plan. The
Company''s net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value. The
fair value of plan assets is reduced from the gross obligation under
the defined benefit plans, to recognise the obligation on net basis. The
calculation of the Company''s obligation is performed annually by a
qualified actuary using the projected unit credit method.
The Company recognises all actuarial gains and losses arising from
defined benefit plans immediately in the Statement of Profit and Loss.
All expenses related to defined benefit plans are recognised in employee
benefits expense in the Statement of Profit and Loss. The Company
recognises gains and losses on the curtailment or settlement of a
defined benefit plan when the curtailment or settlement occurs.
The Company''s gratuity fund is administered and managed by the Life
Insurance Corporation of India ("LIC"). Actuarial gains and losses are
recognised immediately in the Statement of Profit and Loss.
Compensated absences
The employees can carry-forward a portion of the unutilised accrued
compensated absences and utilise it in future service periods or
receive cash compensation on termination of employment. Since the
compensated absences do not fall due wholly within twelve months after
the end of the period in which the employees render the related service
and are also not expected to be utilized wholly within twelve months
after the end of such period, the benefit is classified as a long-term
employee benefit. The Company records an obligation for such compensated
absences in the period in which the employee renders the services that
increase this entitlement. The obligation is measured on the basis of
independent actuarial valuation using the projected unit credit method.
Actuarial gains and losses are recognised in the Statement of Profit and
Loss.
Termination benefits
Termination benefits are recognised as an expense when, as a result of a
past event, the Company has a present obligation that can be estimated
reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation.
P. Income Taxes
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income- tax law) and deferred
tax charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the period).
Income-tax expense is recognised in Statement of Profit or Loss except
that tax expense related to items recognised directly in reserves is
also recognized in those reserves.
Current tax is measured at the amount expected to be paid to (recovered
from) the taxation authorities, using the applicable tax rates and tax
laws. Deferred tax is recognised in respect of timing differences
between taxable income and accounting income i.e. differences that
originate in one period and are capable of reversal in one or more
subsequent periods. The deferred tax charge or credit and the
corresponding deferred tax liabilities or assets are recognised using
the tax rates and tax laws that have been enacted or substantively
enacted by the balance sheet date. Deferred tax assets are recognised
only to the extent there is reasonable certainty that the assets can be
realised in future; however, where there is unabsorbed depreciation or
carried forward loss under taxation laws, deferred tax assets are
recognised only if there is a virtual certainty supported by convincing
evidence that sufficient future taxable income will be available against
which such deferred tax assets can be realised. Deferred tax assets are
reviewed as at each balance sheet date and written down or written-up
to refect the amount that is reasonably/virtually certain (as the case
may be) to be realised.
Minimum Alternative Tax (''MAT'') under the provisions of the Income-tax
Act, 1961 is recognised as current tax in the Statement of Profit and
Loss. The credit available under the Act in respect of MAT paid is
recognised as an asset only when and to the extent there is convincing
evidence that the Company will pay normal income tax during the period
for which the MAT credit can be carried forward for setoff against the
normal tax liability. MAT credit recognised as an asset is reviewed at
each balance sheet date and written down to the extent, the aforesaid
convincing evidence no longer exists.
Q. Representative offices
In translating the financial statements of representative offices, the
monetary assets and liabilities are translated at the rate prevailing
at the balance sheet date; non-monetary assets and liabilities are
translated at exchange rate prevailing at the date of transaction and
income and expense items are converted at the respective month end
rate.
R. Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net
profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
The weighted average numbers of equity shares outstanding during the
year are adjusted for events of bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss) per share, the net
proft or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. The
dilutive potential equity shares are deemed to be converted as of the
beginning of the period, unless they have been issued at a later date.
S. Cash and cash equivalent
Cash and cash equivalents comprise cash balances on hand, cash balance
with bank, and highly liquid investments with maturity period of three
months or less from the date of investment.
(f) Aggregate number and class of shares allotted as fully paid up
pursuant to contract(s) without payment being received in cash for the
period of five years immediately preceding the Balance Sheet date:
Equity shares includes
(i) 2,405,128 equity shares of Rs. 10 each fully paid up issued during the
year 2010-11 for consideration other than cash to the shareholders of
Minda Autogas Limited, pursuant to the scheme of amalgamation.
(ii) 1,120,164 Equity Shares of Rs. 10 each fully paid up issued during
the year 2011-12 for consideration other than cash to the shareholders
of Minda Acoustic Limited, pursuant to the scheme of amalgamation.
(iii) 1,835,000 equity shares of Rs. 10 each fully paid up issued during
the year 2011-12 on conversion of 3% Cumulative compulsorily
convertible preference shares of Rs. 2,187 each (Class ''B'').
(g) The Company has not allotted any bonus shares or bought back any
shares during the current year or for a period of fve years immediately
preceding the balance sheet date.
Mar 31, 2013
A. Basis of preparation of financial statements
These financial statements have been prepared and presented on the
accrual basis of accounting and comply with the Accounting Standards
prescribed in the Companies (Accounting Standards) Rules, 2006 issued
by the Central Government, the relevant provisions of the Companies
Act, 1956 and other accounting principles generally accepted in India,
to the extent applicable. The financial statements are presented in
Indian rupees rounded off to the nearest lacs.
B. Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of the financial statements. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in current and future periods.
C. CurrentÂnon-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be realised in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting
date; or
(d) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non- current financial
assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be settled in the Company''s normal operating
cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date;
or
(d) the Company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities. All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
D. Fixed assets and depreciation
a) Tangible fixed assets
Tangible fixed assets except revalued assets are carried at cost of
acquisition or construction less accumulated depreciation and/or
accumulated impairment loss, if any. The cost of an item of tangible
fixed asset comprises its purchase price, including import duties and
other non-refundable taxes or levies and any directly attributable cost
of bringing the asset to its working condition for its intended use;
any trade discounts and rebates are deducted in arriving at the
purchase price.
Subsequent expenditures related to an item of tangible fixed 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.
Tangible fixed assets acquired wholly or partly with specific
grant/subsidy from government, if any, are recorded at the net
acquisition cost to the Company.
Borrowing costs are interest and other costs (including exchange
differences arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs) incurred by the
Company in connection with the borrowing of funds. Borrowing costs
directly attributable to acquisition or construction of those tangible
fixed assets which necessarily take a substantial period of time to get
ready for their intended use are capitalised. Other borrowing costs are
recognised as an expense in the period in which they are incurred.
Exchange differences (favorable as well as unfavorable) arising in
respect of translation/ settlement of long term foreign currency
borrowings attributable to the acquisition of a depreciable asset are
also included in the cost of the asset.
The rates of depreciation prescribed in Schedule XIV to the Companies
Act, 1956 are considered as the minimum rates. If the management''s
estimate of the useful life of a fixed asset at the time of acquisition
of the asset or of the remaining useful life on a subsequent review is
shorter than that envisaged in the aforesaid schedule, depreciation is
provided at a higher rate based on the management''s estimate of the
useful life/ remaining useful life. Depreciation is accordingly
provided at the rates which are equal to or higher than the rates
prescribed in Schedule XIV to the Companies Act, 1956 and are as stated
below:
- on plant and machinery : on written down value method as per rates
specified in Schedule XIV.
- on tools and dies : 30/40 % per annum on written down value method on
all tools except those used in Acoustic (Horn) division which are
depreciated at the rate of 30% per annum on straight line method basis
- on other fixed assets : on straight line method as per rates
specified in Schedule XIV.
Leasehold land and leasehold improvements are amortised on a straight
line basis over the period of lease or their useful lives, whichever is
shorter. Freehold land is not depreciated.
Depreciation is provided on a pro-rata basis i.e. from the date on
which asset is ready for use.
Assets acquired under finance leases are depreciated over the shorter
of the lease term and their useful lives (not being greater than the
useful life envisaged in Schedule XIV to the Companies Act, 1956)
unless it is reasonably certain that the Company will obtain ownership
by the end of the lease term, in which case the depreciation rates
applicable for similar assets owned by the Company are applied.
Assets costing upto Rs.5,000 are fully depreciated in the year of
purchase.
Depreciation for the year is recognised in the Statement of Profit and
Loss.
The useful lives are reviewed by the management at each financial
year-end and revised, if appropriate. In case of a revision, the
unamortized depreciable amount is charged over the revised remaining
useful life.
A fixed asset is eliminated from the financial statements on disposal
or when no further benefit is expected from its use and disposal.
Assets retired from active use and held for disposal, if any, are
stated at the lower of their net book value and net realisable value
and shown under ''Other current assets''.
Losses arising from retirement or gains or losses arising from disposal
of fixed assets which are carried at cost are recognised in the
Statement of Profit and Loss.
b) Intangible fixed assets and amortization
(i) Goodwill
Goodwill that arises on an amalgamation or on the acquisition of a
business is presented as an intangible asset. Goodwill arising from
amalgamation is measured at cost less accumulated amortisation and any
accumulated impairment loss. Such goodwill is amortised over its
estimated useful life or five years whichever is shorter. Goodwill
arising on acquisition of a business is measured at cost less any
accumulated impairment loss. Goodwill is tested for impairment
annually.
(ii) Acquired intangible assets
Intangible assets that are acquired by the Company are measured
initially at cost. After initial recognition, an intangible asset is
carried at its cost less any accumulated amortization and any
accumulated impairment loss.
Subsequent expenditure is capitalised only when it increases the future
economic benefits from the specific asset to which it relates.
Intangible assets are amortised in the Statement of Profit or Loss over
their estimated useful lives, from the date that they are available for
use based on the expected pattern of consumption of economic benefits
of the asset. Accordingly, at present, these are being amortised on
straight line basis. In accordance with the applicable Accounting
Standard, the Company follows a rebuttable presumption that the useful
life of an intangible asset will not exceed ten years from the date
when the asset is available for use. However, if there is persuasive
evidence that the useful life of an intangible asset is longer than ten
years, it is amortised over the best estimate of its useful life. Such
intangible assets and intangible assets that are not yet available for
use are tested annually for impairment.
The amortization rates are as follows:
a) Technical knowhow: Amortised over the period of agreement
b) Computer software : 16.21% straight line method (except in the case
of Enterprise Resource Planning (ERP) system, which is
depreciated over a period not exceeding four years)
Amortisation method and useful lives are reviewed at each reporting
date. If the useful life of an asset is estimated to be significantly
different from previous estimates, the amortisation period is changed
accordingly. If there has been a significant change in the expected
pattern of economic benefits from the asset, the amortisation method is
changed to reflect the changed pattern.
An intangible asset is derecognised on disposal or when no future
economic benefits are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from
disposal 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.
c) Capital work-in-progress
Fixed assets under construction and cost of assets not put to use
before the year-end, are disclosed as capital work-in-progress.
E. Impairment
The carrying values of all assets are reviewed at each reporting date
to determine if there is an indication of any impairment. If any
indication exists, the asset''s recoverable amount is estimated. For
assets that are not yet available for use, the recoverable amount is
estimated at each reporting date. An impairment loss is recognised
whenever the carrying amount of an asset, or its cash generating unit
exceeds its recoverable amount. Impairment losses are recognised in the
Statement of Profit and Loss. An impairment loss is reversed if there
is a change in the estimate used to determine the recoverable amount.
An impairment loss is reversed only to the extent the carrying amount
of the asset that does not exceed the carrying amount that would have
been determined net off depreciation or amortisation, if no impairment
loss had been recognised.
F. Leases
a) Operating leases
Assets acquired under leases other than finance leases are classified
as operating leases. The total lease rentals (including scheduled
rental increases) in respect of an asset taken on operating lease are
charged to the Statement of Profit and Loss on a straight line basis
over the lease term unless another systematic basis is more
representative of the time pattern of the benefit.
b) Finance leases
Assets acquired under finance leases are recognised as an asset and a
liability at the lower of the fair value of the leased assets at the
inception of the lease and the present value of minimum lease payments.
Lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated
to periods during the lease term so as to produce a constant periodic
rate of interest on the remaining balance of the liability and charged
to the Statement of Profit and Loss.
G. Investments
Investments that are readily realisable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as long-term
investments. However, that part of long term investments which is
expected to be realized within 12 months after the reporting date is
also presented under ''current assets'' as "current portion of long term
investments" in consonance with the currentÂnon- current classification
scheme of revised Schedule VI.
Long-term investments (including current portion thereof) are carried
at cost less any other-than- temporary diminution in value, determined
separately for each individual investment.
Current investments are carried at the lower of cost and fair value.
Any reductions in the carrying amount and any reversals of such
reductions are charged or credited to the Statement of Profit and Loss.
Investment in the capital of a partnership firm is shown by reference
to the capital of the firm on the balance sheet date. The Company''s
share of profit or loss in a partnership firm is recognised in the
Statement of Profit and Loss as and when it accrues i.e. when it is
computed and credited or debited to the capital/ current/any other
account of the company in the books of the partnership firm.
H. Inventories
Inventories which comprise raw materials, work-in- progress, finished
goods, stock-in-trade, stores and spares, and loose tools are carried
at the lower of cost and net realisable value.
Cost of inventories comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to
their present location and condition.
In determining the cost, moving average cost method is used. In the
case of manufactured inventories and work in progress, fixed production
overheads are allocated on the basis of normal capacity of production
facilities.
Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and the
estimated costs necessary to make the sale.
The net realisable value of work-in-progress is determined with
reference to the selling prices of related finished products. Raw
materials and other supplies held for use in the production of finished
products are not written down below cost except in cases where material
prices have declined and it is estimated that the cost of the finished
products will exceed their net realisable value.
The comparison of cost and net realisable value is made on an
item-by-item basis.
Finished goods inventory is inclusive of excise duty.
Inventories in transit are valued at cost.
Appropriate adjustments are made to the carrying value of damaged, slow
moving and obsolete inventories based on management''s current best
estimate.
I. Revenue recognition
a) Revenue from sale of goods in the course of ordinary activities is
recognised when the property in the goods or all significant risks and
rewards of ownership are transferred to the customer and no significant
uncertainty exists regarding the amount of the consideration that will
be derived from the sale of goods and regarding its collection. The
amount recognized as revenue is exclusive of sales tax, value added
taxes (VAT) and is net of returns, trade discounts and quantity
discounts.
b) Designing and service revenue is recognised on an accrual basis as
and when the services are rendered in accordance with the terms of the
underlying contract.
c) Interest income is recognised on a time proportionate basis taking
into account the amount outstanding and the interest rate applicable.
d) Dividend income is recognised when the right to receive dividend is
established.
e) Royalty income is recognised based on the terms of the underlying
agreement.
f) Claims lodged with insurance companies are accounted for on an
accrual basis, to the extent these are measurable and the ultimate
collection is reasonably certain.
g) Export entitlement under Duty Entitlement Pass Book Scheme (''DEPB'')
is recognised on accrual basis and when the right to entitlement has
been established.
h) Share of profit from partnership firms is recognised on accrual
basis.
J. Government grants
Government grants in the nature of promoters'' contribution are credited
to capital reserve and treated as a part of shareholders'' funds. Grants
from State Government towards revenue expenditure are recognised as
income either till the period of benefit expires or the financial cap
is reached, whichever occurs earlier.
K. Research and development
a) Revenue expenditure on research and development is charged off under
the respective heads of account in the year in which it is incurred.
b) Capitalised development expenditure is stated at cost less
accumulated amortisation and impairment losses, if any. Fixed assets
used for research and development are depreciated in accordance with
the Company''s policy as stated above.
L. Foreign currency transactions
a) Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of the respective transactions. Monetary foreign
currency assets and liabilities remaining unsettled at the balance
sheet date are translated at the closing rates of exchange prevailing
on that date. The resultant exchange differences are recognised in the
Statement of Profit and Loss except exchange differences pertaining to
long term foreign currency monetary items that are related to
acquisition of depreciable assets and are adjusted in the carrying
amount of the related fixed assets.
b) In the cases of exchange difference on reporting long term monetary
items, the company has opted to avail the option provided under
paragraph 46A of Accounting Standard 11 "The Effects of Changes in
Foreign Exchange Rates" inserted vide notification dated 29 December
2011. Consequently, the exchange differences arising on reporting of
long term foreign currency monetary items on account of a depreciable
asset is adjusted in the cost of depreciable asset and would be
depreciated over the balance life of the asset.
In cases other then the depreciable assets exchange differences is
accumulated in a Foreign Currency Monetary Item Translation Difference
Account, and amortized over the balance period of such long term asset
or liability.
c) The Company uses forward contracts to hedge its foreign currency
risk relating to an existing asset/ liability, which are covered under
Accounting Standard  ''Accounting for the effects of changes in foreign
exchange rates''.
Exchange difference on a forward exchange contract is the difference
between:
(i) the foreign currency amount of the contract translated at the
exchange rate at the reporting date, or the settlement date where the
transaction is settled during the reporting period; and
(ii) the same foreign currency amount translated at the latter of the
date of inception of the forward exchange contract and the last
reporting date and is recognised in the Statement of Profit and Loss
over the period of the contract.
The forward exchange contracts taken to hedge existing assets/
liabilities are translated at the closing exchange rates and the
resultant exchange differences are recognised in the same manner as
those on the underlying foreign currency asset or liability. Any profit
or loss arising on cancellation/ renewal of such contracts is
recognised in the Statement of Profit and Loss for the year.
The premium or discount on all such contracts arising at the inception
of each contract is amortized over the life of the contract.
d) Investments in foreign entities are recorded at the exchange rate
prevailing on the date of making the investments.
e) Foreign currency loans covered by forward exchange contracts are
translated at the rate prevailing on the date of transaction as
increased or decreased by the proportionate difference between the
forward rate and exchange rate on the date of transaction, such
difference having been recognized over the life of the contract.
f) Derivative Transactions
The Company has entered into cross currency cum interest swap to hedge
foreign currency risk and interest risk. In respect of forward
contracts, which are covered under Accounting Standard (AS) 11,
''Effects of Changes in Foreign Exchange Rates'', the difference between
the spot rate and forward rate on the date the forward exchange
contract is entered into, is amortised over the tenure of the contract.
The foreign currency receivable or payable arising under the forward
contract is revalued using the closing rate, and any resultant gain or
loss is taken to the Statement of Profit and Loss. In respect of
derivative contract, which are not covered by AS 11, pursuant to the
announcement on "Accounting for Derivatives" made by the Institute of
Chartered Accountants of India (''ICAI'') on 29 March 2008, such
contracts are marked to market and provision for loss, if any, is
recognised in the Statement of Profit and Loss and resultant gains, if
any, on account of mark to market are ignored. The Company does not
enter into derivative transactions for trading or speculative purposes.
g) Commodity hedging
In case of hedging contracts for metals used as raw materials entered
into with commodity exchanges, the changes in the fair value of these
contracts are recorded through the statement of profit and loss.
h) Increase or decrease in non-current liabilities on account of
exchange rate fluctuations has been adjusted in the cost of tangible
fixed assets.
M. Provisions
A provision is recognised if, as a result of a past event, the Company
has a present obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are recognised at the best estimate
of the expenditure required to settle the present obligation at the
balance sheet date. The provisions are measured on an undiscounted
basis.
Warranties
Warranty costs are estimated on the basis of a technical evaluation and
past experience. Provision is made for estimated liability in respect
of warranty costs in the year of sale of goods and is included in the
consolidated statement of profit and loss. The estimates used for
accounting for warranty costs are reviewed periodically and revisions
are made, as and when required.
Contingencies
Provision in respect of loss contingencies relating to claims,
litigation, assessment, fines, penalties, etc. are recognised when it
is probable that a liability has been incurred, and the amount can be
estimated reliably.
N. Contingent liabilities and contingent assets
A contingent liability exists when there is a possible but not probable
obligation, or a present obligation that may, but probably will not,
require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant
provisions, but are disclosed unless the possibility of outflow of
resources is remote. Contingent assets are neither recognised nor
disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are
recognised in the period in which the change occurs.
O. Employee Benefits
a) Short term employee benefits
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits.
These benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short-term employee benefits to be paid in
exchange for employee services is recognised as an expense as the
related service is rendered by employees.
b) Post employment benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The Company makes
specified monthly contributions towards employee provident fund to
Government administered provident fund scheme which is a defined
contribution plan. The Company''s contribution is recognised as an
expense in the Statement of Profit and Loss during the period in which
the employee renders the related service.
The Company makes specified monthly contribution towards superannuation
fund to Superannuation Trust which is managed by the Life Insurance
Corporation of India ("LIC").
Defined benefit plan
The Company''s gratuity benefit scheme is a defined benefit plan. The
Company''s net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value. The
fair value of plan assets is reduced from the gross obligation under
the defined benefit plans, to recognise the obligation on net basis.
The calculation of the Company''s obligation is performed annually by a
qualified actuary using the projected unit credit method.
The Company recognises all actuarial gains and losses arising from
defined benefit plans immediately in the Statement of Profit and Loss.
All expenses related to defined benefit plans are recognised in
employee benefits expense in the Statement of Profit and Loss. The
Company recognises gains and losses on the curtailment or settlement of
a defined benefit plan when the curtailment or settlement occurs.
The Company''s gratuity fund is administered and managed by the Life
Insurance Corporation of India ("LIC"). Actuarial gains and losses are
recognised immediately in the Statement of Profit and Loss.
Compensated absences
The employees can carry-forward a portion of the unutilised accrued
compensated absences and utilise it in future service periods or
receive cash compensation on termination of employment. Since the
compensated absences do not fall due wholly within twelve months after
the end of the period in which the employees render the related service
and are also not expected to be utilized wholly within twelve months
after the end of such period, the benefit is classified as a long- term
employee benefit. The Company records an obligation for such
compensated absences in the period in which the employee renders the
services that increase this entitlement. The obligation is measured on
the basis of independent actuarial valuation using the projected unit
credit method.
Actuarial gains and losses are recognised in the Statement of Profit
and Loss.
Termination benefits
Termination benefits are recognised as an expense when, as a result of
a past event, the Company has a present obligation that can be
estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation.
P. Income Taxes
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income-tax law) and deferred
tax charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the period).
Income-tax expense is recognised in Statement of Profit or Loss except
that tax expense related to items recognised directly in reserves is
also recognized in those reserves.
Current tax is measured at the amount expected to be paid to (recovered
from) the taxation authorities, using the applicable tax rates and tax
laws. Deferred tax is recognised in respect of timing differences
between taxable income and accounting income i.e. differences that
originate in one period and are capable of reversal in one or more
subsequent periods. The deferred tax charge or credit and the
corresponding deferred tax liabilities or assets are recognised using
the tax rates and tax laws that have been enacted or substantively
enacted by the balance sheet date. Deferred tax assets are recognised
only to the extent there is reasonable certainty that the assets can be
realised in future; however, where there is unabsorbed depreciation or
carried forward loss under taxation laws, deferred tax assets are
recognised only if there is a virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets are reviewed as at each balance sheet date and written down or
written-up to reflect the amount that is reasonably/virtually certain
(as the case may be) to be realised.
Minimum Alternative Tax (''MAT'') under the provisions of the Income-tax
Act, 1961 is recognised as current tax in the Statement of Profit and
Loss. The credit available under the Act in respect of MAT paid is
recognised as an asset only when and to the extent there is convincing
evidence that the Company will pay normal income tax during the period
for which the MAT credit can be carried forward for set-off against the
normal tax liability. MAT credit recognised as an asset is reviewed at
each balance sheet date and written down to the extent, the aforesaid
convincing evidence no longer exists.
Q. Representative offices
In translating the financial statements of representative offices, the
monetary assets and liabilities are translated at the rate prevailing
at the balance sheet date; non- monetary assets and liabilities are
translated at exchange rate prevailing at the date of transaction and
income and expense items are converted at the respective month end
rate.
R. Earnings per share
Basic earnings/ (loss) per share are calculated by dividing the net
profit or loss for the year attributableto equity shareholders by the
weighted average number of equity shares outstanding during the year.
The weighted average numbers of equity shares outstanding during the
year are adjusted for eventsof bonus issue and share split. For the
purpose of calculating diluted earnings/ (loss) per share, thenet
profit or loss for the year attributable to equity shareholders and the
weighted average number ofshares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. The
dilutive potential equity shares are deemed to be converted as of the
beginning of the period, unless they have been issued at a later date.
S. Cash and cash equivalent
Cash and cash equivalents comprise cash balances on hand, cash balance
with bank, and highly liquid investments with maturity period of three
months or less from the date of investment.
Mar 31, 2012
A. Basis of preparation of financial statements
These financial statements have been prepared and presented on the
accrual basis of accounting and comply with the Accounting Standards
prescribed in the Companies (Accounting Standards) Rules, 2006 issued
by the Central Government, the relevant provisions of the Companies
Act, 1956 and other accounting principles generally accepted in India,
to the extent applicable. The financial statements are presented in
Indian rupees rounded off to the nearest lacs. This is the first year
of application of the revised Schedule VI to the Companies Act, 1956
for the preparation of the financial statements of the Company. The
revised Schedule VI introduces some significant conceptual changes as
well as new disclosures. These include classification of all assets
and liabilities into current and non-current. The previous year fi
gures have also undergone a major reclassification to comply with the
requirements of the revised Schedule VI.
B. Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of the financial statements. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in current and future periods.
CurrentÃnon-current classification
All assets and liabilities are classified into current and
non-current. Assets
An asset is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be realised in, or is intended for sale or
consumption in, the Company's normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting
date; or
(d) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
(a) it is expected to be settled in the Company's normal operating
cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date;
or
(d) the Company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities. All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
C. Fixed assets and depreciation
a) Tangible fixed assets
Tangible fixed assets except revalued assets are carried at cost of
acquisition or construction less accumulated depreciation and/or
accumulated impairment loss, if any. The cost of an item of tangible fi
xed asset comprises its purchase price, including import duties and
other non-refundable taxes or levies and any directly attributable cost
of bringing the asset to its working condition for its intended use;
any trade discounts and rebates are deducted in arriving at the
purchase price.
Subsequent expenditures related to an item of tangible fixed 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.
Tangible fixed assets acquired wholly or partly with Specific
grant/subsidy from government, if any, are recorded at the net
acquisition cost to the Company.
Borrowing costs are interest and other costs (including exchange
differences arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs) incurred by the
Company in connection with the borrowing of funds. Borrowing costs
directly attributable to acquisition or construction of those tangible
fixed assets which necessarily take a substantial period of time to
get ready for their intended use are capitalised. Other borrowing costs
are recognised as an expense in the period in which they are incurred.
Exchange differences (favorable as well as unfavorable) arising in
respect of translation/settlement of long term foreign currency
borrowings attributable to the acquisition of a depreciable asset are
also included in the cost of the asset.
The rates of depreciation prescribed in Schedule XIV to the Companies
Act, 1956 are considered as the minimum rates. If the management's
estimate of the useful life of a fixed asset at the time of
acquisition of the asset or of the remaining useful life on a
subsequent review is shorter than that envisaged in the aforesaid
schedule, depreciation is provided at a higher rate based on the
management's estimate of the useful life/remaining useful life.
Depreciation is accordingly provided at the rates which are equal to or
higher than the rates prescribed in Schedule XIV to the Companies Act,
1956 and are stated below:
- on plant and machinery : on written down value method as per rates
specified in Schedule XIV.
- on tools and dies : 30/40 % on written down value method on all tools
except those used in Acoustic (Horn) division which are depreciated at
the rate of 30% on straight line method basis
- on other fixed assets : on straight line method as per rates specifi
ed in Schedule XIV.
Leasehold land and leasehold improvements are amortised on a straight
line basis over the period of lease or their useful lives, whichever is
shorter. Freehold land is not depreciated.
Depreciation is provided on a pro-rata basis i.e. from the date on
which asset is ready for use.
Assets acquired under finance leases are depreciated over the shorter
of the lease term and their useful lives (not being greater than the
useful life envisaged in Schedule XIV to the Companies Act, 1956)
unless it is reasonably certain that the Company will obtain ownership
by the end of the lease term, in which case the depreciation rates
applicable for similar assets owned by the Company are applied.
Assets costing upto Rs 5,000 are fully depreciated in the year of
purchase.
Depreciation for the year is recognised in the Statement of Profit and
Loss.
The useful lives are reviewed by the management at each financial
year-end and revised, if appropriate. In case of a revision, the
unamortized depreciable amount is charged over the revised remaining
useful life.
A fixed asset is eliminated from the financial statements on disposal
or when no further benefit is expected from its use.
Assets retired from active use and held for disposal, if any, are
stated at the lower of their net book value and net realisable value
and shown under 'Other current assets'.
Losses arising from retirement or gains or losses arising from disposal
of fixed assets which are carried at cost are recognised in the
Statement of Profit and Loss.
b) Intangible fixed assets
(i) Goodwill: Goodwill that arises on an amalgamation or on the
acquisition of a business is presented as an intangible asset. Goodwill
arising from amalgamation is measured at cost less accumulated
amortisation and any accumulated impairment loss. Such goodwill is
amortised over its estimated useful life or five years whichever is
shorter. Goodwill arising on acquisition of a business is measured at
cost less any accumulated impairment loss. Goodwill is tested for
impairment annually.
(ii) Acquired intangible assets
Intangible assets that are acquired by the Company are measured
initially at cost. After initial recognition, an intangible asset is
carried at its cost less any accumulated amortisation and any
accumulated impairment loss.
Subsequent expenditure is capitalised only when it increases the future
economic benefits from the Specific asset to which it relates.
Intangible assets are amortised in the Statement of Profit or Loss
over their estimated useful lives, from the date that they are
available for use based on the expected pattern of consumption of
economic benefits of the asset. Accordingly, at present, these are
being amortised on straight line basis. In accordance with the
applicable Accounting Standard, the Company follows a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use. However,
if there is persuasive evidence that the useful life of an intangible
asset is longer than ten years, it is amortised over the best estimate
of its useful life. Such intangible assets and intangible assets that
are not yet available for use are tested annually for impairment.
The amortization rates are as follows:
i) Technical knowhow: Amortised over the period of agreement
ii) Computer software : 16.21% straight line method (except in the case
of Enterprise Resource Planning (ERP) system, which is depreciated over
a period not exceeding four years)
Amortisation method and useful lives are reviewed at each reporting
date. If the useful life of an asset is estimated to be significantly
different from previous estimates, the amortisation period is changed
accordingly. If there has been a significant change in the expected
pattern of economic benefits from the asset, the amortisation method
is changed to reflect the changed pattern.
An intangible asset is derecognised on disposal or when no future
economic benefits are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from
disposal 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.
c) Capital work-in-progress
Fixed assets under construction and cost of assets not put to use
before the year-end, are disclosed as capital work-in-progress.
D. Impairment
The carrying values of all assets are reviewed at each reporting date
to determine if there is an indication of any impairment. If any
indication exists, the asset's recoverable amount is estimated. For
assets that are not yet available for use, the recoverable amount is
estimated at each reporting date. An impairment loss is recognised
whenever the carrying amount of an asset or its cash generating unit
exceeds its recoverable amount and is recognised in the Statement of
Profit and Loss Account. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that would
have been determined net of depreciation or amortisation, if no
impairment loss had been recognised.
E. Leases
a) Operating leases
Assets acquired under leases other than finance leases are classified
as operating leases. The total lease rentals (including scheduled
rental increases) in respect of an asset taken on operating lease are
charged to the Statement of Profit and Loss on a straight line basis
over the lease term unless another systematic basis is more
representative of the time pattern of the benefit.
b) Finance leases
Assets acquired under finance leases are recognised as an asset and a
liability at the lower of the fair value of the leased assets at the
inception of the lease and the present value of minimum lease payments.
Lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is
allocated to periods during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability and
charged to the Statement of Profit and Loss.
F. Investments
Investments that are readily realisable and intended to be held for not
more than a year from the date of acquisition are classified as
current investments. All other investments are classified as long-term
investments. However, that part of long term investments which is
expected to be realized within 12 months after the reporting date is
also presented under 'current assets' as "current portion of long term
investments" in consonance with the currentÃnon-current classification
scheme of revised Schedule VI.
Long-term investments (including current portion thereof) are carried
at cost less any other-than temporary diminution in value, determined
separately for each individual investment. Current investments are
carried at the lower of cost and fair value.
Any reductions in the carrying amount and any reversals of such
reductions are charged or credited to the Statement of Profit and
Loss.
Investment in the capital of a partnership firm is shown by reference
to the capital of the firm on the balance sheet date. The Company's
share of Profit or loss in a partnership firm is recognised in the
Statement of Profit and Loss as and when it accrues i.e. when it is
computed and credited or debited to the capital/current/any other
account of the company in the books of the partnership firm.
G. Inventories
Inventories which comprise raw materials, work-in-progress, finished
goods, stock-in-trade, stores and spares, and loose tools are carried
at the lower of cost and net realisable value.
Cost of inventories comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to
their present location and condition.
In determining the cost, weighted average cost method is used. In the
case of manufactured inventories and work in progress, fixed
production overheads are allocated on the basis of normal capacity of
production facilities.
Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and the
estimated costs necessary to make the sale.
The net realisable value of work-in-progress is determined with
reference to the selling prices of related finished products. Raw
materials and other supplies held for use in the production of fi
nished products are not written down below cost except in cases where
material prices have declined and it is estimated that the cost of the
finished products will exceed their net realisable value.
The comparison of cost and net realisable value is made on an
item-by-item basis.
Finished goods inventory is inclusive of excise duty.
Inventories in transit are valued at cost.
Appropriate adjustments are made to the carrying value of damaged, slow
moving and obsolete inventories based on management's current best
estimate.
H. Revenue recognition
a) Revenue from sale of goods in the course of ordinary activities is
recognised when the property in the goods or all significant risks and
rewards of ownership are transferred to the customer and no signifi
cant uncertainty exists regarding the amount of the consideration that
will be derived from the sale of goods and regarding its collection.
The amount recognized as revenue is exclusive of sales tax, value added
taxes (VAT) and is net of returns and trade discounts.
b) Designing and service revenue is recognised on an accrual basis as
and when the services are rendered in accordance with the terms of the
underlying contract.
c) Interest income is recognised on a time proportionate basis taking
into account the amount outstanding and the interest rate applicable.
d) Dividend income is recognised when the right to receive dividend is
established.
e) Royalty income is recognised based on the terms of the underlying
agreement.
f) Claims lodged with insurance companies are accounted for on an
accrual basis, to the extent these are measurable and the ultimate
collection is reasonably certain.
g) Export entitlement under Duty Entitlement Pass Book Scheme ('DEPB')
is recognised on accrual basis and when the right to entitlement has
been established.
h) Share of Profit from partnership firms is recognized on accrual
basis.
I. Government grants
Government grants in the nature of promoters' contribution are credited
to capital reserve and treated as a part of shareholders' funds. Grants
from State Government towards revenue expenditure are recognised as
income either till the period of benefit expires or the financial cap
is reached, whichever occurs earlier.
J. Research and development
a) Revenue expenditure on research and development is charged off under
the respective heads of account in the year in which it is incurred.
b) Capitalised development expenditure is stated at cost less
accumulated amortisation and impairment losses, if any. Fixed assets
used for research and development are depreciated in accordance with
the Company's policy as stated above.
K. Foreign currency transactions
a) Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of the respective transactions. Monetary foreign
currency assets and liabilities remaining unsettled at the balance
sheet date are translated at the rates of exchange prevailing on that
date. The resultant exchange differences are recognised in the
Statement of Profit and Loss except exchange differences pertaining to
long term foreign currency monetary items that are related to
acquisition of depreciable assets and are adjusted in the carrying
amount of the related fixed assets
b) The Company uses forward contracts to hedge its foreign currency
risk relating to an existing asset/liability, which are covered under
Accounting Standard à Accounting for the effects of changes in foreign
exchange rates'.
Exchange difference on a forward exchange contract is the difference
between:
(a) the foreign currency amount of the contract translated at the
exchange rate at the reporting date, or the settlement date where the
transaction is settled during the reporting period; and
(b) the same foreign currency amount translated at the latter of the
date of inception of the forward exchange contract and the last
reporting date; and is recognised in the Statement of Profit and Loss.
The forward exchange contracts taken to hedge existing assets/
liabilities are translated at the closing exchange rates and the
resultant exchange differences are recognised in the same manner as
those on the underlying foreign currency asset or liability. Any profi
t or loss arising on cancellation/ renewal of such contracts is
recognised in the Statement of Profit and Loss for the year.
c) Investments in foreign entities are recorded at the exchange rate
prevailing on the date of making the investments.
d) Foreign currency loans covered by forward exchange contracts are
translated at the rate prevailing on the date of transaction as
increased or decreased by the proportionate difference between the
forward rate and exchange rate on the date of transaction, such
difference having been recognized over the life of the contract.
e) Commodity hedging
The Company enters into derivative contracts such as forward contracts
in relation to commodity options to hedge against the risk of adverse
movement in commodity price risk for metals used as raw materials.
However, the Company does not conduct speculative operations in the
future markets.
f) Increase or decrease in non-current liabilities on account of
exchange rate fluctuations have been adjusted in the cost of tangible
fixed assets.
L. Provisions
A provision is recognised if, as a result of a past event, the Company
has a present obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are recognised at the best estimate
of the expenditure required to settle the present obligation at the
balance sheet date. The provisions are measured on an undiscounted
basis.
Warranties
Warranty costs are estimated on the basis of a technical evaluation and
past experience. Provision is made for estimated liability in respect
of warranty costs in the year of sale of goods.
Contingencies
Provision in respect of loss contingencies relating to claims,
litigation, assessment, fi nes, penalties, etc. are recognised when it
is probable that a liability has been incurred, and the amount can be
estimated reliably.
M. Contingent liabilities and contingent assets
A contingent liability exists when there is a possible but not probable
obligation, or a present obligation that may, but probably will not,
require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant
provisions, but are disclosed unless the possibility of outflow of
resources is remote. Contingent assets are neither recognised nor
disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are
recognised in the period in which the change occurs.
N. Employee Benefits
a) Short term employee benefits
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits.
These benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short-term employee benefits to be paid in
exchange for employee services is recognised as an expense as the
related service is rendered by employees.
b) Post employment benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The Company makes specifi
ed monthly contributions towards employee provident fund to Government
administered provident fund scheme which is a defined contribution
plan. The Company's contribution is recognised as an expense in the
Statement of Profit and Loss during the period in which the employee
renders the related service.
The Company makes specified monthly contribution towards
superannuation fund to Superannuation Trust which is managed by the
Life Insurance Corporation of India ("LIC")
Defined benefit plan
The Company's gratuity benefit scheme is defined benefit plan. The
Company's net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value.
Any unrecognised past service costs and the fair value of any plan
assets are deducted. The calculation of the Company's obligation under
each of the two plans is performed annually by a qualified actuary
using the projected unit credit method.
The Company recognises all actuarial gains and losses arising from defi
ned benefit plans immediately in the Statement of Profit and Loss.
All expenses related to defined benefit plans are recognised in
employee benefits expense in the Statement of Profit and Loss. When
the benefits of a plan are improved, the portion of the increased
benefit related to past service by employees is recognised in
Statement of Profit or Loss on a straight-line basis over the average
period until the benefits become vested. The Company recognises gains
and losses on the curtailment or settlement of a defined benefit plan
when the curtailment or settlement occurs.
The Company's gratuity fund is administered and managed by the Life
Insurance Corporation of India ("LIC"). Actuarial gains and losses are
recognised immediately in the Statement of Profit and Loss.
Compensated absences
The employees can carry-forward a portion of the unutilised accrued
compensated absences and utilise it in future service periods or
receive cash compensation on termination of employment. Since the
compensated absences do not fall due wholly within twelve months after
the end of the period in which the employees render the related service
and are also not expected to be utilized wholly within twelve months
after the end of such period, the benefit is classified as a
long-term employee benefit.
The Company records an obligation for such compensated absences in the
period in which the employee renders the services that increase this
entitlement. The obligation is measured on the basis of independent
actuarial valuation using the projected unit credit method.
Actuarial gains and losses are recognised in the Statement of Profit
and Loss.
Termination benefits
Termination benefits are recognised as an expense when, as a result of
a past event, the Company has a present obligation that can be
estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation.
O. Income Taxes
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the income-tax law) and deferred
tax charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the period).
Income-tax expense is recognised in Statement of Profit or Loss except
that tax expense related to items recognised directly in reserves is
also recognized in those reserves.
Current tax is measured at the amount expected to be paid to (recovered
from) the taxation authorities, using the applicable tax rates and tax
laws. Deferred tax is recognised in respect of timing differences
between taxable income and accounting income i.e. differences that
originate in one period and are capable of reversal in one or more
subsequent periods. The deferred tax charge or credit and the
corresponding deferred tax liabilities or assets are recognised using
the tax rates and tax laws that have been enacted or substantively
enacted by the balance sheet date. Deferred tax assets are recognised
only to the extent there is reasonable certainty that the assets can be
realised in future; however, where there is unabsorbed depreciation or
carried forward loss under taxation laws, deferred tax assets are
recognised only if there is a virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets are reviewed as at each balance sheet date and written down or
written-up to reflect the amount that is reasonably/virtually certain
(as the case may be) to be realised.
Minimum Alternate Tax ('MAT') under the provisions of the Income-tax
Act, 1961 is recognised as current tax in the Statement of Profit and
Loss. The credit available under the Act in respect of MAT paid is
recognised as an asset only when and to the extent there is convincing
evidence that the Company will pay normal income tax during the period
for which the MAT credit can be carried forward for set-off against the
normal tax liability. MAT credit recognised as an asset is reviewed at
each balance sheet date and written down to the extent, the aforesaid
convincing evidence no longer exists.
P. Representative offices
In translating the financial statements of representative offices,
the monetary assets and liabilities are translated at the rate
prevailing at the balance sheet date; non-monetary assets and
liabilities are translated at exchange rate prevailing at the date of
transaction and income and expense items are converted at the
respective month end rate.
Mar 31, 2011
1. BASIS OF PREPARATION OF FINANCIAL STATEMENT
a) The Financial Statements are prepared under the historical cost
convention, in accordance with the generally accepted accounting
principles, accounting standards notified under Section 211(3C) of the
Companies Act'1956 and the relevant provision thereof. All income and
expenditure having a material bearing in the Financial Statements are
recognized on accrual basis.
2. USE OF ESTIMATES
a) The preparation of Financial Statement requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of Financial Statement and the reported amount
of revenue and expenses during the reported period. Differences between
the actual results and estimates are recognized in the period in which
the results are known/ materialized.
3. FIXED ASSETS
a) Fixed Assets except revalued assets are stated at cost of
acquisition inclusive of purchase price, duties, taxes, labour costs
and directly attributable costs for in house manufacturing of assets
and other direct costs incurred and other incidental expenses,
erection/ commissioning expenses etc. (net of Cenvat benefit availed
of excise duty, cess, countervailing duty on imported capital goods,
and vat/sales tax set off availed, wherever applicable) up to the date,
the assets are put to use. Increase or decrease in long term
liabilities on account of exchange rate fluctuations has been adjusted
in the cost of fixed assets.
b) Hardware/Software costs of Enterprises Resource Planning (ERP)
system includes cost of designing software, which provide significant
future economic benefits over an extended period. The cost comprises
of license fee, cost of system integration and implementation cost. The
costs are capitalized in the year in which the relevant system is ready
for intended use.
4. DEPRECIATION/AMORTIZATION
a) Depreciation on fixed assets is provided On Plant and Machinery on
Written Down Value method On other fixed assets on Straight Line
Method.at the rates and in the manner specified in Schedule-XIV in the
Companies Act, 1956.
Hardware/ software cost of ERP are amortized over the estimated useful
economic life not exceeding four years.
On Computer Software on straight-line method at the rate of 16.21
percent.
Leasehold land and lease hold improvements are amortized over the
period of lease.
b) Technical-know how fees is being amortized over a period of the
agreement.
5. IMPAIRMENT OF ASSETS
a) An impairment loss is recognized whenever the carrying amount of an
asset is in excess of its recoverable amount and same is recognized as
an expense in the statement of profit and loss account of the assets is
reduced to its 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 decreased.
6. INVESTMENTS
a) Long term investments are valued at cost. Current Investments are
valued at cost or fair market value whichever is lower. Provision for
permanent diminution in the value of Long Term Investments, if any, is
based on perception of the management of the Company.
7. INVENTORIES
a) Raw material (including packing material), Finished Goods and
Work-in-Progress are valued at lower of cost (Moving Average Price) or
net realizable value.
b) "Stores and Spares" and "Material in Transit" are valued at cost.
8. SALES
a) Sales comprise amounts invoiced for goods sold inclusive of excise
duty, cess, but net of Sales Tax/VAT and returns/rejections.
b) Sales includes sale of own products, design income, job work,
scraps, tools, dies and moulds and consumable material.
9. GOVERNMENT GRANTS
a) Grants relating to fixed assets are shown as Deferred Government
Grant and those of the nature of Capital Subsidy are credited to
Capital Reserve.
b) Other Government Grants are credited to Profit and Loss Account or
deducted from the related expenses.
10. BORROWING COST
a) Borrowing costs directly attributable to the acquisition or
construction of fixed assets are capitalized as part of the cost of the
assets up to the date each asset is put to use. All other borrowing
costs are charged to revenue.
11. RESEARCH AND DEVELOPMENT
a) Revenue expenditure incurred on research and development is charged
to Profit and Loss Account in respective account heads.
b) Capital expenditure incurred on research and development activity is
included in fixed assets and depreciated at applicable rates.
12. FOREIGN CURRENCY TRANSACTIONS
a) Investments in foreign entities are recorded at the exchange rate
prevailing on the date of making the investments.
b) Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction.
c) Foreign currency loans covered by forward exchange contracts are
translated at the rate prevailing on the date of transaction as
increased or decreased by the proportionate difference between the
forward rate and exchange rate on the date of transaction, such
difference having been recognized over the life of the Contract.
d) In the case of liabilities incurred for the acquisition of fixed
assets, the loss or gain on conversion (at the rate prevailing at the
year end or at the forward rate where forward cover has been taken) is
included in the carrying amount of the related fixed assets.
e) Current Assets and Liabilities (other than those relating to fixed
assets and investments) are restated at the rates prevailing at the
year end or at the forward rate where forward cover has been taken. The
difference between exchange rate at the year end and at the date of the
transaction is recognized as income or expense in Profit and Loss
Account. In respect of transactions covered by forward exchange
contracts, the difference between the contract rate and the rate on the
date of the transaction is recognized as income or expense in the
Profit and Loss Account over the life of the contract.
13 COMMODITY HEDGING
a) The Company uses forward contracts and options to hedge its exposure
to the movement of commodity price risk for metals used as raw
materials. These forward contracts and options are not used for trading
or speculation purpose. The gains or losses arising on this account
are adjusted to the consumption of raw materials.
14. REPRESENTATIVE OFFICES
a) In translating the financial statements of representative offices,
the monetary assets and liabilities are translated at the rate
prevailing at the balance sheet date; non-monetary assets and
liabilities are translated at exchange rate prevailing at the date of
transaction and income and expense items are converted at the
respective monthly average rate.
15. CUSTOM AND EXCISE DUTY
a) Custom duty on material and machinery lying in bond and in transit
is accounted for at the time of clearance thereof.
b) Excise Duty has been accounted on the basis of both payments made in
respect of goods cleared as also provision made for goods lying in
bonded warehouse.
16. RETIREMENT BENEFITS
a) The payment for present liability of future payment of gratuity is
being made to approved gratuity fund, which covers the same under the
policy of Life Insurance Corporation of India.
b) Provision for Leave Encashment benefits have been made on the basis
of actuarial valuation.
17. SHARE ISSUE EXPENSES
a) Share issue expenses are amortized over a period of five years.
18. WARRANTY COSTS
a) Product warranty costs are accrued in the year of sale of products,
based on technical estimates.
19. LIABILITIES
a) All liabilities are provided for in the accounts except liabilities
of a contingent nature, which are disclosed in the notes on accounts.
20. TAXATION
a) The provision for income tax for the year is based on the assessable
profit as computed in accordance with the Income Tax Act, 1961/Income
Tax Rules, 1962.
b) Deferred tax is recognized subject to consideration, of prudence on
timing differences, being the difference between Taxable income and
accounting income that originate in one period and capable of reversal
in one or more subsequent periods.
21. ACCOUNTING STANDARDS
a) The accounts have been prepared in compliance with the applicable
Accounting Standards referred to in section 211 (3C) of the Companies
Act, 1956.
Mar 31, 2010
1. BASIS OF PREPARATION OF FINANCIAL STATEMENT
a) The Financial Statements are prepared under the historical cost
convention, in accordance with the generally accepted accounting
principles, accounting standards notified under Section 211(3C) of the
Companies Act, 1956 and the relevant provision thereof. All income and
expenditure having a material bearing in the Financial Statements are
recognized on accrual basis.
2. USE OF ESTIMATES
a) The preparation of Financial Statement requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of Financial Statement and the reported amount
of revenue and expenses during the reported period. Differences between
the actual results and estimates are recognized in the period in which
the results are known/ materialized.
3. FIXED ASSETS
a) Fixed Assets except revalued assets are stated at cost of
acquisition inclusive of purchase price, duties, taxes, labour costs
and directly attributable costs for in house manufacturing of assets
and other direct costs incurred and other incidental expenses,
erection/ commissioning expenses etc. (net of Cenvat benefit availed of
excise duty, cess, countervailing duty on imported capital goods, and
vat/sales tax set off availed, wherever applicable) up to the date, the
assets are put to use. Increase or decrease in long term liabilities on
account of exchange rate fluctuations has been adjusted in the cost of
fixed assets.
b) Capitalised hardware/software costs of Enterprises Resource Planning
(ERP) system includes cost of designing software, which provide
significant future economic benefits over an extended period. The cost
comprises of license fee, cost of system integration and implementation
cost. The costs are capitalized in the year in which the relevant
system is ready for intended use. The up gradation/ enhancement costs
are also capitalized.
4. DEPRECIATION/AMORTIZATION
a) Depreciation on fixed assets is provided
- On Plant and Machinery on Written Down Value method
- On other fixed assets on Straight Line Method at the rates and in the
manner specified in Schedule-XIV in the Companies Act, 1956.
- Capitalized hardware/ software cost of ERP are amortized over the
estimated useful economic life not exceeding four years.
- On Computer Software on straight-line method at the rate of 16.21
percent.
- Leasehold land and leasehold improvements are amortized over the
period of lease.
b) Technical-know how fees is being amortized over a period of the
agreement.
5. IMPAIRMENT OF ASSETS
a) An impairment loss is recognized whenever the carrying amount of an
asset is in excess of its recoverable amount and same is recognized as
an expense in the statement of profit and loss account of the assets is
reduced to its 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 decreased.
6. INVESTMENTS
a) Long term investments are valued at cost. Current Investments are
valued at cost or fair market value whichever is lower. Provision for
permanent diminution in the value of Long Term Investments, if any, is
based on perception of the management of the Company.
7. INVENTORIES
a) Raw material (including packing material), Finished Goods and
Work-in-Progress are valued at lower of cost (Moving Average Price) or
net realizable value.
b) "Stores and Spares" and "Material in Transit" are valued at cost.
8. SALES
a) Sales comprise amounts invoiced for goods sold inclusive of excise
duty, cess, but net of sales tax /VAT and returns/rejections.
b) Sales includes sale of own products, design income, job work,
scraps, tools, dies and moulds and consumable material.
9. GOVERNMENT GRANTS
a) Grants relating to fixed assets are shown as Deferred Government
Grant and those of the nature of Capital Subsidy are credited to
Capital Reserve.
b) Other Government Grants are credited to Profit and Loss Account or
deducted from the related expenses.
10. BORROWING COST
a) Borrowing costs directly attributable to the acquisition or
construction of fixed assets are capitalized as part of the cost of the
assets up to the date each asset is put to use. All other borrowing
costs are charged to revenue.
11. RESEARCH AND DEVELOPMENT
a) Revenue expenditure incurred on research and development is charged
to Profit and Loss Account in respective account heads.
b) Capital expenditure incurred on research and development activity is
included in fixed assets and depreciated at applicable rates.
12. FOREIGN CURRENCY TRANSACTIONS
a) Investments in foreign entities are recorded at the exchange rate
prevailing on the date of making the investments.
b) Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction.
c) Foreign currency loans covered by forward exchange contracts are
translated at the rate prevailing on the date of transaction as
increased or decreased by the proportionate difference between the
forward rate and exchange rate on the date of transaction, such
difference having been recognized over the life of the Contract.
d) In the case of liabilities incurred for the acquisition of fixed
assets, the loss or gain on conversion (at the rate prevailing at the
year end or at the forward rate where forward cover has been taken) is
included in the carrying amount of the related fixed assets.
e) Current Assets and Liabilities (other than those relating to fixed
assets and investments) are restated at the rates prevailing at the
year end or at the forward rate where forward cover has been taken. The
difference between exchange rate at the year end and at the date of the
transaction is recognized as income or expense in Profit and Loss
Account. In respect of transactions covered by forward exchange
contracts, the difference between the contract rate and the rate on the
date of the transaction is recognized as income or expense in the
Profit and Loss Account over the life of the contract.
13. COMMODITY HEDGING
a) The company uses forward contracts and options to hedge its exposure
to the movement of commodity price risk for metals used as raw
materials. These forward contracts and options are not used for trading
or speculation purpose.
The gains or losses arising on this account are adjusted to the
consumption of raw materials.
14. REPRESENTATIVE OFFICES
a) In translating the financial statements of representative offices,
the monetary assets and liabilities are translated at the rate
prevailing at the balance sheet date; non-monetary assets and
liabilities are translated at exchange rate prevailing at the date of
transaction and income and expense items are converted at the
respective monthly average rate.
15. CUSTOM AND EXCISE DUTY
a) Custom duty on material and machinery lying in bond and in transit
is accounted for at the time of clearance thereof.
b) Excise Duty has been accounted on the basis of both payments made in
respect of goods cleared as also provision made for goods lying in
bonded warehouse.
16. RETIREMENT BENEFITS
a) The payment for present liability of future payment of gratuity is
being made to approved gratuity fund, which covers the same under the
policy of Life Insurance Corporation of India.
b) Provision for Leave Encashment benefits have been made on the basis
of actuarial valuation.
c) Retirement benefits in the form of Provident Fund and Superannuation
Schemes are charged to Profit and Loss Account for the year when the
contributions to the respective fund are due.
17. PRELIMINARY EXPENSES/SHARE ISSUE EXPENSES
a) Preliminary expenses/Share issue expenses are amortized over a
period of five years.
18. WARRANTY COSTS
a) Product warranty costs are accrued in the year of sale of products,
based on technical estimates.
19. LIABILITIES
a) All liabilities are provided for in the accounts except liabilities
of a contingent nature, which are disclosed in the notes on accounts.
20. TAXATION
a) The provision for income tax for the year is based on the assessable
profit as computed in accordance with the Income Tax Act, 1961/ Income
Tax Rules, 1962.
b) Deferred tax is recognized subject to consideration, of prudence on
timing differences, being the difference between Taxable income and
accounting income that originate in one period and capable of reversal
in one or more subsequent periods.
21. ACCOUNTING STANDARDS
a) The accounts have been prepared in compliance with the applicable
Accounting Standards referred to in section 211 (3C) of the Companies
Act, 1956.