Accounting Policies of Pix Transmissions Ltd. Company
Mar 31, 2022
1 Corporate Information
PIX Transmissions Limited was incorporated on July 22, 1981, as a private limited company in the State of Maharashtra, India. The status of PIX Transmissions Limited changed from a Private Limited company to a Public Limited Company effective from September 27, 1989. PIX Transmissions Limited completed its initial public offering of its equity shares in India on December 4, 1989. The shares of the Company are listed with BSE Limited and National Stock Exchange of India Limited.
The Company is the leading manufacturer of Belts and related mechanical Power Transmission products in India. The Company has state-of-the-art Belt manufacturing units as well as an ultrasophisticated, automated Rubber Mixing facility located in Nagpur, India.
2.1. Significant Accounting Policies
a) Compliance with the Indian Accounting Standards (Ind AS)
The standalone financial statements comply in all material aspects with Ind AS notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The financial statements have been prepared on a historical cost basis, except for the following:
i. certain financial assets and liabilities (including derivative instruments) is measured at fair value
ii. defined benefit plans - plan assets measured at fair value
c) New and amended standards adopted by the Company
The Company has applied the following amendments to Ind AS for the first time for their annual reporting period commencing April 1, 2021:
⢠Extension of COVID-19 related concessions - amendments to Ind AS 116
⢠Interest rate benchmark reform - amendments to Ind AS 109, Financial Instruments, Ind AS 107, Financial Instruments: Disclosures, Ind AS 104, Insurance Contracts and Ind AS 116, Leases.
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
d) New amendments issued but not effective
The Ministry of Corporate Affairs has vide notification dated March 23, 2022, notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amends certain accounting standards, and are effective April 1, 2022. These amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.
e) Reclassifications consequent to amendments to Schedule III
The Ministry of Corporate Affairs amended the Schedule III to the Companies Act, 2013 on 24 March 2021 to increase the transparency and provide additional disclosures to users of financial statements. These amendments are effective from April 1, 2021.
Consequent to above, the Company has changed the classification/presentation of (i) current maturities of long-term borrowings (ii) security deposits, in the current year.
The current maturities of long-term borrowings have now been included in the "Current borrowings" line item. Previously, current maturities of long-term borrowings were included in ''other financial liabilities'' line item.
Further, security deposits (which meet the definition of a financial asset as per Ind AS 32) have
been included in ''other financial assets'' line item. Previously, these deposits were included in ''loans'' line item.
The Company has reclassified comparative amounts to conform with current year presentation as per the requirements of Ind AS 1.
f) Use of estimates and judgements
The preparation of financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions, which affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
g) Property, plant, and equipment and intangible assets
Property, plant, and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Freehold land is carried at cost. 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. Borrowing costs directly attributable to acquisition or construction of qualifying PPE are capitalised.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Borrowing costs directly attributable to acquisition of property, plant and equipment which take 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.Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the Property, plant and equipment is de-recognized.
Costs of assets not ready for use at the balance sheet date are disclosed under capital work- inprogress.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated on straight line basis using the useful lives as prescribed under Schedule II to the Companies Act, 2013. If the management''s estimate of the useful life of an item of property, plant, and equipment at the time of acquisition or the remaining useful life on a subsequent review is shorter than the envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management''s estimate of the useful life/ remaining useful life.
Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortization and accumulated impairment loss.
Subsequent expenditure is capitalized only when it increases the future economic benefits from the specific asset to which it relates. An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss.
Amortisation methods and periods
The estimated useful lives of intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern, if any. Computer Software is amortized over the useful life prescribed under Schedule II to the Companies Act, 2013.
Impairment of non-financial assets
The Company assesses at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an assets'' or cash-generating unit''s (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.
Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss.
h) Foreign currency translation Functional and presentation currency
Items included in the financial statements of the entity are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is entity''s functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in statement of profit or loss. Non-monetary items denominated in a foreign currency are measured at historical cost and translated at exchange rate prevalent at the date of transaction.
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss and ancillary costs related to borrowings) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in Statement of Profit and Loss and ancillary costs related to borrowings) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income ("FVOCI") or fair value through profit or loss ("FVTPL") based on following:
⢠the entity''s business model for managing the financial assets and
⢠the contractual cash flow characteristics of the financial asset.
A financial asset shall be classified and measured at amortised cost if both of the following conditions are met:
â¢the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and â¢the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method.
(ii) Fair Value through other comprehensive income
A financial asset shall be classified and measured at fair value through OCI if both of the following conditions are met:
â¢the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
â¢the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI).
(iii) Fair Value through Profit or Loss
Fair Value through Profit or Loss is a residual category for financial assets. A financial asset shall be classified and measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through OCI. Financial assets included within the Fair Value through Profit or Loss category are measured at fair value with all changes recognised in the statement of profit and loss.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification and Subsequent Measurement: Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. All financial liabilities are recognised initially at fair value and, in the case of loans, borrowings, and payables, net of directly attributable transaction costs.
(I) Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
(ii) Other Financial Liabilities
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial asset. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix based on its historical credit loss experience.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is
recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged, cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Equity investment in subsidiaries
Investment in subsidiaries is carried at cost. Impairment recognized, if any, is reduced from the carrying value.
Offsetting of financial 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. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business.
j) Derivatives that are not designated as hedges
Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedge accounting criteria, they are classified as ''held for trading'' for accounting purposes and are accounted for at FVPL. They are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period. Financial assets and liabilities are offset, and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value is recognised in profit or loss.
k) Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all liabilities. Equity instruments issued by a Company are recognised at the proceeds received.
Current income tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from
''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years, items that are never taxable or deductible and tax incentives. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Deferred income tax is recognized using the balance sheet approach, deferred tax is recognized on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, 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 utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet 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 income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been 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 taxes relate to the same taxable entity and the same taxation authority.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
Finished goods and work in progress: Cost of finished goods and work-in-progress includes the cost of materials, conversion cost, an appropriate share of fixed and variable production overheads and other costs incurred in bringing the inventories to their present location and condition.
Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in production of finished products are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. Revenue from sale of goods is recognised when the goods are dispatched, and tittles have passed. The Company disaggregates Revenue from contracts with customers by geography.
Dividend income is recorded when the right to receive payment is established.
Interest income is recognised using the effective Interest method. For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR).
o) Employee benefits(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The earned leave obligations are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the appropriate market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
(iii) Post-employment obligations
The company operates the following post-employment schemes:
(a) defined benefit plans viz gratuity,
(b) defined contribution plans viz provident fund.
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement 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.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
The Company pays provident fund contributions to approved provident fund trust and publicly administered provident funds. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
As a lessee
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date.
The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant, and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term
leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.
Right-of-use assets are measured at cost comprising the following:
⢠the amount of the initial measurement of lease liability
⢠any lease payments made at or before the commencement date less any lease incentives received
⢠any initial direct costs
⢠restoration costs.
Lease liabilities include the net present value of the following lease payments:
⢠fixed payments (including in-substance fixed payments), less any lease incentives receivable
⢠variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date
⢠amounts expected to be payable by the Company under residual value guarantees
⢠the exercise price of a purchase option if the Company is reasonably certain to exercise that option, and
⢠payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
h) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources, which can be reliably estimated, will be required to settle such an obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Claims against the Company where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
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 profit or 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 drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
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 or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or 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 12 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 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.
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds and is measured with reference to the effective interest rate (EIR) applicable to the respective borrowing.
Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Borrowing costs, allocated to qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
All other borrowing costs are recognised as an expense in the period which they are incurred.
v) Segment Reporting - Identification of Segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company is engaged in the business of Industrial Rubber Products and there is no reportable primary segment as per Indian Accounting
Standard (IND AS 108) '' Segment Reporting''. The Company identified geographical locations as secondary segments. The products of the company are sold both in the domestic & export markets, which are considered different geographical segments.
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to consider the after-income tax effect of interest and other financing costs associated with dilutive potential equity and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and shortterm deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management
y) Current/non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ noncurrent classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The company has identified twelve months as its operating cycle.
2.2 Critical estimates and judgements
(i) Recoverability of trade receivables
In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix based on its historical credit loss experience.
(ii) Useful lives of property, plant, and equipment/intangible assets
The Company reviews the useful life of property, plant, and equipment/intangible assets at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.
(iii) Defined benefit plans
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Mar 31, 2019
(a) Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Freehold land are stated at cost. 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. Projects pre-operative expenses are capitalized to various eligible PPE in respective units. Borrowing costs directly attributable to acquisition or construction of qualifying PPE are capitalised.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future benefits from its previously assessed standard of performance. All other expenses on existing property, plant and equipment, 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.
Borrowing costs directly attributable to acquisition of property, plant and equipment which take 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.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the Property, plant and equipment is de-recognized.
Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure (including borrowing costs) incurred during the construction period which is neither related to the construction activity nor is incidental thereto is charged to the statement of profit and loss.
Costs of assets not ready for use at the balance sheet date are disclosed under capital work-in-progress.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated on straight line basis using the useful lives as prescribed under Schedule II to the Companies Act, 2013. If the managementâs estimate of the useful life of a item of property, plant and equipment at the time of acquisition or the remaining useful life on a subsequent review is shorter than the envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the managementâs estimate of the useful life/remaining useful life.
The property, plant and equipment acquired under finance leases is depreciated over the assetâs useful life or over the shorter of the assetâs useful life and the lease term if there is no reasonable certainty that the company will obtain ownership at the end of the lease term. Leasehold assets are amortised on a straight-line basis over the balance period of lease.
The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.
(b)Intangible assets
Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortization and accumulated impairment loss.
Subsequent expenditure is capitalized only when it increases the future economic benefits from the specific asset to which it relates. An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss.
Amortisation methods and periods
The estimated useful lives of intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern, if any.
(c) Research and development
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss in the year it is incurred, unless a productâs technological feasibility has been established, in which case such expenditure is capitalised. These costs are charged to the respective heads in the Statement of Profit and Loss in the year it is incurred. The amount capitalised comprises of expenditure that can be directly attributed or allocated on a reasonable and consistent basis for creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets.
(d) Impairment of non financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the 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.
Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss.
(e) Foreign currency translation
(i)Functional and presentation currency
Items included in the financial statements of the entity are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is entityâs functional and presentation currency.
(ii)Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in statement of profit orloss. Non monetary assets and liabilities are carried at cost.
(f) Financial Instruments
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss and ancillary costs related to borrowings) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (âFVOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
The entityâs business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
(i)Amortised Cost
A financial asset shall be classified and measured at amortised cost if both of the following conditions are met:
-the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and -the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(ii) Fair Value through other comprehensive income
A financial asset shall be classified and measured at fair value through OCI if both of the following conditions are met:
-the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and -the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iii)Fair Value through Profit or Loss
A financial asset shall be classified and measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through OCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification and Subsequent Measurement: Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or âother financial liabilitiesâ.
(i) Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
(ii) Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial asset. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments for recognition of impairment loss allowance. The application of simplified approach does not require the Companyto track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Equity investment in subsidiaries
Investment in subsidiaries are carried at cost. Impairment recognized, if any, is reduced from the carrying value.
Offsetting of financial 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.
(g) Financial liabilities and equity instruments Classification as debtor equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received.
(h) Taxes
(i) Current income tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years, items that are never taxable or deductible and tax incentives. The Companyâs current tax is calculated using tax rates that have been enacted or substantively enacted by the end of there porting period.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
(ii) Deferred tax
Deferred income tax is recognized using the balance sheet approach, deferred tax is recognized on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profitwill be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet 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 income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been 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 taxes relate to the same tax able entity and the same taxation authority.
(ii) Deferred tax
Deferred income tax is recognized using the balance sheet approach, deferred tax is recognized on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, 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 utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet 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 income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been 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 taxes relate to the same tax able entity and the same taxation authority.
(i) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
Finished goods and work in progress: Cost of finished goods and work-in-progress includes the cost of materials, conversion cost, an appropriate share of fixed and variable production overheads and other costs incurred in bringing the inventories to their present location and condition.
Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value.
(j) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates, value added taxes and amounts collected on behalf of third parties. The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the companyâs activities as described below. The company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Recognising revenue from major business activities
(i) Sale of goods
âRevenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.â
(ii) Interest income
For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate(EIR).
(iii) Dividend income
Revenue is recognised when the companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
(k) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The earned leave obligations are presented as current liabilities in the balance sheet as the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(iii) Post-employment obligations
The company operates the following post-employment schemes:
(a) defined benefit plans viz gratuity,
(b) defined contribution plans viz provident fund.
Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit acturial cost method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement 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.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
Defined contribution plans
The company pays provident fund contributions to approved provident fund trust and publicly administered provident funds. The company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iii)Termination benefits
Termination benefits are payable when employment is terminated by the company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits.
(l) Leases:
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
(i) A sales see: A lease is classified at the inception date as a finance lease or an operating lease. Leases of property, plant and equipment where the company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the company as lessee are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to com pensate for the lessorâs expected inflationary cost increases.
(ii) As a lessor: Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Lease income from operating leases where the company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
(m) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly with in the control of the Company.
Claims against the Company where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
(n) Borrowing costs
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds and is measured with reference to the effective interest rate (EIR) applicable to the respective borrowing.
Borrowing costs, allocated to qualifying assets, pertaining to the period from commencement of activities relating to construction/development of the qualifying asset up to the date of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
All other borrowing costs are recognised as an expense in the period which they are incurred.
(o) Segment Reporting-Identification of Segments
The Company is engaged in the business of Industrial Rubber Products and there is no reportable primary segment as per Indian Accounting Standard (IND AS 108) â Segment Reportingâ.
The Company identified geographical locations as secondary segements. The products of the company are sold both in the domestic & export markets, which are considered different geographical segments.
(p) Earnings per share Basic earnings per share
Basic earnings per share is calculated by dividing:
-the profit attributable to shareholders of the company
-by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
-the after income tax effect of interest and other financing costs associated with dilutive potential equity
-the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(q) Cash and cash equivalents
âCash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.â
(r) Current/non current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is treated as current when it is:
-Expected to be realised or intended to be sold or consumed in normal operating cycle -Held primarily for the purpose of trading
-Expected to be realised within twelve months after the reporting period, or
-Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
Allother assets are classified as non-current.
A liability is current when:
-It is expected to be settled in normal operating cycle -It is held primarily for the purpose of trading
-It is due to be settled within twelve months after the reporting period, or -There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The company has identified twelve months as its operating cycle.
Mar 31, 2016
1 Company Information
Pix Transmissions Limited was incorporated on 22nd July 1981 as a private limited company in the State of Maharashtra, India. The status of Pix Transmissions Limited changed from a Private Limited company to a Public Limited Company effective from 27th September 1989. Pix Transmissions Limited completed its initial public offering of its equity shares in India on 4th December 1989. It is now listed on The Stock Exchange, Mumbai (BSE).
Significant Accounting Policies
2.1 Basis of Accounting:
These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis with the accounting standards notified under section 133 of the Companies Act, 2013. Accounting Policies not stated explicitly otherwise are consistent with generally accepted accounting principles in India.
2.2 Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets that the management co-markets and liabilities disclosure of contingent liabilities as on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the period in which the results are known/ materialized.
2.3 Revenue Recognition:
Sales are recognized when the substantial risk and rewards of ownership in the goods are transferred to the buyer, upon supply of goods, and or recorded net of trade discount,. Sales, taxes and excise duties. It does not include inter divisional transfers.
Income from export incentives such as duty drawback and premium on sale of import licenses is recognized on cash basis. Interest is booked on a time proportion basis taking into account the amounts invested and the rate of interest. Dividend income on investment is accounted for when the right to receive the payment is established.
2.4 Tangible Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses, If any. Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing assets beyond its previously assessed standard performance. Losses arising from the requirement of, and gains or losses arising from the disposal of fixed assets which are carried at cost are recognized in the profit and loss account.
2.5 Intangible Assets
Intangible assets are at cost of acquisition less accumulated amortization and accumulated impairment loss, if any
2.6 DEPRECIATION AND AMORTIZATION
Depreciation on tangible assets is provided on the straight-line method over the useful lives of assets estimated by management. Depreciation for asset purchased / sold during a period is proportionately charged. Intangible assets are amortized over their respective individual estimated useful lives on straight line basis, commencing from the date the asset is available to the company for its use.
The management estimates the useful lives of the other fixed assets as follows:
Building 30 years
Plant and Machinery 15 years
Office Equipment 5 years
Electrical Installation 10 years
Computer Equipment 3 years
Furniture and Fixtures 10 years
Vehicles 6 years
Depreciation and amortization methods, useful lives and residual values are reviewed periodically including at each financial year end
2.7 Impairment of Assets
Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount.
Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
Assessment is done at each balance sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased.
2.8 Investment
Investments are classified into current and long term investments. Long-term investments are carried at cost.
Cost of acquisition includes all costs directly incurred on the acquisition of the investment after providing for diminution in value, if such diminution is of permanent nature.
2.9 Inventories
Inventories are valued at lower of cost, computed on a weighted average basis, and estimated net realizable value, after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Finished goods and work in progress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
2.10 Trade Receivables and Loans and Advances
Trade Receivables and Loans and Advances are stated at book value and no provision is made for doubtful debts.
2.11 Foreign Currency Transactions:
Transactions in foreign currencies are converted in Rupees at rate prevailing on the date of transaction. Monetary assets and liabilities denomination in foreign currency are translated at the period end exchange rates.
Gains / losses arising on account of realization/ settlement of foreign exchange transactions and on translation of foreign currency assets and liabilities are recognized in the Profit and Loss Account. All Foreign Currency liabilities and monetary assets are stated at the exchange rate prevailing as at the date of Balance Sheet and the difference taken to Profit & Loss account as Exchange Fluctuation loss or gain.
2.12 Employee Benefits:
A. Post-employment Benefits
i. Defined Contribution Plans:
The Company has a Defined Contribution Plan for Post employment benefit in the form of Provident Fund for all employees which are administrated by Regional Provident Fund Commissioner.
ii. Defined Benefit Plans:
Funded Plan: The Company has defined benefit & Leave Encashment plan for Post-employment benefit in the form of Gratuity for all employees.
Liability for above defined benefit plan is provided on the basis of valuation, as at the Balance Sheet date, the actuarial method used for measuring the liability is the Projected Unit Credit method.
B. Gratuity:
The Provision has been made in the accounts for the present liability for future payment of gratuity to employees of the company in terms of Payment of Gratuity act, 1972.
C. The actuarial gains and losses arising during the year are recognized in the Profit & Loss Account of the year.
2.13 Expenditure
Expenses are accounted on accrual basis and provision is made for all known losses and liabilies. Revenue expenditure on research and development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as an addition to fixed assets.
2.14 Current and Deferred Tax
Income taxes comprise of current tax and deferred tax charge. Current tax is the amount of tax payable on the taxable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that that have been enacted or substantively enacted by the balance sheet date. In the event of unabsorbed depreciation and carry forward losses, deferred tax assets are recognized only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available to ralise such assets. in other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.
2.15 Borrowing Cost
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset is charged to Profit & Loss Account.
2.16 Contingencies
The company creates a provision for loss, contingencies arising from claims, litigations, assessment, fines, penalties etc when there is a present obligation as a result of past events that probably requires outflow of resources and a reliable estimate can be made of the amount of obligation.
2.17 Segment Reporting
The Company is engaged in the business of Industrial Rubber Products and there is no reportable primary segment as per Accounting Standard (AS 17) âSegment Reporting''.
The company identified geographical locations as secondary segments. The products of the company are sold both in the domestic & export markets, which are considered different geographical segments.
2.18 Earning Per Share
Basic earning per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.
Mar 31, 2015
2.1 Basis of Accounting: These financial statements have been prepared
in accordance with the generally accepted accounting principles in
India under the historical cost convention on accrual basis with the
accounting standards notified under section 133 of the Companies Act,
2013. Accounting Policies not stated explicitly otherwise are
consistent with generally accepted accounting principles in India.
2.2 Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
estimates and assumptions to be made that affect the reported amounts
of assets that the management co-markets and liabilities disclosure of
contingent liabilities as on the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Differences between actual results and estimates are recognized
in the period in which the results are known/ materialized.
2.3 Revenue Recognition: Sales are recognised when the substantial risk
and rewards of ownership in the goods are transferred to the buyer,
upon supply of goods, and or recorded net of trade discount,. Sales,
taxes and excise duties. It does not include inter divisional
transfers.
2.4 Tangible Fixed Assets: Fixed assets are stated at cost less
accumulated depreciation and accumulated impairment losses, If any.
Subsequent expenditures related to an item of fixed asset are added to
its book value only if they increase the future benefits from the
existing assets beyond its previously assesssed standard
performance.Losses arising from the requirement of, and gains or losses
arising from the disposal of fixed assets which are carried at cost are
recognized in the profit and loss account.
2.5 Intangible Assets: Intangible assets are at cost of acquisition less
accumulated amortization and accumulated impairment loss, if any
2.6 Depreciation And Amortization: Depreciation on tangible assets is
provided on the straight-line method over the useful lives of assets
estimated by management. Depreciation for asset purchased / sold during
a period is proportionately charged. Intangible assets are amortised
over their respective individual estimated useful lives on straight
line basis, commencing from the date the asset is available to the
company for its use. The manageme- nt estimates the useful lives of the
other fixed assets as follows:
Building 30 years
Plant and Machinery 15 years
Office Equipment 5 years
Electrical Installation 10 years
Computer Equipment 3 years
Furniture and Fixtures 10 years
Vehicles 6 years
Depreciation and amortization mehtods, useful lives and residual values
are reveiwed periodoically including at each financial year end
2.7 Impairment of Assets: Impairment loss, if any, is provided to the
extent, the carrying amount of assets exceeds their recoverable amount.
Recoverable amount is higher of an asset's net selling price and its
value in use. Value in use is the present value of estimated fututre
cash flows expected to arise from the continuing use of an asset and
from its disposal at the end of its useful life.
Assessment is done at each balance sheet date as to whether there is
any indication that an impairment loss recognised for an asset in prior
accounting periods may no longer exist or may have decreased.
2.8 Investment: Investments are classified into current and long-term
investments. Long-term investments are carried at cost. Cost of
acquisition includes all costs directly incurred on the acquisition of
the investment after providing for diminution in value, if such
diminution is of permanent nature.
2.9 Inventories: Inventories are valued at lower of cost, computed on a
weighted average basis, and estimated net realisable value, after
providing for cost of obsolescence and other anticipated losses,
wherever considered nesessary. Finished goods and work in progress
include costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
2.10 Trade Receivables and Loans and Advances:
Trade Receivables and Loans and Advances are stated at book value and
no provision is made for doubtful debts.
2.11 Foreign Currency Transactions: Transactions in foreign currencies
are converted in Rupees at rate prevailing on the date of transaction.
Monetary assets and liabilities denomination in foreign currency are
translated at the period end exchange rates. Gains / losses arising on
account of realisation/settlement of foreign exchange transactions and
on translation of foreign currency assets and liabilities are
recognised in the Profit and Loss Account. All Foreign Currency
liabilities and monetary assets are stated at the exchange rate
prevailing as at the date of Balance Sheet and the difference taken to
Profit & Loss account as Exchange Fluctuation loss or gain.
2.12 Employee Benefits:
A. Post-employment Benefits
i. Defined Contribution Plans:
The Company has a Defined Contribution Plan for Post employment benefit
in the form of Provident Fund for all employees which are administrated
by Regional Provident Fund Commissioner.
ii. Defined Benefit Plans:
Funded Plan: The Company has defined benefit & Leave Encashment plan
for Post-employment benefit in the form of Gratuity for all employees.
Liability for above defined benefit plan is provided on the basis of
valuation, as at the Balance Sheet date, the actuarial method used for
measuring the liability is the Projected Unit Credit method.
B. Gratuity: The Provision has been made in the accounts for the
present liability for future payment of gratuity to employees of the
company in terms of Payment of Gratuity act, 1972.
C. The actuarial gains and losses arising during the year are
recognized in the Profit & Loss Account of the year.
2.13 Expenditure: Expenses are accounted on accrual basis and provision
is made all known losses and liabilies. Revenue expenditure on research
and development is charged against the profit of the year in which it
is incurred. Capital expenditure on research and development is shown
as an addition to fixed assets.
2.14 Current and Deferred Tax: Income taxes comprise of current tax and
deferred taxcharge. Current tax is the amount of tax payable on the
taxable income for the year determined in accordance with the
provisions of the Income Tax Act, 1961.
Deferried tax is recognised on timing differences, being the
differences between the taxable income and the accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods.Deferred tax assets and liabilities are measured
using the tax rates and tax laws that that have been enacted or
substantively enacted by the balance sheet date. In the event of
unabsorbed depreciationand carry forward losses, deferred tax assets
are recognised only to the extent that there is virtual certainty
supported by conviencing evidence that sufficient future taxable income
will be available to ralise such assets. in other situations, deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available to
realise these assets.
2.15 Borrowing Cost: Borrowing costs that are not directly attributable
to the acquisition, construction or production of a qualifying asset is
charged to Profit & Loss Account.
2.16 Contingencies: The company creates a provision for loss,
contingencies arising from claims, litigations, assessment, fines,
penalties etc when there is a present obligation as a result of past
events that probably requires outflow of resources and a reliable
estimate can be made of the amount of obligation.
2.17 Segment Reporting: The Company is engaged in the business of
Industrial Rubber Products and there is no reportable primary segment
as per Accounting Standard (AS 17) 'Segment Reporting'. The company
identified geographical locations as secondary segments. The products
of the company are sold both in the domestic & export markets, which
are considered different geographical segments.
2.18 Earning Per Share: Basic earning per share is calculated by
dividing the net profit for the period attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the period.
The weighted average number of equity shares outstanding during the
period and for all periods presented is adjusted for events, such as
bonus shares, other than the conversion of potential equity shares,
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
Mar 31, 2014
1.1 Basis of Accounting: These financial statements have been prepared
in accordance with the generally accepted accounting principles in
India under the historical cost convention on accrual basis with the
accounting standards notified under Section 211(3C) of the Companies
Act, 1956 (which continue to be applicable in respect of section 133 of
the Companies Act, 2013 in terms of General Circular 15/2013 dated
September 13, 2013 of the Ministry of Corporate Affairs) and the
relevant provisions of the Companies Act 1956 /Companies Act 2013.
Accounting Policies not stated explicitly otherwise are consistent with
generally accepted accounting principles in India.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and the time between the acquisition of
assets for processing and their realization in cash and cash
equivalents, the Company has determined its operation cycle as twelve
months for the purpose of current - non current classification of
assets and liabilities.
1.2 Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
estimates and assumptions to be made that affect the reported amounts
of assets that the management co-markets and liabilities disclosure of
contingent liabilities as on the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Differences between actual results and estimates are recognized
in the period in which the results are known/ materialized.
1.3 Revenue Recognition: Sales are recognised when the substantial risk
and rewards of ownership in the goods are transferred to the buyer,
upon supply of goods, and are recorded net of trade discount, sales
taxes and excise duties. It does not include inter-
divisional transfers.
Income from export incentives such as duty drawback and premium on sale
of import licences is recognised on cash basis.
Interest is booked on a time proportion basis taking into account the
amounts invested and the rate of interest.
Dividend income on investment is accounted for when the right to
receive the payment is established.
1.4 Tangible Fixed Assets: Fixed assets are stated at cost less
accumulated depreciation and accumulated impairment losses, If any.
Subsequent expenditures related to an item of fixed asset are added to
its book value only if they increase the future benefits from the
existing assets beyond its previously assesssed standard performance.
Losses arising from the requirement of, and gains or losses arisisng
from disposal of fixed assets which are carried at cost are recognised
in the profit and Loss account.
Depreciation is provided under the straight line method at the rates
specified in schedule XIV of the Companies Act 1956. Free hold Lands
are not depreciated.
1.5 Intangible Assets: Intangible Assets are stated at cost of
acquisition less accumulated amortisation and accumulated impairment
loss, if any.
1.6 Impairment of Assets: Impairment loss, if any, is provided to the
extent, the carrying amount of assets exceeds their recoverable amount.
Recoverable amount is higher of an asset''s net selling price and its
value in use. Value in use is the present value of estimated future
cash flows expected to arise from the continuing use of an asset and
from its disposal at the end of its useful life.
Assessment is done at each balance sheet date as to whether there is
any indication that an impairment loss recognised for an asset in prior
accounting periods may no longer exist or may have decreased.
1.7 Investment: Investments are classified into current and long-term
investments. Long-term investments are carried at cost. Cost of
acquisition includes all costs directly incurred on the acquisition of
the investment after providing for diminution in value, if such
diminution is of permanent nature.
1.8 Inventories: Inventories are valued at lower of cost, computed on a
weighted average basis, and estimated net realisable value, after
providing for cost of obsolescence and other anticipated losses,
wherever considered nesessary. Finished goods and work in progress
include costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
1.9 Trade Receivables and Loans and Advances
Trade Receivables and Loans and Advances are stated at book value and
no provision is made for doubtful debts.
1.10 Foreign Currency Transactions: Transactions in foreign currencies
are converted in Rupees at rate prevailing on the date of transaction.
Monetary assets and liabilities denomination in foreign currency are
translated at the period end exchange rates. Gains/losses arising on
account of realisation/settlement of foreign exchange transactions and
on translation of foreign currency assets and liabilities are
recognised in the Profit and Loss Account.
All Foreign Currency liabilities and monetary assets are stated at the
exchange rate prevailing as at the date of Balance Sheet and the
difference taken to Profit & Loss account as Exchange Fluctuation loss
or gain.
1.11 Employee Benefits:
A. Post-employment Benefits
I. Defined Contribution Plans: The Company has Defined Contribution
Plan for Post employment benefit in the form of Provident Fund for all
employees which are administrated by Regional Provident Fund
Commissioner.
ii. Defined Benefit Plans:
Funded Plan: The Company has defined benefit & Leave Encashment plan
for Post-employment benefit in the form of Gratuity for all employees.
Liability for above defined benefit plan is provided on the basis of
valuation, as at the Balance Sheet date, the actuarial method used for
measuring the liability is the Projected Unit Credit method.
B. Gratuity:
The Provision has been made in the accounts for the present liability
for future payment of gratuity to employees of the company in terms of
Payment of Gratuity act, 1972.
C. The actuarial gains and losses arising during the year are
recognized in the Profit & Loss Account of the year.
1.12 Expenditure: Expenses are accounted on accrual basis and provision
is made all known losses and liabilies.
Revenue expenditure on research and development is charged against the
profit of the year in which it is incurred. Capital expenditure on
research and development is shown as an addition to fixed assets.
1.13 Current and Deferred Tax: Income taxes comprise of current tax and
deferred tax charge. Current tax is the amount of tax payable on the
taxable income for the year determined in accordance with the
provisions of the Income Tax Act, 1961.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets and liabilities are measured using the tax
rates and tax laws that that have been enacted or substantively enacted
by the balance sheet date. In the event of unabsorbed depreciation and
carry forward losses, deferred tax assets are recognised only to the
extent that there is virtual certainty supported by convincing evidence
that sufficient future taxable income will be available to realise such
assets. in other situations, deferred tax assets are recognised only to
the extent that there is reasonable certainty that sufficient future
taxable income will be available to realise these assets.
1.14 Borrowing Cost: Borrowing costs that are not directly attributable
to the acquisition, construction or production of a qualifying asset is
charged to Profit & Loss Account.
1.15 Contingencies: The company creates a provision for loss,
contingencies arising from claims, litigations, assessment, fines,
penalties etc when there is a present obligation as a result of past
events that probably requires outflow of resources and a reliable
estimate can be made of the amount of obligation.
1.16 Segment Reporting: The Company is engaged in the business of
Industrial Rubber Products and there is no reportable primary segment
as per Accounting Standard (AS 17) ''Segment Reporting''.
The company identified geographical locations as secondary segments.
The products of the company are sold both in the domestic & export
markets, which are considered different geographical segments.
1.16 Earning per share: Basic earning per share is calculated by
dividing the net profit for the period attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the period.
The weighted average number of equity shares outstanding during the
period and for all periods presented is adjusted for events, such as
bonus shares, other than the conversion of potential equity shares,
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
Mar 31, 2012
A. Basis of Accounting:
1. The financial statements are prepared under the historical cost
convention on the accrual basis of accounting in accordance with the
generally accepted accounting principles, the applicable mandatory
Accounting Standards and the relevant provisions of the Companies Act,
1956.
2. All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and the time between the acquisition of
assets for processing and their realization in cash and cash
equivalents, the Company has determined its operation cycle as twelve
months for the purpose of current - non current classification of
assets and liabilities.
B. Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets that the management
co-markets and liabilities disclosure of contingent liabilities as on
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Differences between
actual results and estimates are recognized in the period in which the
results are known/ materialized.
C. Revenue Recognization:
I) The company recognizes sales at the point of dispatch of goods to
the customers.
ii) Dividend income recognized when the right to receive the same is
established.
iii) Interest income is recognized on the time proportion basis.
D. Fixed Assets:
I. Fixed Assets are stated at cost of acquisition/revaluation and
pre-operative expenses capitalized forms part of the value of assets
less accumulated depreciation.
II. Own Fabricated Plant & Machinery are capitalized at cost including
an appropriate share of overheads.
III. Gross Block of Fixed Assets includes assets purchased under hire
purchase agreements.
E. Depreciation: Depreciation is provided under the straight line
method at the rates specified in schedule XIV of the Companies Act,
1956. Lease hold lands are not depreciated.
F. Investments: Investments are classified into current and long-term
investments. Long-term investments are carried at cost. Cost of
acquisition includes all costs directly incurred on the acquisition of
the investment after providing for diminution in value, if such
diminution is of permanent nature.
G. Inventories:
I. Raw materials valued at cost or net realized value, whichever is
lower.
II. Work-in-progress valued at cost or net realized value, whichever
is lower.
III. Finished goods are valued at cost [including Excise Duty payable].
IV. Stores and spares and packing materials are stated at cost or net
realized value, whichever is lower.
H. Debtors & Advances: Debtors & advances are stated at book value and
no provision is made for Doubtful Debts.
I. Foreign Currency Transactions:
a. Transactions in foreign currencies are converted in Rupees at rate
prevailing on the date of transaction. Monetary assets and liabilities
denomination in foreign currency are translated at the period end
exchange rates. Gains/losses arising on account of realisation /
settlement of foreign exchange transactions and on translation of
foreign currency assets and liabilities are recognised in the Profit
and Loss Account.
b. All Foreign currency liabilities and monetary assets are stated at
the exchange rate prevailing as at the date of Balance Sheet and the
difference taken to Profit & Loss account as Exchange Fluctuation loss
orgain.
J. Export Benefit: Export benefits in respect of exports made under the
Duty Entitlement Pass Book (DEPB) scheme as per the Import and Export
policy have been accounted on cash basis.
K. Employee Benefits:
I) Post-employment Benefits:
a) Defined Contribution Plans: The Company has Defined Contribution
Plan for Post employment benefit in the form of Provident Fund for all
employees which are administrated by Regional Provident Fund
Commissioner.
b) Defined Benefit Plans:
Funded Plan: The Company has defined benefit & Leave Encashment plan
for Post -employment benefit in the form of Gratuity for all employees.
Liability for above defined benefit plan is provided on the basis of
valuation, as at the Balance Sheet date, the actuarial method used for
measuring the liability is the Projected Unit Credit method.
ii) Gratuity: The Provision has been made in the accounts for the
present liability for future payment of gratuity to employees of the
company i n terms of Payment of Gratuity Act, 1972.
iii) The actuarial gains and losses arising during the year are
recognized in the Profit & Loss Account of the year.
L. Borrowing Costs: Borrowing costs that are not directly attributable
to the acquisition, construction or production of a qualifying asset is
charged to Profits Loss Account
M. Impairment of Assets: At Balance Sheet date, an assessment is done
to determine whether there is any indication of impairment in the
carrying amount of the company's fixed assets. If any such indication
exists, the asset's recoverable amount is estimated. An impairment loss
is recognized wherever the carrying amount of an asset exceeds its
recoverable amount. An impairment loss is charged to profit and loss
account in the year in which an asset is identified as impaired.
N. Taxes on Income: Income tax expense comprises current tax and
deferred tax charge or release. Deferred tax is recognized on timing
differences, subject to consideration of prudence, being the
differences between taxable income and accounting income that
originates in one period and capable of reversal in one or more
subsequent periods.
O. Contingencies: The company creates a provision for loss,
contingencies arising from claims, litigations, assessment, fines,
penalties etc when there is a present obligation as a result of past
events that probably requires outflow of resources and a reliable
estimate can be made of the amount of obligation.
Mar 31, 2010
A. Basis of Accounting:
The financial statements are prepared under the historical cost
convention on the accrual basis of accounting in accordance with the
generally accepted accounting principles, the applicable mandatory
Accounting Standards and the relevant provisions of the Companies Act,
1956.
B. Use of Estimates :
The preparation of financial statements in conformity with generally
accepted accounting principles requires that the management to make
estimates and assumptions to be made that affect the reported amounts
of assets and liabilities disclosure of contingent liabilities as on
the date of the financial statements .Differences between actual
results and estimates are recognized in the period in which the results
are known/ materialized.
C Revenue Reorganization:
i) The company recognizes sales at the point of dispatch of goods to
the customers.
ii) Dividend income recognized when the right to receive the same is
established.
iii) Interest income is recognized on the time proportion basis.
D. Fixed Assets:
I. Fixed Assets are stated at cost of acquisition / Revaluation and
pre-operative expenses capitalized forms part of the value of assets
less accumulated Depreciation.
II. Own Fabricated Plant & Machinery are capitalized at cost including
an appropriate share of overheads.
III. Gross Block of Fixed Assets includes assets purchased under hire
purchase agreements.
E Depreciation:
Depreciation is provided under the straight line method at the rates
specified in schedule XIV of the Companies Act 1956. Lease hold Lands
are not depreciated.
F. Investments:
Investments are classified into current and long-term investments.
Long-term investments are carried at cost. Cost of acquisition
includes all costs directly incurred on the acquisition of the
investment after providing for diminution in value, if such diminution
is of permanent nature.
G Inventories:
I. Raw Materials valued at cost or net realized value, which ever is
lower.
II. Work in progress valued at cost or net realized value, which ever
is lower.
III. Finished goods are valued at cost [including Excise Duty
Payable].
IV. Stores and Spares and packing materials are stated at cost or net
realized value, which ever is lower.
H. Debtors & Advances:
Debtors & Advances are stated at book value and no provision is made
for Doubtful Debts.
I. Foreign Currency Transactions:
a. Transactions in foreign currencies are converted in Rupees at rate
prevailing on the date of transaction. Monetary assets and liabilities
denomination in foreign currency are translated at the year end
exchange rates- Gains / losses arising on account of realisation /
settlement of foreign exchange transactions and on translation of
foreign currency assets and liabilities are recognised in the Profit
and Loss Account.
b. All Foreign Currency liabilities and monetary assets are stated at
the exchange rate prevailing as at the date of Balance Sheet and the
difference taken to Profit & Loss account as Exchange Fluctuation loss
or gain.
J. Employee Benefits
i) Post-employment Benefits
a) Defined Contribution Plans:
The Company has Defined Contribution Plan for Post employment benefit
in the form of Provident Fund for all employees which are administrated
by Regional Provident Fund Commissioner.
b) Defined Benefit Plans:
Funded Plan: The Company has defined benefit plan for Post-employment
benefit in the form of Gratuity and Leave Encashment for all employees.
Liability for above defined benefit plan is provided on the basis of
valuation, as at the Balance Sheet date, The actuarial method used for
measuring the liability is the Projected Unit Credit method.
ii) Gratuity:
The Provision has been made in the accounts for the present liability
for future payment of gratuity to employees of the company in terms of
Payment of Gratuity act, 1972.
iii) Leave Encashment:
The Provision has been made in the accounts for the present liability
for future payment of Leave Encashment to employees of the company.
iv) The actuarial gains and losses arising during the year are
recognized in the Profit & Loss Account of the year.
K. Borrowing Costs:
Borrowing costs that are not directly attributable to the acquisition,
construction or production of a qualifying asset is charged to Profit &
Loss Account
L Impairment of Assets
At Balance Sheet date, an assessment is done to determine whether there
is any indication of impairment in the carrying amount of the companys
fixed assets. If any such indication exists, the assets recoverable
amount is estimated. An impairment loss is recognized wherever the
carrying amount of an asset exceeds its recoverable amount. An
impairment loss is charged to profit and loss account in the year in
which an asset is identified as impaired.
M. Taxes on Income:
Income tax expense comprises current tax and deferred tax charge or
release. Deferred tax is recognized on timing differences, subject to
consideration of prudence, being the differences between taxable income
and accounting income that originates in one period and capable of
reversal in one or more subsequent periods.
N. Contingencies:
The company creates a provision for loss, contingencies arising from
claims, litigations, assessment, fines, penalties etc when there is a
present obligation as a result of past events that probably requires
outflow of resources and a reliable estimate can be made of the amount
of obligation.
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