Mar 31, 2019
I SIGNIFICANT ACCOUNTING POLICY
The Company has consistently applied the following accounting policies to all periods presented in the financial statements.
a) Property, plant and equipment
i) Recognition and measurement
Items of property, plant and equipment are measured at cost, 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.
Borrowing costs relating to acquisition of qualifying fixed assets, if material, are also included in cost to the extent they relate to the period till such assets are ready to be put to use.
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. The cost of replacing part of an item of property, plant and equipment are recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of all other repairs and maintenance are recognised in the Statement of Profit & Loss as incurred.
Capital work-in-progress includes cost of property, plant and equipment under installation / under development as at the balance sheet date. Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other noncurrent assets.
An item of property, plant and equipment is derecognised when no future economic benefit are expected to arise from the continued use of the asset or upon disposal. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
ii) Depreciation
Depreciation on property, plant and equipment is provided on the Straight Line Method based on the useful life of assets as prescribed under Schedule II of the Companies Act, 2013, which are as follows:
Buildings including Factory Buildings and Roads : 5 - 60 years
Plant & Equipment (Including Continuous Process Plant, Components & Laboratory Equipment) : 5 - 25 years
Electrical Installations : 10 years
Furniture and Fixtures : 10 years
Air Conditioners and coolers : 5 years
Office Equipment : 5 - 10 years
Motor Vehicles : 5 years
Computer and Servers & Networks : 3 - 6 years
Leasehold land is being amortised over the lease period. Buildings constructed on Leasehold land are depreciated based on the useful life prescribed in the Schedule II of the Companies Act, 2013.
Depreciation on additions to or on disposal of assets is calculated on pro-rata basis i.e. from (upto) the date on which the property, plant and equipment is available for use (disposed off).
b) Intangible assets
i) Recognition and measurement
Intangible Assets Acquired Separately
Intangible assets that are acquired by the Company are measured at cost. Subsequent to initial recognition, the assets are measured at cost, less accumulated amortisation and accumulated impairment losses, if any.
Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate.
All intangible assets are tested for impairment when there are indications that the carrying value may not be recoverable. Impairment losses, if any, are recognised immediately in profit or loss.
An item of intangible asset is derecognised when no future economic benefit are expected to arise from the continued use of the asset or upon disposal. Any gain or loss on disposal of an item of intangible assets is recognised in profit or loss.
ii) Amortisation
Amortization is recognised in the income statement on a straight-line basis over the estimated useful lives of intangible assets or on any other basis that reflects the pattern in which the assetâs future economic benefits are expected to be consumed by the entity. Intangible assets that are not available for use are amortized from the date they are available for use.
The estimated useful lives are as follows:
Software : 5 years
The amortization period and the amortization method for intangible assets are reviewed at each reporting date.
c) Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication on impairment. If any such indication exists, then the assetâs recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use or 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 asset.
An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognised in Statement of Profit and Loss
In respect of 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 assets 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.
After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
d) Financial Instruments
i) Initial recognition
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognised at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
ii) Subsequent measurement
(a) Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost by applying the Effective Interest Rate (EIR) Method to gross carrying amount of the financial asset, if it is held within a business model whose objective is to hold the asset in order 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. When the financial asset is derecognised or impaired, the gain or loss is recognised in the statement of profit and loss.
(b) Financial assets at fair value through other comprehensive income
Equity instruments are subsequently measured at fair value. 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. Fair value gains and losses recognised in OCI are not reclassified to profit and loss.
(c) Financial assets at fair value through profit or loss
Financial assets which is not classified in any of the above categories are subsequently fair valued through profit or loss.
(d) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest rate method. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
(e) Reclassification of Financial Assets and 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. 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.
(f) Investment in subsidiary Investment in subsidiary is carried at cost.
iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. Except Trade receivables, expected credit losses are measured at an amount equal to the 12-month Expected Credit Loss (ECL), unless there has been a significant increase in credit risk from initial recognition, in which case those are measured at lifetime ECL.
With regard to trade receivable, the Company applies the simplified approach , which requires expected lifetime losses to be recognised from the initial recognition of the trade receivables.
iv) Derecognition
Financial Assets
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.
v) Derivative financial instruments
The Company is exposed to exchange rate risk which arises from its foreign exchange revenues, primarily in Euro and US Dollars. The Company uses foreign exchange forward contracts (derivative financial instruments), to hedge foreign currency risk associated with highly probable forecasted transactions and classifies them as cash flow hedges.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are taken directly to profit and loss.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
The Company makes an assessment, on an on-going basis, of whether the hedging instruments are expected to be âhighly effectiveâ in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged risk.
(vi) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company 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.
e) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using other valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
Fair values for measurement and/ or disclosure purposes are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 - This includes financial instruments measured using quoted prices.
Level 2 - The fair value of financial instrument that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs require to fair value an instrument are observable, the instrument is included in level 2. Inputs other than quoted prices included within 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 - If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
f) Inventories
Inventories are valued at lower of Cost and Net Realisable value. The cost of finished goods is determined by taking material, labour and related factory overheads including depreciation. Cost of material is determined on weighted average cost basis. Further the cost for Work-in-Progress includes material cost, stage wise direct cost and other related manufacturing overheads including depreciation. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Net realisable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and making the sale.
Cost of raw materials, packing materials, stores and spares are determined on weighted average basis.
Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, the same are written off or provision is made for such inventories.
g) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Contingent liability is disclosed after careful evaluation of facts, uncertainties and possibility of reimbursement, unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent liabilities are not recognised but are disclosed in notes.
Contingent assets are not disclosed in the financial statements unless an inflow of economic benefits is probable.
h) Revenue from contracts with customers
The Company derives revenue from sale of Insoluble Sulpur, Sulphuric Acid and Oleum.
Ind AS 115 âRevenue from Contracts with Customersâ provides a control-based revenue recognition model and provides a five step application approach to be followed for revenue recognition.
- Identify the contract(s) with a customer;
- Identify the performance obligations;
- Determine the transaction price;
- Allocate the transaction price to the performance obligations;
- Recognise revenue when or as an entity satisfies performance obligation.
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.
The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from contracts with customers are provided in Note 14 and disclosures of transition approach along with impact of adoption of Ind AS 115 on financial statements are provided in Note 1(t).
Sale of goods
For Sale of goods, revenue is recognised on satisfaction of performance obligation upon transfer of Control of promised products to Customers at an amount that reflects the Consideration, the Company expects to receive in exchange for those products.
i) Other Revenue Streams
Export Benefits
In case of direct exports made by the Company, export benefits arising from Drawback, Merchandise Export Incentive Scheme are recognised on shipment of direct exports.
Revenue from exports benefits measured at the fair value of consideration received or receivable net of returns.
Interest Income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the assetâs net carrying amount on initial recognition. Interest income is included in other income in the statement of profit and loss.
Dividends
Dividend income is recognised when the Companyâs right to receive dividend is established, and is included in other income in the statement of profit and loss.
j) Employee Benefits
i) Short term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid 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 obligation can be estimated reliably.
ii) Defined contribution plans
Employees benefits in the form of the Companyâs contribution to Provident Fund, Pension scheme, Superannuation Fund and Employees State Insurance are defined contribution schemes. The Company recognises contribution payable to these schemes as an expense, when an employee renders the related service.
If the contribution payable exceeds contribution already paid, the deficit payable is recognised as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the end of the reporting period, the Company recognise that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund.
iii) Defined benefit plans
Retirement benefits in the form of gratuity are considered as defined benefit plans. The Companyâs net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The Company provides for its gratuity liability based on actuarial valuation of the gratuity liability as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary. The Company contributes to the gratuity fund, which are recognised as plan assets. The defined benefit obligation as reduced by fair value of plan assets is recognised in the Balance Sheet.
When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in Other Comprehensive Income. Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset), to the net defined liability (asset) at the start of the financial year after taking into account any changes as a result of contribution and benefit payments during the year. 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 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.
iv) Other long-term employee benefits
Employee benefits in the form of long term compensated absences are considered as long term employee benefits. The Companyâs net obligation in respect of long-term employee benefits is 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. Remeasurement are recognised in profit or loss in the period in which they arise.
The liability for long term compensated absences are provided based on actuarial valuation as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary.
k) Foreign currency transactions
Initial recognition:
Transactions in foreign currencies are translated into the Companyâs functional currency at the exchange rates at the dates of the transactions.
Conversion:
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Nonmonetary 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 difference:
Exchange differences are recognised in Statement of profit & loss. In accordance with Ind-AS 101 âFirst Time Adoption of Indian Accounting Standardsâ, the Company has continued the policy of capitalisation of exchange differences on foreign currency loans taken before the transition date. Accordingly, exchange differences arising on translation of long term foreign currency monetary items relating to acquisition of depreciable fixed assets taken before the transition date are capitalized and depreciated over the remaining useful life of the asset.
l) Research and Development Expenses
Revenue Expenditure on Research and Development is charged to Statement of Profit and loss in the year in which it is incurred and capital expenditure is added to Property, Plant & Equipment.
m) Borrowing costs
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.
n) Income Tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to items recognised directly 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 after taking credit of the benefits available under the Income Tax Act and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if, the Company:
a) has a legally enforceable right to set off the recognised amounts; and
b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
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 tax bases used for taxation purposes. Deferred tax is not recognised for:
- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and
- temporary differences related to investments in subsidiary to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.
A deferred income tax asset is recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences and tax losses can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at 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.
For operations carried out in tax free units, deferred tax assets or liabilities, if any, have been recognised for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends.
Deferred tax assets and liabilities are offset only if:
a) The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
b) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is probable evidence that the Company will pay normal income tax in future. Accordingly, MAT is recognised as deferred tax asset in the Balance Sheet.
o) Segment Reporting
The Companyâs business activity falls within a single segment viz., Manufacturing and Sales of Chemicals. The segment has been identified by taking into account the nature of product, the differing risks, the returns, the organisation structure and the internal reporting systems and the manner in which operating results are reviewed by the Chief Operating Decision Maker (CODM).
p) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand and short-term deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
q) Cash flow statement
Cash flow statements are prepared in accordance with âIndirect Methodâ as explained in the Accounting Standard on Statement of Cash Flows (Ind AS - 7). The cash flows from regular revenue generating, financing and investing activity of the Company are segregated.
r) Lease
At inception of an arrangement, it is determined whether the arrangement is or contains a lease, based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Company as lessee under operating lease
Payments made under operating leases are recognised in profit or loss. The payments are in line with the expected general inflation to compensate the lessors expected inflationary cost increase.
s) Earning per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to Equity Shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted Earning per Share, the net profit or loss for the period attributable to Equity Shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
t) Changes in accounting policies and disclosures
New and amended standards
The Company applied Ind AS 115 for the first time. The nature and effect of the changes as a result of adoption of new accounting standards are described below. Several other amendments and interpretations apply for the first time in March 2019, but do not have an impact on the financial statements of the Company. The Company has not early adopted any standards or amendments that have been issued but are not yet effective.
Ind AS 115 Revenue from Contracts with Customers
Ind AS 115 was issued on March 28, 2018 and supersedes Ind AS 11 Construction Contracts and Ind AS 18 Revenue and it applies, with limited exceptions, to all revenue arising from contracts with its customers. Ind AS 115 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
Ind AS 115 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.
The Company adopted Ind AS 115 using the modified retrospective method of adoption. The change did not have a material impact on the financial statements of the Company.
Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Considerations
The appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the de-recognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or nonmonetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the date of the transactions for each payment or receipt of advance consideration. This Interpretation does not have any impact on the Companyâs financial statements.
Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealised Losses
The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.
Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact.
These amendments do not have any impact on the Company as the Company has no deductible temporary differences or assets that are in the scope of the amendments.
u) Standards issued but not effective upto the date of Financial Statements
Ind AS 116 Leases
Ind AS 116 Leases was notified by MCA on March 30, 2019 and it replaces Ind AS 17 Leases, including appendices thereto. Ind AS 116 is effective for annual periods beginning on or after April 01 2019. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under Ind AS 17. The standard includes two recognition exemptions for lessees- leases of âlow-valueâ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under Ind AS 116 is substantially unchanged from todayâs accounting under Ind AS 17. Lessors will continue to classify all leases using the same classification principle as in Ind AS 17 and distinguish between two types of leases: operating and finance leases.
The Company intends to adopt these standards from April 01 2019. The impact on adoption of Ind AS 116 on the financial statements is given below. Ind AS 116 also requires lessees and lessors to make more extensive disclosures than under Ind AS 17.
Mar 31, 2018
NOTES TO FINANCIAL STATEMENT FOR THE YEAR ENDED MARCH 31, 2018
1. COMPANY OVERVIEW, BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
I CORPORATE INFORMATION
Oriental Carbon and Chemicals Limited ( "OCCL" or "the Company" ) is a public limited company domiciled in India and has its registered office at Kolkata. The shares of the Company are listed on National Stock Exchange of India Ltd. and Bombay Stock Exchange Ltd. The Company''s core business is manufacturing and sales of Insoluble Sulphur. The Company is a global supplier of Insoluble Sulphur and about two-third of the turnover of the Company is from Exports. It has two manufacturing facilities, one in Haryana and other one in Gujrat.
II BASIS OF PREPARATION
a) Statement of compliance
These financial statements have been prepared in accordance with the recognition and measurement principles laid down in the Indian Accounting Standard (âInd ASâ) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 (âthe Actâ) and other relevant provisions of the Act to the extent applicable.
The financial statement up to year ended March 31, 2017 were prepared in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) and other relevant provisions of the Act.
As these are the Companyâs first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 35.
These financial statements were authorized for issue by the Board of Directors on May 29, 2018
b) Basis of measurement
The financial statements have been prepared on an accrual basis and under the historical cost convention, except for the following:
i. Certain financial assets and liabilities (including derivative instruments) measured at Fair Value/Amortized Cost;
ii. Defined benefit plan assets measured at fair value;
c) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The financial statements are presented in Indian National Rupee (âINRâ), which is the Companyâs functional and presentation currency. All amounts have been rounded to two decimal points of lakhs, unless otherwise indicated.
d) Current or Non current classification
All Assets and Liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of the business of the Company and its business time cycle from inception of an order and its completion on realization in cash and cash equivalents, the Company has ascertained the operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
e) Use of judgments and estimates
In preparing these financial statements, management has made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, the disclosures of contingent liabilities and contingent assets as at the date of financial statements, income and expenses during the period. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to estimates are recognized prospectively.
Application of accounting policies that require critical accounting estimates and assumption judgments having the most significant effect on the amounts recognized in the financial statements are:
Measurement of defined benefit obligations;
Recognition of deferred tax assets & MAT credit entitlement;
Useful life and residual value of Property, plant and equipment and intangible assets;
Measurement of Fair Value of Current Investments;
Measurement of fair value of Equity Investments.
III SIGNIFICANT ACCOUNTING POLICY
The Company has consistently applied the following accounting policies to all periods presented in the financial statements.
a) Property, plant and equipment
i) Recognition and measurement
Items of property, plant and equipment are measured at cost, 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.
Borrowing costs relating to acquisition of qualifying fixed assets, if material, are also included in cost to the extent they relate to the period till such assets are ready to be put to use.
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. The cost of replacing part of an item of property, plant and equipment are recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of all other repairs and maintenance are recognized in the Statement of Profit & Loss as incurred.
Capital work-in-progress includes cost of property, plant and equipment under installation / under development as at the balance sheet date. Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other noncurrent assets.
An item of property, plant and equipment is derecognized when no future economic benefit are expected to arise from the continued use of the asset or upon disposal. Any gain or loss on disposal of an item of property, plant and equipment is recognized 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 its property, plant and equipment recognized as at April 1, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
The Company has estimated the useful lives based on the Assessment made by technical expert, of Air-Conditioners & Coolers and Motor Vehicles different from the life prescribed in Schedule-II to the Companies Act,2013 from 10 years to 5 years and from 8 years to 5 years respectively.
Leasehold land is being amortized over the lease period. Buildings constructed on Leasehold land are depreciated based on the useful life prescribed in the Schedule II of the Companies Act, 2013.
Depreciation on additions to or on disposal of assets is calculated on pro-rata basis i.e. from (up to) the date on which the property, plant and equipment is available for use (disposed off).
b) Intangible assets
i) Recognition and measurement Intangible Assets Acquired Separately
Intangible assets that are acquired by the Company are measured at cost. Subsequent to initial recognition, the assets are measured at cost, less accumulated amortisation and accumulated impairment losses, if any. Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate.
All intangible assets are tested for impairment when there are indications that the carrying value may not be recoverable. Impairment losses, if any, are recognized immediately in profit or loss.
An item of intangible asset is derecognized when no future economic benefit are expected to arise from the continued use of the asset or upon disposal. Any gain or loss on disposal of an item of intangible assets is recognized in profit or loss.
ii) Transition to Ind AS
On transition to Ind AS, Company has elected to continue with the carrying value of all of its intangible assets recognized as at April 1, 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such intangible assets.
iii) Amortisation
Amortisation is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets or on any other basis that reflects the pattern in which the assetâs future economic benefits are expected to be consumed by the entity. Intangible assets that are not available for use are amortized from the date they are available for use.
The estimated useful lives are as follows:
Software : 5 years
The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.
c) Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication on impairment. If any such indication exists, then the assetâs recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use or 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 asset.
An impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognized in Statement of Profit and Loss.
In respect of assets for which impairment loss has been recognized 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 assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss had been recognized.
After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
d) Financial Instruments
i) Initial recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
ii) Subsequent measurement
(a) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost by applying the Effective Interest Rate (EIR) Method to gross carrying amount of the financial asset, if it is held within a business model whose objective is to hold the asset in order 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. When the financial asset is derecognized or impaired, the gain or loss is recognized in the statement of profit and loss.
(b) Financial assets at fair value through other comprehensive income
Equity instruments are subsequently measured at fair value. 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. Fair value gains and losses recognized in OCI are not reclassified to profit and loss.
(c) Financial assets at fair value through profit or loss
Financial assets which is not classified in any of the above categories are subsequently fair valued through profit or loss.
(d) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest rate method. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
(e) Reclassification of Financial Assets and 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. 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 recognized gains, losses (including impairment gains or losses) or interest.
(f) Investment in subsidiary
Investment in subsidiary is carried at cost.
iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI debt instruments. Except Trade receivables, expected credit losses are measured at an amount equal to the 12-month Expected Credit Loss (ECL), unless there has been a significant increase in credit risk from initial recognition, in which case those are measured at lifetime ECL.
With regard to trade receivable, the Company applies the simplified approach , which requires expected lifetime losses to be recognized from the initial recognition of the trade receivables.
iv) Derecognition Financial Assets
Company derecognizes 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 recognized 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 derecognized.
Financial Liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
v) Derivative financial instruments
The Company is exposed to exchange rate risk which arises from its foreign exchange revenues, primarily in Euro and US Dollars. The Company uses foreign exchange forward contracts (derivative financial instruments), to hedge foreign currency risk associated with highly probable forecasted transactions and classifies them as cash flow hedges.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are taken directly to profit and loss.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
The Company makes an assessment, on an on-going basis, of whether the hedging instruments are expected to be âhighly effectiveâ in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged risk.
(vi) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
e) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using other valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
Fair values for measurement and/ or disclosure purposes are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 - This includes financial instruments measured using quoted prices.
Level 2 - The fair value of financial instrument that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs require to fair value an instrument are observable, the instrument is included in level 2. Inputs other than quoted prices included within 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 - If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
f) Inventories
Inventories are valued at lower of Cost and Net Realizable value. The cost of finished goods is determined by taking material, labour and related factory overheads including depreciation. Cost of material is determined on weighted average cost basis. Further the cost for Work-in-Progress includes material cost, stage wise direct cost and other related manufacturing overheads including depreciation. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and making the sale.
Cost of raw materials, packing materials, stores and spares are determined on weighted average basis.
Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, the same are written off or provision is made for such inventories.
g) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Contingent liability is disclosed after careful evaluation of facts, uncertainties and possibility of reimbursement, unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent liabilities are not recognized but are disclosed in notes.
Contingent assets are not disclosed in the financial statements unless an inflow of economic benefits is probable.
h) Revenue Recognition
i) Sale of goods
Revenue is measured at the fair value of the consideration received or receivable. Revenue is recognized when the significant risk and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods to the degree usually associated with the ownership, and the amount of revenue can be measured reliably, regardless of when the payment is being made. Amounts disclosed as revenue are inclusive of excise duty, till it was applicable, and net of returns, trade discounts and rebates.
Incentives on exports are recognized in books after due consideration of certainty of utilization/ receipt of such incentives.
ii) Interest Income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the assetâs net carrying amount on initial recognition. Interest income is included in other income in the statement of profit and loss.
iii) Dividends
Dividend income is recognized when the Companyâs right to receive dividend is established, and is included in other income in the statement of profit and loss.
i) Employee Benefits
i) Short term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid 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 obligation can be estimated reliably.
ii) Defined contribution plans
Employees benefits in the form of the Companyâs contribution to Provident Fund, Pension scheme, Superannuation Fund and Employees State Insurance are defined contribution schemes. The Company recognizes contribution payable to these schemes as an expense, when an employee renders the related service. If the contribution payable exceeds contribution already paid, the deficit payable is recognized as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the end of the reporting period, the Company recognize that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund.
iii) Defined benefit plans
Retirement benefits in the form of gratuity are considered as defined benefit plans. The Companyâs net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The Company provides for its gratuity liability based on actuarial valuation of the gratuity liability as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary. The Company contributes to the gratuity fund, which are recognized as plan assets. The defined benefit obligation as reduced by fair value of plan assets is recognized in the Balance Sheet.
When the calculation results in a potential asset for the company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in Other Comprehensive Income. Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset), to the net defined liability (asset) at the start of the financial year after taking into account any changes as a result of contribution and benefit payments during the year. Net interest expense and other expenses related to defined benefit plans are recognized 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 or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
iv) Other long-term employee benefits
Employee benefits in the form of long term compensated absences are considered as long term employee benefits. The Companyâs net obligation in respect of long-term employee benefits is 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. Remeasurement are recognized in profit or loss in the period in which they arise.
The liability for long term compensated absences are provided based on actuarial valuation as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary. j) Foreign currency transactions Initial recognition:
Transactions in foreign currencies are translated into the Companyâs functional currency at the exchange rates at the dates of the transactions.
Conversion:
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Nonmonetary 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. Nonmonetary 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 difference:
Exchange differences are recognized in Statement of profit & loss. In accordance with Ind-AS 101 âFirst Time Adoption of Indian Accounting Standardsâ, the Company has continued the policy of capitalization of exchange differences on foreign currency loans taken before the transition date. Accordingly, exchange differences arising on translation of long term foreign currency monetary items relating to acquisition of depreciable fixed assets taken before the transition date are capitalized and depreciated over the remaining useful life of the asset. k) Research and Development Expenses
Revenue Expenditure on Research and Development is charged to Statement of Profit and loss in the year in which it is incurred and capital expenditure is added to Property, Plant & Equipment. l) Borrowing costs
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 capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. m) Income Tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to items recognized directly 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 after taking credit of the benefits available under the Income Tax Act and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if, the Company:
a) has a legally enforceable right to set off the recognized amounts; and
b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
ii) Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding tax bases used for taxation purposes. Deferred tax is not recognized for:
- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and
- temporary differences related to investments in subsidiary to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.
A deferred income tax asset is recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences and tax losses can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at 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.
For operations carried out in tax free units, deferred tax assets or liabilities, if any, have been recognized for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends.
Deferred tax assets and liabilities are offset only if:
a) The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
b) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is probable evidence that the Company will pay normal income tax in future. Accordingly, MAT is recognized as deferred tax asset in the Balance Sheet. n) Segment Reporting
The Company''s business activity falls within a single segment viz., Manufacturing and Sales of Chemicals. The segment has been identified by taking into account the nature of product, the differing risks, the returns, the organization structure and the internal reporting systems and the manner in which operating results are reviewed by the Chief Operating Decision Maker (CODM). o) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand and short-term deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. p) Cash flow statement
Cash flow statements are prepared in accordance with âIndirect Methodâ as explained in the Accounting Standard on Statement of Cash Flows (Ind AS - 7). The cash flows from regular revenue generating, financing and investing activity of the Company are segregated. q) Lease
At inception of an arrangement, it is determined whether the arrangement is or contains a lease, based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Company as lessee under operating lease
Payments made under operating leases are recognized in profit or loss. The payments are in line with the expected general inflation to compensate the lessors expected inflationary cost increase.
r) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to Equity Shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted Earnings per Share, the net profit or loss for the period attributable to Equity Shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2017
(A) Nature of Operations
The Company is a manufacturer of Insoluble Sulphur, Sulphuric Acid and Oleum. The Company has manufacturing facilities at Dharuhera (Haryana) and at Mundra SEZ (Gujarat). Insoluble Sulphur produced by the company is sold globally.
(B) Basis of Accounting
The financial statements have been prepared to comply with the Accounting Standards referred to in section 133 and other relevant provisions of The Companies Act, 2013 read with relevant rules issued there under; or by the Institute of Chartered Accountants of India, as applicable and other accounting principles generally accepted in India. The financial statements have been prepared under the historical cost convention on accrual basis. The accounting policies have been consistently applied by the Company unless otherwise stated.
(C) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the period in which the results are known/materialize.
(D) Classification of Assets and Liabilities as Current and Non Current
All assets and liabilities are classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, 12 months has been considered by the Company for the purpose of current/ non-current classification of assets and liabilities.
(E) Revenue Recognition
(i) Revenue from sales is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, which generally coincides with the delivery.
ii) Revenue (other than sale) is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.
(F) Fixed Assets
Fixed assets are stated at cost or at revalued amount less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. The carrying amounts are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing, value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. (Also refer Note No. 10(iv))
(G) Depreciation Tangible Assets
Depreciation on Fixed Assets has been provided on straight line method with reference to the economic useful life of its fixed assets as prescribed in Schedule II to the Companies Act, 2013 except in case of Motor Vehicles, whose useful life is considered 5 Years instead of 8 Years and Air Conditioners & Coolers, whose useful life is considered 5 Years instead of 10 Years. Depreciation on machinery spares is provided retrospectively from the date the related assets are put to use. Depreciation on additions to or on disposal of assets is calculated on prorata basis. Leasehold land is being amortized over the period of lease tenure. Additions to Fixed Assets on leased land and premises are amortized over the lease period.
Intangible Assets.
Depreciation of Intangible assets is allocated on a systematic basis over the best estimate of their useful life and accordingly software is amortized on straight line basis over the period of five years or license period whichever is lower.
(H) Expenditure on new projects , substantial expansion and during construction period
Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction period, which is not related to the construction activity nor is incidental thereto is charged to the Statement of Profit & Loss. Income earned during construction period is deducted from the total of the indirect expenditure.
All direct capital expenditure on expansion is capitalized. As regards indirect expenditure on expansion, only that portion is capitalized which represents the marginal increase in such expenditure involved as a result of capital expansion. Both direct and indirect expenditure are capitalized only if they increase the value of the asset beyond its originally assessed standard of performance.
Expenditure during construction/installation period is included under capital work-in-progress and the same is allocated to respective Fixed Assets on the completion of its construction.
(I) Investments
Long term (Non-Current) Investments are stated at cost . The Company provides for diminution, other than temporary, in the value of Long term Investments. Current Investments are valued at lower of cost or fair value.
(J) Foreign Currency Transactions
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. Monetary items related to foreign currency transactions are restated at year end exchange rates. All exchange differences arising from such conversion including gain or loss on cancellation of foreign currency forward covers are included in the Statement of Profit & Loss except exchange difference arising on long term foreign currency monetary items in so far as they relate to the acquisition of depreciable capital assets are capitalized. (refer note No. 10(iv)). Premium / Discount on forward covers, covered under AS-11(i.e. The Effects of Changes in Foreign Exchange Rates) are recognized over the tenure of the contract.
(K) Inventories
Inventories are valued at lower of Cost and Net Realizable value. The cost of finished goods is determined by taking material, labour and related factory overheads including depreciation. Cost is determined on weighted average cost. Further the cost for Work-in-Progress includes material cost, stage wise direct cost and other related manufacturing overheads including depreciation. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and to make the sale.
(L) Retirement and other employee benefits
1. Retirement benefits in the form of Provident Fund and Superannuation Scheme, which are defined contribution plans, are charged to the Statement of Profit & Loss of the year when the contributions to the respective funds are due.
2. Gratuity and Leave encashment which are defined benefits, are accrued based on actuarial valuation at the balance sheet date carried out by an independent actuary using the projected unit credit method.
3. Gratuity and Superannuation liability is being contributed to the respective funds formed by the Company.
(M) Taxation
Current tax is measured at the amount expected to be paid to the revenue authorities, using the applicable tax rates and laws. Deferred tax for timing differences between the book and taxable Income for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is reasonable certainty that the assets can be realized in future and the same is reviewed at each Balance Sheet date.
Minimum Alternate Tax (MAT) Credit 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 in accordance with the recommendations contained in Guidance Note issued by Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
(N) Borrowing Cost
Borrowing Cost attributable to the acquisition or construction of qualifying fixed assets, are capitalized as part of the cost of such assets up to the date of commencement of commercial production/put to use of plant. Other Borrowing costs are charged to revenue.
(O) Operating Leases
Lease rent in respect of assets taken on operating lease are charged to Statement of Profit & Loss as per the terms of lease agreements.
(P) Derivatives
Outstanding derivatives contracts, other than those covered under AS-11, at the year end are marked to market rate, and loss, if any, are accounted for in the Statement of Profit & Loss. As prudent accounting policy, gain on marked to market at the end of year are not accounted for.
(Q) Cash & Cash Equivalents
Cash & Cash Equivalents comprises Cash on hand, Balances with Banks and Deposits with Banks maturing with in three months from the Balance Sheet date.
(R) Provisions
A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions except those disclosed elsewhere in the notes to the financial statements, are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
(S) Contingent Liabilities
A disclosure is made for possible or present obligations that may but probably will not require outflow of resources or where a reliable estimate cannot be made, as a contingent liability in the financial statements.
Mar 31, 2015
(A) Nature of Operations
The Company is a manufacturer of Insoluble Sulphur and Sulphuric Acid.
The Company has manufacturing facilities at Dharuhera (Haryana) and at
Mundra SEZ (Gujarat). Insoluble Sulphur produced by the Company is sold
globally.
(B) Basis of Accounting
The financial statements have been prepared to comply with the
Accounting Standards referred to in section 133 and the relevant
provisions of The Companies Act, 2013 .The financial statements have
been prepared under the historical cost convention on accrual basis.
The accounting policies have been consistently applied by the Company
unless otherwise stated.
(C) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the financial
statements and the reported amounts of
revenues and expenses during the reporting period. Differences between
actual results and estimates are recognised in the period in which the
results are known/materialize.
(D) Classification of Assets and Liabilities as Current and Non Current
All assets and liabilities are classified as current or non-current as
per the Company's normal operating cycle and other criteria set out
in Schedule III to the Companies Act, 2013. Based on the nature of
products and the time between the acquisition of assets for processing
and their realisation in cash and cash equivalents, 12 months has been
considered by the Company for the purpose of current/ non-current
classification of assets and liabilities.
(E) Revenue Recognition
(i) Revenue from sales is recognised when the significant risks and
rewards of ownership of the goods have passed to the buyer, which
generally coincides with the delivery.
(ii) Revenue (other than sale) is recognised to the extent that it is
probable that the economic benefits will flow to the company and the
revenue can be reliably measured.
(F) Fixed Assets
Fixed assets are stated at cost or at revalued amount less accumulated
depreciation and impairment losses, if any. Cost comprises the purchase
price and any attributable cost of bringing the asset to its working
condition for its intended use. The carrying amounts are reviewed at
each balance sheet date, if there is any indication of impairment based
on internal/external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is greater of the assets net selling price and value
in use. In assessing, value in use, the estimated future cash flows are
discounted to their present value at the weighted average cost of
capital. (Also refer Note No. 10(ii))
(G) Depreciation Tangible Assets
Depreciation on Fixed Assets has been provided on straight line method
with reference to the economic useful life of its fixed assets as
prescribed in Scedule II to the Companies Act,2013. Depreciation on
machinery spares is provided retrospectively from the date the related
assets are put to use. Depreciation on additions to or on disposal of
assets is calculated on pro-rata basis. Leasehold land is being
amortised over the period of lease tenure. Additions to Fixed Assets on
leased land and premises are amortised over the lease period.
Intangible Assets
Depreciation of Intangile assets is allocated on a systematic basis
over the best estimate of their useful life and accordingly software is
amortised on straight line basis over the period of five years.
(H) Expenditure on new projects, substantial expansion and during
construction period
Expenditure directly relating to construction activity is capitalised.
Indirect expenditure incurred during construction period is capitalised
as part of the indirect construction cost to the extent to which the
expenditure is indirectly related to construction or is incidental
thereto. Other indirect expenditure incurred during the construction
period, which is not related to the construction activity nor is
incidental thereto is charged to the Statement of Profit & Loss. Income
earned during construction period is deducted from the total of the
indirect expenditure.
All direct capital expenditure on expansion is capitalised. As regards
indirect expenditure on expansion, only that portion is capitalised
which represents the marginal increase in such expenditure involved as
a result of capital expansion. Both direct and indirect expenditure are
capitalised only if they increase the value of the asset beyond its
originally assessed standard of performance.
Expenditure during construction/installation period is included under
capital work-in-progress and the same is allocated to respective Fixed
Assets on the completion of its construction.
(I) Investments
Long term (Non-Current) Investments are stated at cost . The Company
provides for diminution, other than temporary, in the value of Long
term Investments. Current Investments are valued at lower of cost or
fair value.
(J) Foreign Currency Transactions
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. Monetary items related to foreign currency transactions
are restated at year end exchange rates. All exchange differences
arising from such conversion including gain or loss on cancellation of
foreign currency forward covers are included in the Statement of Profit
& Loss except exchange difference arising on long term foreign currency
monetary items in so far as they relate to the acquisation of
depreciable capital assets are capitalised. (refer note No. 10(ii)).
Premium / Discount on forward covers, covered under AS- 11(i.e. The
Effects of Changes in Foreign Exchange Rates) are recognised over the
tenure of the contract.
(K) Inventories
Inventories are valued at lower of Cost and Net Realisable value.The
cost of finished goods is determined by taking material, labour and
related factory overheads including depreciation. Cost is determined on
weighted average cost. Further the cost for Work-in-Progress includes
material cost, stagewise direct cost and other related manufacturing
overheads including depreciation. Materials and other supplies held for
use in the production of inventories are not written down below cost if
the finished products in which they will be incorporated are expected
to be sold at or above cost. Net realisable value is the estimated
selling price in the ordinary course of business, less estimated cost
of completion and to make the sale.
(L) Retirement and other employee benefits
1. Retirement benefits in the form of Provident Fund and Superannuation
Scheme, which are defined contribution plans, are charged to the
Statement of Profit & Loss of the year when the contributions to the
respective funds are due.
2. Gratuity and Leave encashment which are defined benefits, are
accrued based on actuarial valuation at the balance sheet date carried
out by an independent actuary using the projected unit credit method.
3. Gratuity and Superannuation liability is being contributed to the
respective funds formed by the Company.
(M) Taxation
Current tax is measured at the amount expected to be paid to the
revenue authorities, using the applicable tax rates and laws. Deferred
tax for timing differences between the book and taxable Income for the
year is accounted for using the tax rates and laws that have been
enacted or substantively enacted as of the balance sheet date. Deferred
Tax Assets arising from temporary timing differences are recognised to
the extent there is reasonable certainty that the assets can be
realised in future and the same is reviewed at each Balance Sheet date.
Minimum Alternate Tax (MAT) Credit 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 in
accordance with the recommendations contained in Guidance Note issued
by Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Statement of Profit and Loss and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
(N) Borrowing Cost
Borrowing Cost attributable to the acquisition or construction of
qualifying fixed assets, are capitalised as part of the cost of such
assets upto the date of commencement of commercial production/put to
use of plant. Other Borrowing costs are charged to revenue.
(O) Operating Leases
Lease rent in respect of assets taken on operating lease are charged to
Statement of Profit & Loss as per the terms of lease agreements.
(P) Derivatives
Outstanding derivatives contracts, other than those covered under
AS-11, at the year end are marked to market rate, and loss, if any, are
accounted for in the Statement of Profit & Loss. As prudent accounting
policy, gain on marked to market at the end of year are not accounted
for.
(Q) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions except those
disclosed elsewhere in the notes to the financial statements, are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to reflect
the current best estimates.
(R) Contingent Liabilities
A disclosure is made for possible or present obligations that may but
probably will not require outflow of resources or where a reliable
estimate cannot be made, as a contingent liability in the financial
statements.
Mar 31, 2014
(A) Nature of Operations
The Company is a manufacturer of Insoluble Sulphur and Sulphuric Acid.
The Company has manufacturing facilities at Dharuhera (Haryana) and at
Mundra SEZ (Gujarat). Insoluble Sulphur produced by the company is sold
globally.
(B) Basis of Accounting
The financial statements have been prepared to comply with the
Accounting Standards referred to in The Companies (Accounting
Standards) Rule 2006 issued by the Central Government and the relevant
provisions of The Companies Act,1956 .The financial statements have been
prepared under the historical cost convention on accrual basis. The
accounting policies have been consistently applied by the Company
unless otherwise stated.
(C) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Differences between actual results and estimates are
recognised in the period in which the results are known/materialize.
(D) Classifcation of Assets and Liabilities as Current and Non Current
All assets and liabilities are classifed as current or non-current as
per the Company''s normal operating cycle and other criteria set out in
Revised Schedule VI to the Companies Act, 1956. Based on the nature of
products and the time between the acquisition of assets for processing
and their realisation in cash and cash equivalents, 12 months has been
considered by the Company for the purpose of current/ non-current
classifcation of assets and liabilities.
(E) Revenue Recognition
(i) Revenue from sales is recognised when the significant risks and
rewards of ownership of the goods have passed to the buyer, which
generally coincides with the delivery.
(ii) Revenue (other than sale) is recognised to the extent that it is
probable that the economic benefits will fow to the company and the
revenue can be reliably measured.
(F) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. The carrying amounts are reviewed at each balance
sheet date, if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is greater of the assets net selling price and value
in use. In assessing, value in use, the estimated future cash flows are
discounted to their present value at the weighted average cost of
capital. (Also refer Note No. 10(ii))
(G) Depreciation
Tangible Assets
Depreciation on Fixed Assets has been provided on straight line method
at the rates and in the manner specified in Schedule XIV of the
Companies Act, 1956 except in case of vehicles,depreciation on which
has been provided @11.875% instead of 9.50 % charged in earlier years.
Depreciation on machinery spares is provided retrospectively from the
date the related assets are put to use. Depreciation on additions to or
on disposal of assets is calculated on pro-rata basis. Leasehold land
is being amortised over the period of lease tenure. Depreciation
includes adjustment on account of revaluation which is written off on
the basis of residual life as assessed by the Valuers and adjusted by
transfer from Revaluation Reserve account. Additions to Fixed Assets on
leased land and premises are amortised over the lease period.
Intangible Assets
Depreciation of Intangile assets is allocated on a systematic basis
over the best estimate of their useful life and accordingly software is
amortised on straight line basis over the period of five years.
(H) Expenditure on new projects substantial expansion and during
construction period
Expenditure directly relating to construction activity is capitalised.
Indirect expenditure incurred during construction period is capitalised
as part of the indirect construction cost to the extent to which the
expenditure is indirectly related to construction or is incidental
thereto. Other indirect expenditure incurred during the construction
period, which is not related to the construction activity nor is
incidental thereto is charged to the Statement of profit & Loss. Income
earned during construction period is deducted from the total of the
indirect expenditure.
All direct capital expenditure on expansion is capitalised. As regards
indirect expenditure on expansion, only that portion is capitalised
which represents the marginal increase in such expenditure involved as
a result of capital expansion. Both direct and indirect expenditure are
capitalised only if they increase the value of the asset beyond its
originally assessed standard of performance.
Expenditure during construction/installation period is included under
capital work-in-progress and the same is allocated to respective Fixed
Assets on the completion of its construction.
(I) Investments
Long term Investments are stated at cost . The Company provides for
diminution other than temporary in the value of Long term Investments.
Current Investments are valued at lower of cost or fair value.
(J) Foreign Currency Transactions
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. Monetary items related to foreign currency transactions
are restated at year end exchange rates. All exchange differences
arising from such conversion including gain or loss on cancellation of
foreign currency forward covers are included in the Statement of profit
& Loss except exchange difference arising on long term foreign currency
monetary items in so far as they relate to the acquisation of
depreciable capital assets are capitalised. (refer note No. 10(ii)).
Premium / Discount on forward covers, covered under AS-11(i.e. The
Effects of Changes in Foreign Exchange Rates) are recognised over the
tenure of the contract.
(K) Inventories
Inventories are valued at lower of Cost and Net Realisable value.The
cost of fnished goods is determined by taking material, labour and
related factory overheads including depreciation. Cost is determined on
weighted average cost. Further the cost for Work-in-Progress includes
material cost, stagewise direct cost and other related manufacturing
overheads including depreciation. Materials and other supplies held for
use in the production of inventories are not written down below cost if
the fnished products in which they will be incorporated are expected to
be sold at or above cost. Net realisable value is the estimated selling
price in the ordinary course of business, less estimated cost of
completion and to make the sale.
(L) Segment Reporting
The accounting policies adopted for segment reporting are in conformity
with the accounting policies adopted for the Company. Primary Segments
are identified based on the nature of products and services, the
different risks and returns and the internal business reporting system.
Revenue, Expense, Assets and Liabilities, which relate to the Company
as a whole and could not be allocated to segments on a reasonable
basis, have been classifed as unallocated. Secondary segment is
identified based on geography by location of customers i.e. in India and
outside India. Inter-segment revenue have been accounted for based on
the transaction price agreed to between the segments, which is
primarily market based.
(M) Retirement and other employee benefits
1 Retirement benefits in the form of Provident Fund and Superannuation
Scheme, which are Defined contribution plans, are charged to the
Statement of profit & Loss of the year when the contributions to the
respective funds are due.
2 Gratuity and Leave encashment which are Defined benefits, are accrued
based on actuarial valuation at the balance sheet date carried out by
an independent actuary using the projected unit credit method.
3 Gratuity and Superannuation liability is being contributed to the
respective funds formed by the Company.
(N) Taxation
Current tax is measured at the amount expected to be paid to the
revenue authorities, using the applicable tax rates and laws. Deferred
tax for timing differences between the book and taxable Income for the
year is accounted for using the tax rates and laws that have been
enacted or substantively enacted as of the balance sheet date. Deferred
Tax Assets arising from temporary timing differences are recognised to
the extent there is reasonable certainty that the assets can be
realised in future and the same is reviewed at each Balance Sheet date
Minimum Alternate Tax (MAT) Credit 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 in
accordance with the recommendations contained in Guidance Note issued
by Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Statement of profit and Loss and shown
as MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
(O) Borrowing Cost
Borrowing Cost attributable to the acquisition or construction of
qualifying fixed assets, are capitalised as part of the cost of such
assets upto the date of commencement of commercial production/put to
use of plant. Other Borrowing costs are charged to revenue.
(P) Operating Leases
Lease rent in respect of assets taken on operating lease are charged to
Statement of profit & Loss as per the terms of lease agreements.
(Q) Derivatives
Outstanding derivatives contracts, other than those covered under
AS-11, at the year end are marked to market rate, and loss, if any, are
accounted for in the Statement of profit & Loss. As prudent accounting
policy, gain on marked to market at the end of year are not accounted
for.
(R) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions except those
disclosed elsewhere in the notes to the financial statements, are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to refect
the current best estimates.
(S) Contingent Liabilities
A disclosure is made for possible or present obligations that may but
probably will not require outflow of resources or where a reliable
estimate cannot be made, as a contingent liability in the financial
statements.
Mar 31, 2013
(A) Basis of Accounting
The fnancial statements have been prepared to comply with the
Accounting Standards referred to in The Companies (Accounting
Standards) Rule 2006 issued by the Central Government and the relevant
provisions of The Companies Act,1956. The fnancial statements have been
prepared un- der the historical cost convention on accrual basis. The
accounting policies have been consistently applied by the Company
unless otherwise stated.
(B) Use of Estimates
The preparation of fnancial statements in conformity with generally
accepted accounting prin- ciples requires estimates and assumptions to
be made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the fnancial
statements and the reported amounts of revenues and expenses during the
reporting period. Differences between actual results and estimates are
recognised in the period in which the results are known/material- ize.
(C) Classifcation of Assets and Liabilities as Current and Non Current
All assets and liabilities are classifed as current or non-current as
per the Company''s normal op- erating cycle and other criteria set out
in Revised Schedule VI to the Companies Act, 1956. Based on the nature
of products and the time between the acquisition of assets for
processing and their realisation in cash and cash equivalents, 12
months has been considered by the Company for the purpose of current/
non-current classifcation of assets and liabilities.
(D) Revenue Recognition
(i) Revenue from sales is recognised when the signifcant risks and
rewards of ownership of the goods have passed to the buyer, which
generally coincides with the delivery.
(ii) Revenue (other than sale) is recognised to the extent that it is
probable that the economic ben- efts will fow to the company and the
revenue can be reliably measured.
(E) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condi- tion for
its intended use. The carrying amounts are reviewed at each balance
sheet date, if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is greater of the assets net selling price and value
in use. In assessing, value in use, the estimated future cash fows are
discounted to their present value at the weighted average cost of
capital.
(F) Depreciation
Tangible Assets
Depreciation on Fixed Assets has been provided on straight line method
at the rates and in the manner specifed in Schedule XIV of the
Companies Act, 1956. Depreciation on additions due to Machinery spares
is provided retrospectively from the date the related assets are put to
use. Depreciation on additions to or on disposal of assets is
calculated on pro-rata basis. Leasehold land is being amortised over
the period of lease tenure. Depreciation includes adjustment on account
of revaluation which is written off on the basis of residual life as
assessed by the Valuers and adjusted by transfer from Revaluation
Reserve account. Additions to Fixed Assets on leased land and premises
are amortised over the lease period.
Intangible Assets
Depreciation of Intangible assets is allocated on a systematic basis
over the best estimate of their useful life and accordingly software is
amortised on straight line basis over the period of fve years.
(G) Expenditure on new projects, substantial expansion and during
construction period
Expenditure directly relating to construction activity is capitalised.
Indirect expenditure incurred during construction period is capitalised
as part of the indirect construction cost to the extent to which the
expenditure is indirectly related to construction or is incidental
thereto. Other indirect expenditure incurred during the construction
period, which is not related to the construction activ- ity nor is
incidental thereto is charged to the Statement of Proft & Loss. Income
earned during construction period is deducted from the total of the
indirect expenditure. All direct capital expenditure on expansion is
capitalised. As regards indirect expenditure on ex- pansion, only that
portion is capitalised which represents the marginal increase in such
expenditure involved as a result of capital expansion. Both direct and
indirect expenditure are capitalised only if they increase the value of
the asset beyond its originally assessed standard of performance.
Expenditure during construction/installation period is included under
capital work-in-progress and the same is allocated to respective Fixed
Assets on the completion of its construction.
(H) Foreign Currency Transactions
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. Monetary items related to foreign currency transactions
are restated at year end exchange rates. All exchange differences
arising from such conversion including gain or loss on cancellation of
foreign currency forward covers are included in the Statement of Proft
& Loss except exchange difference arising on long term foreign currency
monetary items in so far as they relate to the acquisation of
depreciable capital assets are capitalised. (refer note 10). Pre- mium
/ Discount on forward covers, covered under AS-11(i.e. The Effects of
Changes in Foreign Exchange Rates) are recognised over the tenure of
the contract.
(I) Inventories
Inventories are valued at lower of Cost and Net Realisable value.The
cost of fnished goods is determined by taking material, labour and
related factory overheads including depreciation. Cost is determined
on weighted average cost. Further the cost for Work-in-Progress
includes material cost, stagewise direct cost and other related
manufacturing overheads including de- preciation. Materials and other
supplies held for use in the production of inventories are not written
down below cost if the fnished products in which they will be
incorporated are expected to be sold at or above cost. Net realisable
value is the estimated selling price in the ordinary course of
business, less estimated cost of completion and to make the sale.
(J) Segment Reporting
The accounting policies adopted for segment reporting are in conformity
with the accounting poli- cies adopted for the Company. Primary
Segments are identifed based on the nature of products and services,
the different risks and returns and the internal business reporting
system. Revenue, Expense, Assets and Liabilities, which relate to the
Company as a whole and could not be allocated to segments on a
reasonable basis, have been classifed as unallocated. Secondary segment
is iden- tifed based on geography by location of customers i.e. in
India and outside India. Inter-segment revenue have been accounted for
based on the transaction price agreed to between the segments, which is
primarily market based.
(K) Retirement and other employee benefts
1 Retirement benefts in the form of Provident Fund and Superannuation
Scheme, which are defned contribution plans, are charged to the
Statement of Proft & Loss of the year when the contributions to the
respective funds are due.
2 Gratuity and Leave encashment which are defned benefts, are accrued
based on actuarial valuation at the balance sheet date carried out by
an independent actuary using the projected unit credit method.
3 Gratuity and Superannuation liability is being contributed to the
respective funds formed by the Company.
(L) Investments
Long term Investments are stated at cost. The Company provides for
diminution other than temporary in the value of Long term Investments.
Current Investments are valued at lower of cost or fair value.
(M) Taxation
Current tax is measured at the amount expected to be paid to the
revenue authorities, using the applicable tax rates and laws. Deferred
tax for timing differences between the book and taxable Income for the
year is accounted for using the tax rates and laws that have been
enacted or substantively enacted as of the balance sheet date. Deferred
Tax Assets arising from temporary timing differences are recognised to
the extent there is reasonable certainty that the assets can be
realised in future and the same is reviewed at each Balance Sheet date.
Minimum Alternate Tax (MAT) Credit 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 specifed period. In the year in which
the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued
by Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Statement of Proft and Loss and shown
as MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specifed
period.
(N) Borrowing Cost
Borrowing Cost attributable to the acquisition or construction of
qualifying fxed assets, are capitalised as part of the cost of such
assets upto the date of commencement of commercial production/put to
use of plant. Other Borrowing costs are charged to revenue.
(O) Operating Leases
Lease rent in respect of assets taken on operating lease are charged to
Statement of Proft & Loss as per the terms of lease agreements.
(P) Derivatives
Outstanding derivatives contracts, other than those covered under
AS-11, at the year end are marked to market rate, and loss, if any, are
accounted for in the Statement of Proft & Loss. As prudent accounting
policy, gain on marked to market at the end of year are not accounted
for.
(Q) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outfow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions except those
disclosed elsewhere in the notes to the fnancial statements, are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to refect
the current best estimates.
(R) Contingent Liabilities
A disclosure is made for possible or present obligations that may but
probably will not require outfow of resources or where a reliable
estimate cannot be made, as a contingent liability in the fnancial
statements.
Mar 31, 2012
(A) Basis of Accounting
The financial statements have been prepared to comply with the
Accounting Standards referred to in The Companies (Accounting
Standards) Rule 2006 issued by the Central Government and the relevant
provisions of The Companies Act,1956. The financial statements have
been prepared under the historical cost convention on accrual basis.
The accounting policies have been consistently applied by the Company
unless otherwise stated.
(B) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Differences between actual results and estimates are
recognised in the period in which the results are known/materialize.
(C) Revenue Recognition
(i) Revenue from sales is recognised when the significant risks and
rewards of ownership of the goods have passed to the buyer, which
generally coincides with the delivery.
(ii) Revenue (other than sale) is recognised to the extent that it is
probable that the economic benefits will flow to the Company and the
revenue can be reliably measured.
(D) Fixed Assets (Tangible Assets)
Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. The carrying amounts are reviewed at each balance
sheet date, if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is greater of the assets net selling price and value
in use. In assessing, value in use, the estimated future cash flows are
discounted to their present value at the weighted average cost of
capital.
(E) Depreciation
Depreciation on Fixed Assets has been provided on straight line method
at the rates and in the manner specified in Schedule XIV of the
Companies Act, 1956. Depreciation on additions due to Machinery spares
is provided retrospectively from the date the related assets are put to
use. Depreciation on additions to or on disposal of assets is
calculated on pro-rata basis. Leasehold land is being amortised over
the period of lease tenure. Depreciation includes adjustment on account
of revaluation which is written off on the basis of residual life as
assessed by the Valuers and adjusted by transfer from Revaluation
Reserve account. Additions to Fixed Assets on leased land and premises
are amortised over the lease period.
(F) Expenditure on new projects , substantial expansion and during
construction period
Expenditure directly relating to construction activity is capitalised.
Indirect expenditure incurred during construction period is capitalised
as part of the indirect construction cost to the extent to which the
expenditure is indirectly related to construction or is incidental
thereto. Other indirect expenditure incurred during the construction
period, which is not related to the construction activity nor is
incidental thereto is charged to the Profit & Loss Statement. Income
earned during construction period is deducted from the total of the
indirect expenditure.
All direct capital expenditure on expansion is capitalised. As regards
indirect expenditure on expansion, only that portion is capitalised
which represents the marginal increase in such expenditure involved as
a result of capital expansion. Both direct and indirect expenditure are
capitalised only if they increase the value of the asset beyond its
originally assessed standard of performance. Expenditure during
construction/installation period is included under capital
work-in-progress and the same is allocated to respective Fixed Assets
on the completion of its construction.
(G) Foreign Currencies
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. Monetary items related to Foreign Currencies transactions
are restated at year end exchange rates. All exchange differences
arising from such conversion including gain or loss on cancellation of
foreign currency forward covers are included in the Profit & Loss
Statement except exchange difference arising on long term foreign
currency monetary items in so far as they relate to the acquisation of
depreciable capital assets are capitalised. (refer note 10). Premium /
Discount on Forward Covers is recognised over the length of the
contract.
(H) Inventories
Inventories are valued at lower of Cost and Net Realisable value.The
cost of Finished Goods is determined by taking material, labour and
related factory overheads including depreciation. Cost is determined
on FIFO basis for raw materials and weighted average cost for Stores &
Spares parts and fuel stock. Further the cost for Work-in-Progress
includes material cost, stagewise direct cost and other related
manufacturing overheads including depreciation. Materials and other
supplies held for use in the production of inventories are not written
down below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost. Net realisable
value is the estamited selling price in the ordinary course of
business, less estimated cost of completion and to make the sale.
(I) Retirement and other employee benefits
1 Retirement benefits in the form of Provident Fund and Superannuation
Scheme, which are defined contribution plans, are charged to the Profit
& Loss Statement of the year when the contributions to the respective
funds are due.
2 Gratuity and Leave encashment which are defined benefits, are accrued
based on actuarial valuation at the balance sheet date carried out by
an independent actuary using the projected unit credit method.
3 Gratuity and Superannuation liability is being contributed to the
respective funds formed by the Company.
(J) Investments
Long term Investments are stated at cost . The Company provides for
diminution other than temporary in the value of Long term Investments.
Current Investments are valued at lower of cost or fair value. (K)
Taxation
Current tax is measured at the amount expected to be paid to the
revenue authorities, using the applicable tax rates and laws. Deferred
tax for timing differences between the book and taxable Income for the
year is accounted for using the tax rates and laws that have been
enacted or substantively enacted as of the balance sheet date. Deferred
Tax Assets arising from temporary timing differences are recognised to
the extent there is reasonable certainty that the assets can be
realised in future and the same is reviewed at each Balance Sheet date.
Minimum Alternate Tax (MAT) Credit 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 in
accordance with the recommendations contained in Guidance Note issued
by Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Profit and Loss Statement and shown
as MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
(L) Borrowing Cost
Borrowing Cost attributable to the acquisition or construction of
qualifying fixed assets, are capitalised as part of the cost of such
assets upto the date of commencement of commercial production/put to
use of plant. Other Borrowing costs are charged to revenue.
(M) Operating Leases
Lease rent in respect of assets taken on operating lease are charged to
Profit & Loss Statement as per the terms of lease agreements.
(N) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions except those
disclosed elsewhere in the notes to the financial statements, are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to reflect
the current best estimates.
(O) Derivatives
Outstanding derivatives contracts, other than those covered under
AS-11, at the year end are marked to market rate, and loss, if any, are
accounted for in the Profit & Loss Statement. As prudent accounting
policy, gain on marked to market at the end of year are not accounted
for.
(P) Contingent Liabilities and Provisions
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. A disclosure is made for possible or present obligations that
may but probably will not require outflow of resources or where a
reliable estimate cannot be made, as a contingent liability in the
financial statements.
Mar 31, 2011
A. Basis of Preparation:
The financial statements have been prepared to comply with the
Accounting Standards referred to in The Companies (Accounting
Standards) Rule 2006 issued by the Central Government and the relevant
provisions of The Companies Act,1956. The financial statements have been
prepared under the historical cost convention on accrual basis. The
accounting policies have been consistently applied by the Company
unless otherwise stated.
B. Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Differences between actual results and estimates are
recognised in the period in which the results are known/ materialize.
C. Fixed Assets:
Freehold Land, Buildings, Plant & Machinery and Electrical Installation
relating to Chemicals Division are stated at revalued amount and other
fxed assets are stated at cost. Cost includes any attributable cost for
bringing the asset to its working condition for its intended use.
D. Depreciation:
(i) Depreciation on Fixed Assets has been provided on straight line
method at the rates and in the manner
specifed in Schedule XIV of the Companies Act, 1956. (ii) Depreciation
includes adjustment on account of revaluation which is written off on
the basis of residual life as
assessed by the Valuers and adjusted by transfer from Revaluation
Reserve account.
(iii) Additions to Fixed Assets on leased land and premises are
amortised over the lease period.
E. Borrowing Costs:
Borrowing costs, that are attributable to the acquisition or
construction of qualifying assests are capitalised as part of the cost
of such assets. All other borrowing costs are charged to Profit & Loss
Account.
F. Impairment:
Impairment loss is recognized wherever the carrying amount of an asset
is in excess of its recoverable amount as at the Balance Sheet date.
G. Treatment of Expenditure during construction period:
Expenditure during construction period is included under Capital
Work-in-progress/Expenditure on new project/pre- operative expenses and
the same is allocated to the respective Fixed Assets on completion of
construction period.
H. Investments:
Long Term Investments are stated at cost, less permanent diminution.
Current Investments are valued at lower of cost and fair value.
I. Valuation of Inventories:
Inventories are valued at lower of Cost and Net Realisable value.The
cost of Finished Goods is determined by taking material, labour and
related factory overheads including depreciation. Cost is determined on
FIFO basis for raw materials and weighted average cost for Stores &
Spares parts and fuel stock. Further the cost for Work-in-Progress
includes material cost, stagewise direct cost and other related
manufacturing overheads including depreciation. Materials and other
supplies held for use in the production of inventories are not written
down below cost if the fnished products in which they will be
incorporated are expected to be sold at or above cost.
J. Foreign Currencies:
Foreign currency transactions are accounted at exchange rates
prevailing on the date of transactions. Monetary items in foreign
currency as at the Balance Sheet date are restated at rates prevailing
at the year end and the resultant net gains or losses are adjusted in
the Profit & Loss account.
K. Recognition of Income and Expenditure:
Income and expenditure are accounted on accrual basis.
L. Sales:
Sales is recognised when the signifcant risks and rewards of ownership
of the goods have passed to the buyer and is net of sales
returns/rebate and trade discount.
M. Retirement Benefits:
Gratuity to employees are provided and funded to approved Gratuity Fund
as per the actuarial valuation at the balance sheet date and
contribution to Superannuation fund as per Companys rules. Year end
liability on account of unavailed leave has been provided in the
accounts on actuarial basis.
N. Research & Development Expenditure:
Revenue expenditure is charged to Profit and loss account in the year in
which it is incurred and Capital expenditure is capitalised in the year
of installation.
O. Taxes on Income:
Provision for Current Tax is made as per the provision of Income Tax
Act, 1961. Deferred Tax liability and Deferred Tax Asset subject to the
consideration of prudence are recognised on timing differences, being
the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods using the rates enacted or substantively enacted on
the Balance Sheet date.
P. Derivatives:
Outstanding derivative contracts at the year end are marked to market
rate and losses on such contracts are provided for in the Profit & Loss
account.
Q. Operating Leases:
Lease rent in respect of assets taken on operating lease are charged to
Profit & Loss Account as per the terms of lease agreements.
R. Contingent liabilities and provisions:
The Company makes a provision when there is a present obligation as a
result of a past event where the outfow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. A disclosure is made for possible or present obligations that may
but probably will not require outfow of resources or where a reliable
estimate cannot be made, as a contingent liability in the financial
statements.
Mar 31, 2010
A. Basis of Preparation:
The financial statements have been prepared to comply with the
Accounting Standards referred to in.The Companies (Accounting
Standards) Rule 2006 issued by the Central Government and the relevant
provisions olThe Companies Act. 1956. The financial statements have
been prepared under the historical cost convention on accrual basis.
The accounting policies have been consistently applied by the Company
unless otherwise stated.
B. Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the dale oflhc financial
statements and the reported amounts of revenues and expenses during the
reporting period. Differences between actiial results and estimates are
recognised in the period in which the results are known/materialize.
C. Fixed Assets:
(i) freehold Land, Huildings, Plant & Machinery and Electrical
Installation relating to Chemicals Division are stated at revalued
amount and other fixed assets arc stated at cost. Cost includes any
attributable cost for bringing the asset to its working condition for
its intended use.
D). Depreciation:
(i) Depreciation on fixed Assets has been provided on straight line
method at the rates and in the manner specified in Schedule XIV of
the Companies Act, 1956.
(ii) Depreciation includes adjustment on account of revaluation which
is written off on the basis of residual life as assessed by the
Valuers and adjusted by transfer from Revaluation Reserve account.
(iii) Addition to fixed Assets arising due to exchange rule
fluctuation upto list March2007 is amortised over the residual life
of such Assets and from 1st April2007 onwards such exchange rate
fluctuation is charged to Profit and loss account.
Additions to fixed Assets on leased premises are amortised over the
lease period.
E. Borrowing Costs:
Borrowing costs, that are attributable to the acquisition or
construction of qualifying assests are capitalised as part of the cost
of such assets. All other borrowing costs are charged to Profit & Eoss
Account.
F Impairment:
Impairment loss is recognized wherever the carrying amount of an asset
is in excess of its recoverable amount as at the Balance Sheet date.
G. Treatment of Expenditure during construction period:
Expenditure (luring construction period is included under Capital
Work-in -progress/Expenditure on new project /pre- operative expenses
and the same is allocated to the respective fixed Assets on completion
of construction period.
H. Investments:
Long Term Investments arc stated at cost, less permanent diminution.
Current Investments are valued al lower of cost and fair value.
I. Valuation of Inventories:
Inventories are valued at lower of Cost and Net Realisable valuc.The
cost of finished Goods is determined by taking material, labour and
related factory overheads including depreciation. Cost is determined on
ITfO basis for raw materials and weighted average cost for Stores &
Spares parts and fuel stock, further the cost for Work-in-Progress
includes material cost, stagewisc direct cost and other related
manufacturing overheads including depreciation. Materials and other
supplies held for use in the production of inventories are not written
down below cost if the finished products in which they will be
incorporated arc expected to be sold at or above cost.
J. Foreign Currencies:
Foreign currency transactions are accounted at exchange rates
prevailing on the date of transactions. Monetary items in foreign
currency as at the Balance Sheet date are restated al rates prevailing
al the year end and the resultant net gains or losses arc adjusted in
the Profit & Loss account.
K. Rceognilion of Income and Expenditure:
Income and expenditure are accounted on accrual basis.
L . Sales:
Sales is recognised when the significant risks and rewards of ownership
of the goods have passed to the buyer and is net of sales
returns/rebate and trade discount.
M. Retirement benefits:
Gratuity to employees are provided and funded lo approved Gratuity fund
as per the actuarial valuation at the balance sheet date and
contribution to Superannuation fund as per Companys rules. Year end
liability on account of unavailed leave has been provided in the
accounts on actuarial basis.
N. Research & Development Expenditure:
Revenue expenditure is charged to profit and loss account in the year
in which it is incurred and Capital expenditure is capitalised in the
year of installation.
O. Taxes on Income:
Provision for Current lax is made as per the provision or Income lax
Act, 1961. Deferred Tax liability and Deterred-lax Asset subject to
the consideration of prudence are recognised on liming differences,
being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods using the rates enacted or substantively enacted on
the Balance Sheet date.
P. Derivatives:
Outstanding derivative contracts at the year end are marked to market
rate and losses on such contracts are provided for in the Profit & loss
account.
Q. Operating Leases:
I.ease rent in respect of assets taken on operating lease are charged
to Profit & Loss Account as per the terms of lease agreements.
R. Contingent liabilities and provisions:
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. A disclosure is made for possible or present obligations that may
but probably will hot require outflow of resources or where a reliable
estimate cannot be made, as a continued! liability in the financial
statements.