Mar 31, 2018
(A) Basis of Preparation of Financial Statements
(i) Compliance with Ind AS: The standalone financial statements have been prepared to comply, in all material aspects, with the Indian Accounting Standards (Ind AS) notified under Section 133 ofthe Companies Act, 2013, read with Companies (Indian Accouting Standards) Rules, 2015 and the relevant provisions of the Companies Act, 2013.
These Financial Statements are the first financial statements ofthe Company under Ind AS refer note 42 for an explanation of how the transition from previous Generally Accepted Accounting Principles (IGAAP) to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
(ii) Classification of assets and liabilities: All assets and liabilities have been classified as current or non-current based on the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Deferred tax assets and liabilities are classified as non-current on net basis.
(iii) Historical cost convention: The financial statements have been prepare on going concern basis under the historical cost convention except:
(a) certain financial instruments (including derivative instruments) and
(b) defined benefit plans
Which are measured at fair value at the end of each reporting period, as explained in the accounting policies below.
(iv) Functional and presentation currency : The Companyâs functional and presentation currency is Indian Rupee (INR). All amounts disclosed in the financial statements and notes have been rounded offto the nearest lakhs ( Rs. lakhs), except otherwise indicated.
(v) Fair value measurement: The Company measures certain financial assets and financial liabilities including derivatives and defined benefit plans at fair value.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability take place either
(a) in the principal market for the asset or liability or
(b) in the absence or a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
(B) Property, Plant and Equipment
(i) Freehold land is carried at historical cost and all other property, plant and equipment are shown at cost (net of adjustable taxes) less accumulated depreciation and accumulated impairment losses. The cost of an asset comprises of its purchase price, non refundable / adjustable purchase taxes and any cost directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by the management, the initial estimate of any decommissioning obligation, if any and for assets that necessarily take a substantial period of time to get ready for their intended use, finance costs. The purchase price is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. The cost also includes trial run cost and other operating expenses such as freight, installation charges etc. The projects under construction are carried at costs comprising of costs directly attributable to brigning the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and attributable borrowing costs.
(ii) Lease arrangements for land are identified as finance lease, in case such arrangements result in transfer ofthe related risks and rewards to the Company classifies land lease arrangement with a term in excess of 99 years as a finance lease.
(iii) Stores and spares which meet the definition of property, plant and equipment and satisfy the recognition criteria of Ind AS 16 are capitalised as property, plant and equipment.
(iv) When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
(v) An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset or significant part) is included in the Statement of Profit and Loss when the asset is derecognised.
(vi) In line with the provisions of Schedule II to the Companies Act, 2013, the Company depreciates significant components of the main asset (which have different useful lives as compared to the main asset) based on the individual useful life of those components. Useful life for such components of property, plant and equipment has been assessed based on the historical experience and internal technical inputs.
(vii) Depreciation on property, plant and equipment is provided as per written down value method based on useful life prescribed under Schedule II to the Companies Act, 2013. The Company has assessed the estimated useful lives of its property, plant and equipment and has adopted the useful lives and residual value as prescribed in Schedule II.
The property, plant and equipment acquired under finance lease are depreciated over the period of lease. Depreciation on stores and spares specific to an item or property, plant and equipment is based on life of the related property, plant and equipment. In other cases, the stores and spares are depreciated over their estimated useful life based on the technical assessment.
(viii) The residual values and useful lives of property, plant and equipment are reviewed at each financial year end, and changes, if any, are accounted prospectively.
(C) Investment Property
Investment properties are properties held to earn rentals and / or for capital appreciation (including property under construction for such purpose). Investment properties are measured initially at cost, including transaction costs.
Subsequent to initial recognition, investment properties are measured in accordance with the requirements of Ind AS 16 for cost model.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecongnition of the property is included in the Statement of Profit and Loss in the period in which the property is derecognised.
Depreciation on investment property is provided as per written down value method based on estimated useful life which is considered at 60 years based on internal assessment.
(D) Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets namely computer software is amortized at the rate of 33.33 % on a straight line basis over the estimated useful economic life.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Profit and Loss Statement when the asset is derecognized.
(E) Borrowing Costs
Borrowing costs are charged to Statement of Profit and Loss except to the extent attributable to acquisition / construction of and asset that necessarily takes a substantial period of time to get ready for its intended use or sale.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
(F) Impairment of Non-financial Assets
At each balance sheet date, an assessment is made of whether there is any indication of impairment.
If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated.
(G) Non-current Assets held for sale
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
Non-current assets are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the assets is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
(H) Inventories
Inventories are valued as follows:
Raw materials Lower of cost or net realizable value. However, materials and other items 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. Cost is determined on a First In First Out (FIFO) basis. Cost of raw materials comprises of cost of purchase (net of discount) and other cost in bringing the inventory to their present location and condition excluding Cenvat credit / Countervailing duty. Customs duty on stock lying in bonded warehouse is included in cost.
Work-in-progress Lower of cost and net realizable value. Cost includes direct materials and labour and a and proportion of manufacturing overheads based on normal operating capacity.
Cost of finished
Finished goods goods includes excise duty. Cost is determined on a First In First Out (FIFO) basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
(I) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:
(i) Sale of Goods:
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. The Company collects sales taxes and value added taxes/goods & service tax (VAT/GST) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.
(ii) Interest income:
Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Interest income is included under the head âother incomeâ in the Statement of Profit and Loss.
(iii) Dividend income:
Revenue is recognized when the shareholdersâ right to receive payment is established by the reporting date. Dividend income is included under the head âother incomeâ in the Statement of Profit and Loss.
(iv) Rental Income:
Revenue is recognised on the basis of income arising from operating lease of investment properties is accounted for on a straight-line basis over the lease unless the payments are structured to increase in line with the expected general inflation to compensate for the lessorâs expected inflationary cost increases and is included in the head âother incomeâ in the Statement of Profit and Loss.
(v) Others:
Revenue is recognised in respect of export incentives, insurance / other claims etc., when it is reasonabley certain that the ultimate collection will be made.
(J) Expenditure on Research and Development
Revenue expenditure on Research and Development is charged to Statement of Profit and Loss under the appropriate heads of expenses. Expenditure relating to property, plant and equipment are capitalised under respective heads.
(K) Foreign Currency Transactions
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Nonmonetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in financial statements, are recognized as income or as expenses in the year in which they arise.
(iv) Forward Contracts
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.
(L) Employee Benefits Post Retirement Benefits
The Company operates the following post-employment schems:
(a) defined benefit plan - gratuity
(b) defined contribution plan - provident fund
Defined benefit plan - Gratuity obligation
Post-employment benefits (benefits which are payable on completion of employment) are measured on a discounted basis by the Projected Unit Credit Method on the basis of actuarial valuation annually.
The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less fair value of plan assets.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.
Defined contribution plan
Retirement benefits in the form of Provident Fund is a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective fund are due. There are no other obligations other than the contribution payable to the respective fund.
(M) Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset(s) or the arrangement conveys a right to use the asset, even if the right is not explicitly specified in an arrangement.
(a) As Company is the lessee
Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized in the Profit and Loss Statement on a straight-line basis over the lease term. Costs, including depreciation, are recognized as an expense in the Profit and Loss Statement. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the Profit and Loss Statement.
(b) Company is the lessor
Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized in the Profit and Loss Statement on a straight-line basis over the lease term. Costs, including depreciation, are recognized as an expense in the Profit and Loss Statement. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the Profit and Loss Statement.
(N) Taxation
Income tax expense comprises of current tax expense and the net change in the deferred tax asset or liability during the year.
(a) Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India.
(b) Deferred Tax: Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are off set if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
(c) Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT Credit is allowed to be carried forward. In the year in which the Company recognizes MAT Credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the Profit and Loss Statement and shown as âMAT Credit Entitlement.â The Company reviews the âMAT Credit Entitlementâ asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the sufficient period.
(O) Segment Reporting
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements ofthe Company as a whole.
(P) Earning per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events, if any, such as bonus issue, bonus elements in a rights issue to existing shareholders, shares split and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
(Q) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as as result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates
Contingent liabilities are disclosed in the case of:
a) a present obligation arising from the past events, when it is not probable that an outflow of resources will be required to settle the obligation;
b) a present obligation arising from the past events, when no reliable estimate is possible;
c) a possible obligation arising from past events, unless the probability of outflow of resources is remote.
Contingent assets are not recognised but disclosed in the financial statements when an inflow of economic benefits is probable.
(R) Financial Instruments
âFinancial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.â
I. Financial Assets
A. Initial recognition and measurement :
Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition of the financial asset [other than financial assets at fair value through profit or loss (FVTPL)] are added to the fair value of the financial assets. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.Transaction costs of financial assets carried at FVTPL are expensed in the Statement of Profit and Loss.
B. Subsequent measurement:
For purposes of subsequent measurement, financial assets are classified in the following categories:
(i) Debt instruments at amortised cost
A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. This category generally applies to trade and other receivables.
(ii) Debt instruments included within the Fair Value Through Profit or Loss (FVTPL) category are measured at fair value with all changes recognised in the Statement of Profit and Loss.
(iii) Equity instruments: All equity instruments within the scope of Ind-AS 109 are measured at fair value. Equity instruments which are classified as held for trading are measured at FVTPL. For all other equity instruments, the Company decides to measure the same either at Fair Value Through Other Comprehensive Income (FVTOCI) or FVTPL. The Company makes such selection on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
For equity instruments measured at FVTOCI, all fair value changes on the instrument, excluding dividends, are recognised in Other Comprehensive Income (OCI). There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of such instruments.
iv) Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement of Profit and Loss.
C. De-recognition:
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognised (i.e. removed from the Companyâs balance sheet) when:
- the rights to receive cash flows from the asset have expired, or
- the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement, and either:
(i) the Company has transferred substantially all the risks and rewards of the asset, or
(ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
D. Impairment of financial assets:
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on trade receivables and other advances. The Company follows âsimplified approachâ for recognition of impairment loss on these financial assets. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
II. Financial Liabilities
A. Initial recognition and measurement:
Financial liabilities are classified at initial recognition as :
(i) financial liabilities at fair value through profit or loss,
(ii) loans and borrowings, payables, net of directly attributable transaction costs or
(iii) derivatives designated as hedging instruments in an effective hedge, as appropriate.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including derivative financial instruments.
B. Subsequent Measurement :
The measurement offinancial liabilities depends on their classification, as described below:
(i) Borrowings: Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Profit and Loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished and the consideration paid is recognised in the Statement of Profit and Loss as other gains / (losses).
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender has agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.
(ii) Trade and other payables: These amounts represent liabilities for goods and services provided to the Company prior to the end of financial period which are unpaid. The amounts are unsecured and are usually paid within twelve months of recognition. Trade and other payables are presented as current liabilities unless payment is not due within twelve months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(iii) Derivative financial instruments: The Company uses derivative financial instruments, such as foreign exchange forward contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value at the end of each reporting period. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Hedge Accounting:
The Company designates certain hedging instruments which include derivatives, embedded derivatives and non derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges or hedges of net investments in foreign operations. At the inception of the hedge relationship, the Company documents the relationship between the hedging instruments and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
C. De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another, from the same lender, on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
D. Offsetting offinancial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(S) First-time adoption-mandatory exceptions, optional exemptions Overall Principle
The Company has prepared the opening Balance Sheet as per Ind AS as of the transition date which is 1st April, 2016, by
(a) recognising all assets and liabilities whose recognition is required by Ind AS;
(b) not recognising items of assets or liabilities which are not permitted by lnd AS;
(c) reclassifying items from previous GAAP to Ind AS as required under Ind AS; and
(d) applying Ind AS in measurement of recognised assets and liabilities.
However, this principle is subject to certain exceptions and certain optional exemptions availed by the Company as detailed below:
1. De-recognition offinancial assets and liabilities
The Company has applied the de-recognition requirements of financial assets and liabilities prospectively for transactions occurring on or after 1st April, 2016 (date of transition).
2. Classification of debt instruments
The Company has determined the classification of debt instruments in terms of whether they meet the amortised cost criteria or the FVTPL criteria based on the facts and circumstances that existed as of the transaction date.
3. Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has use reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
4. Deemed cost for property, plant and equipment, investment property and intangible assets
The Company has elected to continue with the carrying value of all of its property, plant and equipment, investment property and intangible assets recognised as of 1st April, 2016 measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
5. Equity investments at FVTOCI
The Company has designated investment in equity shares as at FVTOCI on the basis of facts and circumstances that existed at the transition date.
The Company has elected to measure investment in subsidiary at cost.
6. Determining whether an arrangement contains a lease
The Company has applied Appendix C of Ind AS 17 determining whether an arrangement contains a lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.
Significant accounting judgements, estimates and assumptions
The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgements
In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:
(a) Operating lease commitments - Company as lessor;
(b) Assessment of functional currency;
(c) Evaluation of recoverability of deferred tax assets
Estimates and assumptions
The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end ofthe reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:
a) Useful lives of property, plant and equipment, investment property and intangible assets;
b) Fair value measurements of financial instruments ;
c) Impairment of non-financial assets;
d) Taxes;
e) Defined benefit plans (gratuity benefits);
f) Provisions;
g) Valuation of inventories;
h) Contingencies
The entity has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follow
Mar 31, 2017
1. Company Information
Panama petrochem Limited ("the Company") is a public limited Company domiciled in India. The registered office of the Company is at Plot No. 3303, GIDC Estate, Ankleshwar 393002, Gujarat, India and corporate office at 401, Aza House, Turner Road, Bandra West, Mumbai 400050. The Company was incorporated on 9 March 1982. The Company is engaged in the manufacture of specialty petroleum products for diverse user industries like printing, textiles, rubber, pharmaceuticals, cosmetics, power and other industrial oil.
2. Basis of preparation and Significant Accounting Policies
2.1 Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects the relevant provisions of the Companies Act, 2013 ("the Act") and with the Accounting Standards notified by the Companies (Accounts) Rules, 2014. The financial statements have been prepared under the historical cost convention.
The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.
2.2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities at the end of the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in the future periods.
2.3 Current / Non-current classification:
The Schedule III to the Act requires assets and liabilities to be classified as either Current or Non-current.
An asset is classified as current when it satisfies any of the following criteria:
(i) it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle;
(ii) it is held primarily for the purpose of being traded;
(iii) it is expected to be realized within twelve months after the reporting date; or
(iv) it is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
All other assets are classified as non-current.
A liability shall be classified as current when it satisfies any of the following criteria:
(i) it is expected to be settled in, the Company''s normal operating cycle;
(ii) it is held primarily for the purpose of being traded;
(iii) it is due to be settled within twelve months after the reporting date; or
(iv) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the opinion of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
All other liabilities are classified as non-current.
2.4 Measurement of EBITDA
As permitted by the Schedule III to the Act, the Company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the Profit and Loss Statement. The Company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Company does not include depreciation and amortization expense, finance costs and tax expense.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
2.6 Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
2.7 Fixed Assets
a) Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the Profit and Loss Statement for the period during which such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Profit and Loss Statement when the asset is derecognized.
b) Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets namely computer software is amortized at the rate of 33.33 % on a straight line basis over the estimated useful economic life.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Profit and Loss Statement when the asset is derecognized.
2.8 Depreciation/Amortization on Fixed Assets
Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives prescribed under the Schedule II to the Act for each class of assets. Where life of a component of an asset is significantly different from the underlying primary asset, then such different useful life is adopted for depreciating the said component.
Leasehold land is amortized on a straight line basis over the period of lease.
Depreciation and amortization methods, useful lives and residual values are reviewed periodically, including at each financial year end.
2.9 Revenue Recognition
Revenue 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. The following specific recognition criteria must also be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer/ insurance company. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.
Interest
Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Interest income is included under the head "other income" in the Profit and Loss Statement.
Dividends
Revenue is recognized when the shareholders'' right to receive payment is established by the reporting date.
2.10 Foreign currency translation
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
(iv) Forward Contracts
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the Profit and Loss Statement in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.
2.11 Investments
Investments that are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Profit and Loss Statement.
2.12 Retirement and other employee benefits Post Retirement Benefits
i. Defined Contribution Plans
Retirement benefits in the form of Provident Fund is a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective fund are due. There are no other obligations other than the contribution payable to the respective fund.
ii. Defined Benefit Plans
Gratuity liability is a defined benefit obligation. The costs of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method.
Actuarial gains and losses for the defined benefit plan are recognized in full in the period in which they occur in the Profit and Loss Statement.
2.13 Borrowing Costs
Borrowing costs includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed out in the period they occur.
2.14 Segment Reporting Policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
2.15 Leases Company is the lessee
Leases where the less or effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.
Company is the less or
Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized in the Profit and Loss Statement on a straight-line basis over the lease term. Costs, including depreciation, are recognized as an expense in the Profit and Loss Statement. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the Profit and Loss Statement.
2.16 Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year.
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.
2.17 Taxes on Income
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT Credit is allowed to be carried forward. In the year in which the Company recognizes MAT Credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the Profit and Loss Statement and shown as "MAT Credit Entitlement." The Company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the sufficient period.
2.18 Impairment of tangible and intangible assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating units (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
2.19 Provisions
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates
2.20 Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Mar 31, 2015
1. Company Information
Panama petrochem Limited ("the Company") is a public limited Company
docimiciled in India. The registered office of the Company is at Plot
No. 3303, GIDC Estate, Ankleshwar 393002, Gujarat, India and corporate
office at 401, Aza House, Turner Road, Bandra West, Mumbai 400050. The
Company was incorporated on 9 March 1982. The Company is engaged in
the manufacture of specialty petroleum products for diverse user
indstries like printing, textiles, rubber, pharmaceuticals, cosmetics,
power and other industrial oil.
2. Basis of preparation and Significant Accounting Policies
2.1 Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects the relevant provisions of the
Companies Act, 2013 ("the Act") and with the Accounting Standards
notified by the Companies (Accounts) Rules, 2014. The financial
statements have been prepared under the historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
2.2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the end of the
reporting period. Although these estimates are based upon management's
best knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in
the future periods.
2.3 Current / Non-current classification:
The Schedule III to the Act requires assets and liabilities to be
classified as either Current or Non-current.
An asset is classified as current when it satisfies any of the
following criteria:
(i) it is expected to be realised in, or is intended for sale or
consumption in, the Company's normal operating cycle;
(ii) it is held primarily for the purpose of being traded;
(iii) it is expected to be realised within twelve months after the
reporting date; or
(iv) it is cash or a cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting date.
All other assets are classified as non-current.
A liability shall be classified as current when it satisfies any of the
following criteria:
(i) it is expected to be settled in, the Company's normal operating
cycle;
(ii) it is held primarily for the purpose of being traded;
(iii) it is due to be settled within twelve months after the reporting
date; or
(iv) the Company does not have an unconditional right to defer
settlement of the liability for at least twelve months after the
reporting date. Terms of a liability that could, at the opinion of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
All other liabilities are classified as non-current.
2.4 Measurement of EBITDA
As permitted by the Schedule III to the Act, the Company has elected to
present earnings before interest, tax, depreciation and amortization
(EBITDA) as a separate line item on the face of the Profit and Loss
Statement. The Company measures EBITDA on the basis of profit/ (loss)
from continuing operations. In its measurement, the Company does not
include depreciation and amortization expense, finance costs and tax
expense.
Inventories are valued as follows: Raw materials
Lower of cost or net realizable value. However, materials and other
items 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. Cost is
determined on a First In First Out (FIFO) basis. Cost of raw materials
comprises of cost of purchase (net of discount) and other cost in
bringing the inventory to their present location and condition
excluding Cenvat credit / Countervailing duty. Customs duty on stock
lying in bonded warehouse is included in cost.
Work-in-progress and Finished goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty. Cost
is determined on a First In First Out (FIFO) basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
2.6 Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short- term investments with an
original maturity of three months or less.
2.7 Fixed Assets
a) Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the Profit and Loss Statement for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the Profit and Loss Statement
when the asset is derecognized.
b) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets namely computer software is amortized at the rate of
33.33 % on a straight line basis over the estimated useful economic
life.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the Profit and Loss
Statement when the asset is derecognized.
2.8 Depreciation/Amortization on Fixed Assets
Depreciation on fixed assets is calculated on a straight-line basis
using the rates arrived at based on the useful lives prescribed under
the Schedule II to the Act.
Leasehold land is amortized on a straight line basis over the period of
lease.
2.9 Revenue Recognition
Revenue 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. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. The Company collects
sales taxes and value added taxes (VAT) on behalf of the government
and, therefore, these are not economic benefits flowing to the Company.
Hence, they are excluded from revenue. Excise duty deducted from
revenue (gross) is the amount that is included in the revenue (gross)
and not the entire amount of liability arising during the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the Profit and Loss
Statement.
Dividends
Revenue is recognized when the shareholders' right to receive payment
is established by the reporting date.
2.10 Foreign currency translation
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of Company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(iv) Forward Contracts
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
Profit and Loss Statement in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
2.11 Investments
Investments that are readily realizable and intended to be held for not
more than one year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the Profit
and Loss Statement.
2.12 Retirement and other employee benefits Post Retirement Benefits
i. Defined Contribution Plans
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the respective fund
are due. There are no other obligations other than the contribution
payable to the respective fund.
ii. Defined Benefit Plans
Gratuity liability is a defined benefit obligation. The costs of
providing benefits under this plan is determined on the basis of
actuarial valuation at each year-end using the projected unit credit
method.
Actuarial gains and losses for the defined benefit plan are recognized
in full in the period in which they occur in the Profit and Loss
Statement.
2.13 Borrowing Costs
Borrowing costs includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed out in the period they occur.
2.14 Segment Reporting Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
2.15 Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
term.
Company is the lessor
Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income on an operating lease is recognized in the
Profit and Loss Statement on a straight-line basis over the lease term.
Costs, including depreciation, are recognized as an expense in the
Profit and Loss Statement. Initial direct costs such as legal costs,
brokerage costs, etc. are recognized immediately in the Profit and Loss
Statement.
2.16 Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) by the weighted average number of equity
shares outstanding during the year.
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.
2.17 Taxes on Income
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realized. In situations where the Company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognized
only if there is virtual certainty supported by convincing evidence
that they can be realized against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternate Tax (MAT) paid in a year is charged to the Statement
of Profit and Loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent there is convincing evidence
that the Company will pay normal income tax during the specified
period, i.e., the period for which MAT Credit is allowed to be carried
forward. In the year in which the Company recognizes MAT Credit as an
asset in accordance with the Guidance Note on Accounting for Credit
Available in respect of Minimum Alternate Tax under the Income Tax Act,
1961, the said asset is created by way of credit to the Profit and Loss
Statement and shown as "MAT Credit Entitlement." The Company reviews
the "MAT Credit Entitlement" asset at each reporting date and writes
down the asset to the extent the Company does not have convincing
evidence that it will pay normal tax during the sufficient period.
2.18 Impairment of tangible and intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset's recoverable amount. An asset's recoverable amount
is the higher of an asset's or cash-generating unit's (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
2.19 Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates
2.20 Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
Mar 31, 2014
1. Corporate Information
Panama Petrochem Limited (the company) is a public limited company
domiciled in India and incorporated under the provisions of the
Companies Act, 1956. The company is engaged in the manufacture of
specialty petroleum products for diverse user industries like printing,
textiles, rubber, pharmaceuticals, cosmetics, power and other
industrial oil.
2. Basis of preparation
The financial statements of the company have been prepared in accordance
with generally accepted accounting principles in India (Indian GAAP).
The company has prepared these financial statements to comply in all
material respects with the Accounting Standards notifed by Companies
(Accounting Standards) Rules, 2006, (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year. 2.1 Summary of
significant accounting policies
a) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the end of the
reporting period. Although these estimates are based upon management''s
best knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in
the future periods.
b) Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price. Subsequent
expenditure related to an item of fixed asset is added to its book value
only if it increases the future benefits from the existing asset beyond
its previously assessed standard of performance. All other expenses on
existing fixed assets, including day-to-day repair and maintenance
expenditure and cost of replacing parts, are charged to the statement
of profit and loss for the period during which such expenses are
incurred Gains or losses arising from derecognition of fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
c) Depreciation/Amortization
Depreciation on fixed assets is calculated on a straight-line basis
using the rates arrived at based on the useful lives estimated by the
management, or those prescribed under the Schedule XIV to the Companies
Act 1956 whichever is higher.
Leasehold land is amortized on a straight line basis over the period of
lease.
Fixed assets costing Rs. 5,000 or less are depreciated fully in the year
of acquisition.
d) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Intangible assets namely computer software
is amortized at the rate of 33.33 % on a straight line basis over the
estimated useful economic life.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
e) Impairment of tangible and intangible assets
The company assesses at each reporting date whether there is an
indication that an asset may be impaired If any indication exists, or
when annual impairment testing for an asset is required, the company
estimates the asset''s recoverable amount. An asset''s recoverable amount
is the higher of an asset''s or cash-generating unit''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that refects current market assessments of the time value
of money and the risks Specific to the asset. In determining net selling
price, recent market transactions are taken into account, if available.
If no such transactions can be identified, an appropriate valuation
model is used.
f) Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classifed as operating
leases. Operating lease payments are recognized as an expense in the
profit and Loss account on a straight-line basis over the lease term.
Company is the lessor
Leases in which the company does not transfer substantially all the
risks and benefits of ownership of the asset are classifed as operating
leases. Assets subject to operating leases are included in fixed assets.
Lease income on an operating lease is recognized in the statement of
profit and loss on a straight-line basis over the lease term. Costs,
including depreciation, are recognized as an expense in the statement
of profit and loss. Initial direct costs such as legal costs, brokerage
costs, etc. are recognized immediately in the statement of profit and
loss.
g) Investments
Investments that are readily realizable and intended to be held for not
more than one year from the date on which such investments are made,
are classifed as current investments. All other investments are
classifed as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
h) Inventories
Inventories are valued as follows:
Raw Material :
Lower of cost or net realizable value. However, materials and other
items 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. Cost is
determined on a First In First Out (FIFO) basis. Cost of raw materials
comprises of cost of purchase and other cost in bringing the inventory
to their present location and condition excluding Cenvat credit /
Countervailing duty. Customs duty on stock lying in bonded warehouse
is included in cost.
Work-in-progress : and Finished goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of fnished goods includes excise duty. Cost
is determined on a First In First Out (FIFO) basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
i) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will fow to the Company and the revenue can be
reliably measured. The following Specific recognition criteria must also
be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. The company collects
sales taxes and value added taxes (VAT) on behalf of the government
and, therefore, these are not economic benefits fowing to the company.
Hence, they are excluded from revenue. Excise duty deducted from
revenue (gross) is the amount that is included in the revenue (gross)
and not the entire amount of liability arising during the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the statement of profit and
loss.
Dividends
Revenue is recognised when the shareholders'' right to receive payment
is established by the reporting date.
j) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
k) Foreign currency translation
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(iv) Forward Contracts
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of forward
exchange contract is recognized as income or as expense for the year.
l) Retirement and other employee benefits
i. Retirement benefits in the form of Provident Fund is a Defined
contribution scheme and the contributions are charged to the profit and
Loss Account of the year when the contributions to the respective fund
are due. There are no other obligations other than the contribution
payable to the respective fund.
ii. Gratuity liability is a Defined benefit obligation. The costs of
providing benefits under this plan is determined on the basis of
actuarial valuation at each year-end using the projected unit credit
method.
iii. Actuarial gains and losses for the Defined benefit plan are
recognized in full in the period in which they occur in the statement
of profit and loss.
m) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. Deferred
income taxes refects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that suffcient future taxable income
will be available against which such deferred tax assets can be
realised. In situations where the company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits. At each
balance sheet date the Company re-assesses unrecognised deferred tax
assets. It recognises unrecognised deferred tax assets to the extent
that it has become reasonably certain or virtually certain, as the case
may be that suffcient future taxable income will be available against
which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes- down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that suffcient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
suffcient future taxable income will be available.
Minimum Alternate Tax (MAT) paid in a year is charged to the Statement
of profit and Loss as current tax. The company recognizes MAT credit
available as an asset only to the extent there is convincing evidence
that the company will pay normal income tax during the specified period,
i.e., the period for which MAT Credit is allowed to be carried forward.
In the year in which the Company recognizes MAT Credit as an asset in
accordance with the Guidance Note on Accounting for Credit Available in
respect of Minimum Alternate Tax under the Income Tax Act, 1961, the
said asset is created by way of credit to the statement of profit and
Loss and shown as "MAT Credit Entitlement." The Company reviews the
"MAT Credit Entitlement" asset at each reporting date and writes down
the asset to the extent the company does not have convincing evidence
that it will pay normal tax during the suffcient period.
n) Segment Reporting Policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
o) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) by the weighted average number of equity
shares outstanding during the year.
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
p) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to refect the current best
estimates
q) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be required
to settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
financial statements.
r) Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash fow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
s) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures EBITDA on the basis of profit/ (loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.
b. Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share, however the holders of global depository receipts (GDR''s) do not
have any voting rights in respect of shares represented by the GDR''s
till the shares are held by the custodian bank (Refer Note 40 ) . The
company declares and pays dividends in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting.
The amount of per share dividend recognized as distributions to equity
shareholders is Rs. 6/-(31 March 2013 : Rs. 4/-)
In the event of liquidation of the company, the holders of equity
shares will be entitled to receive assets in proportion to the number
of equity shares held by the shareholders.
Terms of Securities and repayment
Cash credit from banks is secured against the hypothecation of Stocks,
Book debts and Plant & Machineries (both present & future), Pledge of
Fixed Deposit Receipts, Further secured by Equitable Mortgage of
Company''s present Immoveable Property situated at Ankleshwar,
Daman,Marol industrial estate, property of group companies situated at
Navi Mumbai, property belonging to the Directors and corporate gurantee
given by Anirudh Distributors Pvt. Ltd. (Refer Note 35). The cash
credit is repayable on demand and carried an interest rate of 12% to
16% p.a
Mar 31, 2013
(a) Use of estimates
The preparation of fnancial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the end of the
reporting period. Although these estimates are based upon management''s
best knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in
the future periods.
(b) Tangible fxed assets
Fixed assets are stated at cost, net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fxed asset is added to its
book value only if it increases the future
benefts from the existing asset beyond its previously assessed standard
of performance. All other expenses on existing fxed assets, including
day-to-day repair and maintenance expenditure and cost of replacing
parts, are charged to the statement of proft and loss for the period
during which such expenses are incurred
Gains or losses arising from derecognition of fxed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of proft and
loss when the asset is derecognized.
(c) Depreciation/Amortization
Depreciation on fxed assets is calculated on a straight-line basis
using the rates arrived at based on the useful lives estimated by the
management, or those prescribed under the Schedule XIV to the Companies
Act 1956 whichever is higher.
Leasehold land is amortized on a straight line basis over the period of
lease.
Fixed assets costing Rs. 5,000 or less are depreciated fully in the year
of acquisition.
(d) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets namely computer software is amortized at the rate of
33.33 % on a straight line basis over the estimated useful economic
life.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
proft and loss when the asset is derecognized.
(e) Impairment of tangible and intangible assets
The company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the company
estimates the asset''s recoverable amount. An asset''s recoverable
amount is the higher of an asset''s or cash-generating unit''s (CGU) net
selling price and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate
cash infows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the
estimated future cash fows are discounted to their present value using
a pre-tax discount rate that refects current market assessments of the
time value of money and the risks specifc to the asset. In determining
net selling price, recent market transactions are taken into account,
if available. If no such transactions can be identifed, an appropriate
valuation model is used.
(f) Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefts of ownership of the leased item, are classifed as operating
leases. Operating lease payments are recognized as an expense in the
Proft and Loss account on a straight- line basis over the lease term.
Company is the lessor
Leases in which the company does not transfer substantially all the
risks and benefts of ownership of the asset are classifed as operating
leases. Assets subject to operating leases are included in fxed assets.
Lease income on an operating lease is recognized in the statement of
proft and loss on a straight-line basis over the lease term. Costs,
including depreciation, are recognized as an expense in the statement
of proft and loss. Initial direct costs such as legal costs, brokerage
costs, etc. are recognized immediately in the statement of proft and
loss.
(g) Investments
Investments that are readily realizable and intended to be held for not
more than one year from the date on which such investments are made,
are classifed as current investments. All other investments are
classifed as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the fnancial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of proft and loss.
(h) Inventories
Inventories are valued as follows:
Raw materials: Lower of cost and net realizable value. However,
materials and other items 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. Cost is
determined on a First In First Out (FIFO) basis. Cost of raw materials
comprises of cost of purchase and other cost in bringing the inventory
to their present location and condition excluding Cenvat credit /
Countervailing duty. Customs duty on stock lying in bonded warehouse is
included in cost.
Work-in-progress and Finished goods Lower of cost and net realizable
value. Cost includes direct materials and labour and a proportion of
manufacturing overheads based on normal operating capacity. Cost of
fnished goods includes excise duty. Cost is determined on a First In
First Out (FIFO) basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(i) Revenue Recognition
Revenue is recognized to the extent that
it is probable that the economic benefts will fow to the Company and
the revenue can be reliably measured. The following specifc recognition
criteria must also be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the signifcant risks and rewards of
ownership of the goods have passed to the buyer. The company collects
sales taxes and value added taxes (VAT) on behalf of the government
and, therefore, these are not economic benefts fowing to the company.
Hence, they are excluded from revenue. Excise duty deducted from
revenue (gross) is the amount that is included in the revenue (gross)
and not the entire amount of liability arising during the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the statement of proft and
loss.
Dividends
Revenue is recognised when the shareholders'' right to receive payment
is established by the reporting date.
(j) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(k) Foreign currency translation
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non- monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of company at rates different from those
at which they were initially recorded during the year, or reported in
previous fnancial statements, are recognized as income or as expenses
in the year in which they arise.
(iv) Forward Contracts
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of proft and loss in the year in which the exchange rates
change. Any proft or loss arising on cancellation or renewal of forward
exchange contract is recognised as income or as expense for the year.
(l) Retirement and other employee benefts
i. Retirement benefts in the form of Provident Fund is a defned
contribution scheme and the contributions are charged to the Proft and
Loss Account of the year when the contributions to the respective fund
are due. There are no other obligations other than the contribution
payable to the respective fund.
ii. Gratuity liability is a defned beneft obligation. The costs of
providing benefts under this plan is determined on the basis of
actuarial valuation at each year-end using the projected unit credit
method.
iii. Actuarial gains and losses for the defned beneft plan are
recognized in full in the period in which they occur in the statement
of proft and loss.
(m) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. Deferred
income taxes refects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that suffcient future taxable income
will be available against which such deferred tax assets can be
realised. In situations where the company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profts.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that suffcient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that suffcient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
suffcient future taxable income will be available.
Minimum Alternate Tax (MAT) paid in a year is charged to the Statement
of Proft and Loss as current tax. The company recognizes MAT credit
available as an asset only to the extent there is convincing evidence
that the company will pay normal income tax during the specifed period,
i.e., the period for which MAT Credit is allowed to be carried forward.
In the year in which the Company recognizes MAT Credit as an asset in
accordance with the Guidance Note on Accounting for Credit Available in
respect of Minimum Alternate Tax under the Income Tax Act, 1961, the
said asset is created by way of credit to the statement of Proft and
Loss and shown as "MAT Credit Entitlement." The Company reviews the
"MAT Credit Entitlement" asset at each reporting date and writes down
the asset to the extent the company does not have convincing evidence
that it will pay normal tax during the suffcient period.
(n) Segment Reporting Policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the fnancial
statements of the company as a whole.
(o) Earnings per share
Basic earnings per share are calculated by dividing the net proft or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) by the weighted average number of equity
shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
proft 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.
(p) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; 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 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
(q) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confrmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outfow of resources will be required
to settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
fnancial statements.
(r) Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash fow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(s) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of proft and loss. The company
measures EBITDA on the basis of proft/ (loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, fnance costs and tax expense.
Mar 31, 2012
(a) Change in accounting policy
Presentation and disclosure of financial statements
During the year ended March 31, 2012, the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the company for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However it
has a significant impact on the presentation and disclosures made in
the financial statements. The company has also reclassified previous
year figures in accordance with the requirements applicable in the
current year
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the end of the
reporting period. Although these estimates are based upon management's
best knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in
the future periods.
(c) Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(d) Depreciation/Amortization
Depreciation on fixed assets is calculated on a straight-line basis
using the rates arrived at based on the useful lives estimated by the
management, or those prescribed under the Schedule XIV to the Companies
Act 1956 whichever is higher.
Leasehold land is amortized on a straight line basis over the period of
lease.
Fixed assets costing Rs. 5,000 or less are depreciated fully in the year
of acquisition.
(e) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets namely computer software is amortized at the rate of
33.33 % on a straight line basis over the estimated useful economic
life.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
(f) Impairment of tangible and intangible assets
The company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the company
estimates the asset's recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash-generating unit's (CGU) net
selling price and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. In determining
net selling price, recent market transactions are taken into account,
if available. If no such transactions can be identified, an appropriate
valuation model is used.
(g) Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight- line basis over the lease
term.
Company is the lessor
Leases in which the company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income on an operating lease is recognized in the
statement of profit and loss on a straight-line basis over the lease
term. Costs, including depreciation, are recognized as an expense in
the statement of profit and loss. Initial direct costs such as legal
costs, brokerage costs, etc. are recognized immediately in the
statement of profit and loss.
(h) Investments
Investments that are readily realizable and intended to be held for not
more than one year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
(i) Inventories
Inventories are valued as follows:
Raw materials: Lower of cost and net realizable value. However,
materials and other items 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. Cost is
determined on a First In First Out (FIFO) basis. Cost of raw materials
comprises of cost of purchase and other cost in bringing the inventory
to their present location and condition excluding Cenvat credit /
Countervailing duty. Customs duty on stock lying in bonded warehouse is
included in cost.
Work-in-progress and Finished goods Lower of cost and net realizable
value. Cost includes direct materials and labour and a proportion of
manufacturing overheads based on normal operating capacity. Cost of
finished goods includes excise duty. Cost is determined on a First In
First Out (FIFO) basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Revenue Recognition
Revenue 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. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. The company collects
sales taxes and value added taxes (VAT) on behalf of the government
and, therefore, these are not economic benefits flowing to the company.
Hence, they are excluded from revenue. Excise duty deducted from
revenue (gross) is the amount that is included in the revenue (gross)
and not the entire amount of liability arising during the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the statement of profit and
loss.
Dividends
Revenue is recognised when the shareholders' right to receive payment
is established by the reporting date.
(k) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(l) Foreign currency translation
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non- monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(iv) Forward Contracts
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
(m) Retirement and other employee benefits
i. Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the respective fund
are due. There are no other obligations other than the contribution
payable to the respective fund.
ii. Gratuity liability is a defined benefit obligation. The costs of
providing benefits under this plan is determined on the basis of
actuarial valuation at each year-end using the projected unit credit
method.
iii. Actuarial gains and losses for the defined benefit plan are
recognized in full in the period in which they occur in the statement
of profit and loss.
(n) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realised. In situations where the company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
(o) Segment Reporting Policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
(p) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) by the weighted average number of equity
shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(q) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates
(r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(s) Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(t) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures
EBITDA on the basis of profit/ (loss) from continuing operations. In
its measurement, the company does not include depreciation and
amortization expense, finance costs and tax expense.
Mar 31, 2011
(a) Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies (Accounting
Standards) Rules, 2006, (as amended) and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention on an accrual basis. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation. Cost
comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use. Borrowing costs
relating to acquisition of fixed assets which takes substantial period
of time to get ready for its intended use are also included to the
extent they relate to the period till such assets are ready to be put
to use.
(d) Depreciation/Amortisation
Depreciation of fixed assets is provided on Straight Line Method at the
rates prescribed in Schedule XIV to the Companies Act 1956. Leasehold
lands are amortised on straight line method over the period of lease.
Fixed assets costing Rs. 5,000 or less are depreciated fully in the
year of acquisition.
(e) Impairment
The carrying amounts of assets 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
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash fows are discounted
to their present value using a pre-tax discount rate that refects
current market assessments of the time value of money and risks specific
to the asset.
(f) Intangible Assets
Computer Software
Computer software are amortised on straight line method over a period
of three years.
(g) Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the
lease term.
Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognised in the Profit and Loss Account on a straight-line
basis over the lease term. Costs, including depreciation are recognised
as an expense in the Profit and Loss Account. Initial direct costs such
as legal costs, brokerage costs, etc. are recognised immediately in the
Profit and Loss Account.
(h) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current investments
are carried at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However,
provision for diminution in value is made to recognise a decline other
than temporary in the value of the investments.
(i) Inventories
Inventories are valued as follows:
Raw materials
Lower of cost and net realizable value. However, materials and other
items 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. Cost is
determined on a First In First Out (FIFO) basis. Cost of raw materials
comprises of cost of purchase and other cost in bringing the inventory
to their present location and condition excluding Cenvat
credit/Countervailing duty. Customs duty on stock lying in bonded
warehouse is included in cost.
Work-in-progress and Finished goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty. Cost is
determined on a First In First Out (FIFO) basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will fow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty from
turnover (gross) are the amount that is included in the amount of
turnover (gross) and not the entire amount of liability arised during
the year.
Processing Income is accounted on the basis of completion of quantities
processed as per job contract.
Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends
Revenue is recognised when the shareholders' right to receive payment
is established by the balance sheet date.
(k) Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
(l) Foreign currency translation
Foreign currency transactions
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(iv) Forward Contracts
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of forward
exchange contract is recognised as income or as expense for the year
(m) Retirement and other employee benefits
i. Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the respective funds
are due. There are no other obligations other than the contribution
payable to the respective funds.
ii. Gratuity liability is a defined benefit obligation and is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
iii. Actuarial gains/losses are immediately taken to profit and loss
account and are not deferred.
(n) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. Deferred
income taxes refects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realised. In situations where the company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits.
At each balance sheet date the Company re- assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available
(o) Segment Reporting Policies
Identification of segments :
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided. The analysis
of geographical segments is based on the location of production
facilities and customers of the Company.
Inter segment Transfers :
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
prices.
Segment Policies :
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
(p) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) by the weighted average number of equity
shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(q) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; 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 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) Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash fow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
Mar 31, 2010
1. Basis of preparation
The financial statements are prepared under the historical cost
convention, in accordance with the Accounting Standards notified under
the Companies (Accounting Standards) Rules 2006 and the provisions of
the Companies Act 1956, as adopted consistently by the company. All
revenue/income and cost/expenditure having a material bearing on the
financial statements are recognized on accrual basis, except Dividend
Income which is recognized on cash basis.
2. Use of estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities as at the date
of the financial statements and reported amounts of revenues and
expenses for the year and the difference between actual results and
estimates are recognized in the period in which they materialise.
3. Fixed Assets
Fixed Assets are recorded at historical cost along with capitalized
portion of specific and allocated expenses. Fixed Assets acquired and
constructed are stated at historical cost including attributable cost
and incidental expenses, erection/commissioning expenses for bringing
the asset to its intended use.
The carrying amount of assets is reviewed at each Balance Sheet date to
determine if there is any indication of impairment thereof based on the
external/internal factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount, which
represents the greater of their Value in use. The estimated future
cash flows are discounted to their present value at appropriate rate
arrived at after considering the prevailing interest rate & weighted
average cost of capital.
Capital Work in Progress includes cost of assets at sites, construction
expenditure, advances made for acquisition of capital assets and
interest on the funds deployed.
4. Depreciation/Amortization
Depreciation of fixed assets is provided on straight-line method at the
rates and in the manner prescribed in Schedule XIV to the Companies Act
1956. Additions are depreciated on pro-rata basis for number of days
used during the year at the rates prescribed in Schedule XIV of the
Companies Act, 1956. Depreciation on assets sold, discarded or
demolished during the year is being provided at the rates up to the day
on which such assets are sold, discarded or demolished.
Pursuant to Accounting Standard 26 on Intangible Assets, Software
Development Charges are amortized over the useful life of the assets
over a period not exceeding 3 years.
5. Valuation of Inventories
Inventories of Raw Materials, Packing Materials, Finished Goods and
Traded Goods are stated at Cost or Net Realizable value whichever is
lower on FIFO basis. Cost comprises of all cost of purchase, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition, excluding Cenvat Credit/ Counter
Veiling Duty (CVD), VAT set off, Discounts and Rebates. The excise duty
in respect of closing inventory of finished goods is included as part
of finished goods. Customs duty on stock lying in Bonded Warehouses is
included in cost. Provision for obsolescence is made wherever
necessary.
6. Investments
Long-term Investments are valued at cost. However, provision for
diminution in value if any, is made to recognize a decline, other than
temporary, in the value of investments. Current Investments are valued
at lower of cost or fair value.
7. Foreign Exchange Transactions
Foreign Currency transactions are accounted at exchange rates on the
date of transaction. Premium on forward cover contracts in respect of
import of raw materials is charged to Profit & Loss account over the
period of contract. Amounts payable and receivable in foreign currency
as at the Balance Sheet date, not covered by forward contracts, are
reinstated at the applicable exchange rates prevailing on that date.
All exchange differences arising on monetary transactions not covered
by forward contracts are charged to Profit & Loss account.
8. Retirement Benefits
The Company has defined contribution plans for post employment benefits
namely Provident Fund. Regular contributions are made to Provident Fund
and charged to revenue.
The Company has a defined benefit plans namely Gratuity, the liability
for which is determined on the basis of an actuarial valuation at the
end of the year. Gains and losses arising out of actuarial valuations
are recognized immediately in the Profit & Loss Account as income or
expense.
9. Borrowing Cost
Borrowing Costs that are directly attributable to the acquisition,
construction or production of qualifying assets are capitalized till
the month in which the asset is ready to use as part of the cost of
that asset. Interest on working capital is charged to revenue accounts.
10. Leases
Lease rental in respect of assets taken on "Operating Lease" are
charged to Profit & Loss Account over the nprinH nf Ipasp tprm
11. Provisions and Contingencies
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure of contingent liability is made when there is a possible
obligation or a present obligation that will probably not require
outflow of resources or where a reliable estimate of the obligation
cannot be made.
12. Prior Period Adjustment
All identifiable items of Income and Expenditure pertaining to prior
period are accounted through "Prior Period Adjustment Account".
Prior period adjustments on account of errors and omissions of
transactions relating to prior periods are separately disclosed in the
current years financial statements below the line so that the impact
of prior period adjustments on the current year financial statements
can be ascertain.
13. Revenue Recognition
Revenue from sale of goods is recognized when the significant risks and
rewards in respect of ownership of the goods transferred to the
customer and is stated net of excise duty, trade discounts, sales
return and sales tax where ever applicable. Dividend is recognized on
receipt basis.
14. Taxes on Income
The accounting treatment for the Income Tax in respect of the Companys
income is based on the Accounting Standard on "Accounting for Taxes on
Income" (AS 22) as notified by the Companies (Accounting Standards)
Rules 2006. The Provision made for Income Tax in Accounts comprise
both, current tax and deferred tax.
Deferred tax is recognized for all timing differences, being the
differences between the taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Such deferred tax is quantified using the tax
rates and laws enacted or substantively enacted as on the Balance Sheet
date. The carrying amount of deferred tax asset/ liability is reviewed
at each Balance Sheet date and consequential adjustments are carried
out.
15. Earnings per share
Basic earnings per share are 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. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting 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 Hilutivo nntpntial pnuitu
16. Cash Flow Statement
Cash Flow statements are prepared in accordance with "Indirect Method"
as explained in the Accounting Standards on Cash Flow Statements (AS 3)
notified under the Companies (Accounting Standards) Rules, 2006.
17. Segment Reporting
The accounting policies adopted for segment reporting are in line with
the accounting policy of the Company. Segment Revenue, Segment
Expenses, Segment Assets and Segment Liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment. Revenue, expenses, assets and liabilities
which relate to the Company as a whole and are not allocable to
segments on reasonable basis, have been included under "Unallocated
Revenue/Expenses/Assets/ Liabilities".
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