Mar 31, 2017
1. SIGNIFICANT ACCOUNTING POLICIES
Pricol Limited (Formerly Pricol Pune Limited) is a company incorporated on 18th May, 2011 and is engaged in the business of manufacturing and selling of Instrument clusters and other allied automobile components to Original Equipment Manufacturers (OEM) and replacement markets.
Pursuant to the Scheme of Amalgamation sanctioned by the Honourable High Court of Judicature at Madras, Erstwhile Pricol Limited (Transferor Company) amalgamated with Pricol Pune Limited (Transferee Company) with the appointed date as 1st April, 2015 and the Transferee Company was renamed from "Pricol Pune Limited" to "Pricol Limited" with effect from 18th November, 2016. The comparative figures are as per the audited financial statements of Pricol Pune Limited. Considering the above and as more specifically described in Note No. 2.40 in respect of Scheme of Amalgamation, the figures are not comparable.
I. a) Basis of preparation :
The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) and comply in all material respects with the accounting standards specified under section 133 of Companies act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
b) Use of estimates :
The preparation of financial statements in conformity with Generally Accepted Accounting Principles in India requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, disclosures relating to contingent liabilities and assets as at the balance sheet date and the reported amounts of income and expenses during the year. Difference between the actual amounts and the estimates are recognized in the year in which the events become known / are materialized. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
II. Property, Plant & Equipment and
a) Property, Plant and Equipment (PPE), being fixed assets are tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are expected to be used for more than a period of twelve months. They are measured at cost less accumulated depreciation and any accumulated impairment. Cost comprises of the purchase price including import duties and non-refundable purchase taxes after deducting trade discounts and rebates and any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the Management. Own manufactured assets are capitalized at cost including an appropriate share of overheads. Financing costs relating to acquisition of assets which take substantial period of time to get ready for intended use are also included to the extent they relate to the period up to such assets are ready for their intended use.
b) Items such as spare parts, stand-by equipment and servicing equipment are capitalized if they meet the definition of property, plant and equipment.
c) Depreciation on Property, Plant and Equipment (PPE) are provided under straight
line method as per the useful lives and manner prescribed under Schedule II to the Companies Act, 2013 except for Dies, Tools & Moulds, which are depreciated over a period of 3 years and leasehold building which are amortized as depreciation over the lease period.
d) Where the cost of a part of the PPE is significant to the total cost of the PPE and if that part of the PPE has a different useful life than the main PPE, the useful life of that part is determined separately for depreciation.
e) The Company has used the following useful lives to provide depreciation on its Property, Plant and Equipment.
f) The depreciation method applied to an asset is reviewed at each financial year-end and if there has been a significant change in the expected pattern of consumption of future economic benefits embodied in the asset, depreciation is charged prospectively to reflect the changed pattern.
g) The carrying amount of an item of PPE is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of Property, Plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are
recognized in the statement of profit and loss when the asset is de-recognized.
III. Intangible assets and amortization :
a) Intangible assets are recognized only if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.
b) New Product Development Cost including Technology Fee payable to Technology providers are capitalized as and when the liability gets crystallized with mutual consent of parties concerned.
c) Computer software licenses are capitalized on the basis of costs incurred to acquire and bring to use the specific software. Operating software is capitalized and amortized along with the related fixed asset.
d) The Company has used the following useful lives to amortize its intangible assets :
Particulars Useful Life
Specialized software : Over a period of 4 years
Fees for Technical : Over a period of 4 years Know-how
Intangible Assets : Over a period of 15 acquired on years based on the
Amalgamation technical evaluation
obtained by the Company (Refer to Note No. 2.40 (c))
IV. Impairment of assets :
The Company periodically assesses whether there is any indication that an asset or a group of assets comprising a cash generating unit may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset or group of assets that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost. An impairment loss is reversed only to the extent that the amount of asset does not exceed the net book value that would have been determined if no impairment loss had been recognized.
V. Investments :
a) Long Term Investments are stated at cost.
b) Current Investments are carried at lower of cost and fair value as on the Balance Sheet date.
c) Provision for diminution in value of long-term investments is made, if the diminution is other than temporary.
VI. Valuation of Inventories :
a) Inventories are valued at lower of cost and estimated net realizable value.
b) The basis of determining cost for various categories of inventories is as follows:-
i) Raw Materials, : Weighted Packing Materials Average Basis. and Stores & spares
ii) Finished Goods : Cost of Direct and Work-in- Material, progress Labour and other Manufacturing overheads
c) Stores & Spares which do not meet the definition of Property, Plant and Equipment are accounted as inventories.
d) Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and estimated costs necessary to make the sale.
VII. Revenue Recognition :
a) The company generally follows the mercantile system of accounting and recognizes Income and Expenditure on an accrual basis except those with significant uncertainties.
b) Sale of goods is recognized when the risks and rewards of ownership are passed on to the customers as per the terms of contract.
c) Dividend Income is recognized when the right to receive the dividend is unconditional at the Balance Sheet date.
d) Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
e) Claims made by the company including price escalations and those made on the Company are recognized in the Statement of Profit and Loss as and when the claims are accepted / liability is crystallized.
VIII. Foreign Currency Transactions :
a) Foreign Currency Transactions are recorded in the reporting currency at exchange rates prevailing on the date of such transaction.
b) Exchange differences arising on settlement of transactions of monetary items are recognized as income / expense in the Statement of Profit & Loss in the period in which it arises.
c) Foreign monetary currency assets and liabilities at the yearend are realigned at the exchange rate prevailing at the year end and difference on realignment is recognized in the Statement of Profit & Loss.
d) Premium / Discount in respect of Forward Contract is amortized as expense / income over the period of contract. Exchange difference arising on forward contracts between the exchange rate on the date of the transaction and the exchange rate prevailing at the year end is recognized in the Statement of Profit and Loss.
IX. Employee Benefits:
a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.
b) Post employment and other long term benefits, which are defined benefit plans, are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered service. The expense is recognized based on the present value of the obligation determined as per Projected Unit Credit Method in accordance with Accounting Standard 15 on "Employee Benefits". Actuarial gains & losses are charged to the Statement of Profit and Loss.
c) Payments to defined contribution schemes are charged as expense as and when incurred.
d) Termination benefits are recognized as an expense, as and when incurred.
X. Borrowing Costs :
a) Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalized as part of such assets. All other borrowing costs are charged to revenue in the period they occur.
b) A qualifying asset is an asset that necessarily requires substantial period of time to get ready for its intended use or sale.
XI. Taxes on Income :
a) Current tax on income for the period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessment / appeals.
b) Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.
c) Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future; however, where there is unabsorbed depreciation or carried forward business loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets.
d) Deferred tax assets and Deferred tax liabilities are offset if a legally enforceable right exist to set off current tax assets against current tax liabilities and deferred tax assets / deferred tax liabilities relate to same taxable entity and same taxation authority.
e) Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income tax during the specified period.
XII. Leases :
a) Leases are classified as finance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful lives. Finance costs are treated as period cost using effective interest rate method and are expensed accordingly.
b) Lease arrangements, where the risks and rewards incidental to the ownership of an asset substantially vest with the less or, are recognized as an operating lease.
c) The Assets given under operating leases are shown in Balance Sheet under Fixed Assets and depreciated on a basis consistent with the depreciation policy of the company. The lease income is recognized in the Statement of Profit and Loss on a straight line basis over the lease period.
XIII. Government Grant and Subsidies :
a) Grants and subsidies from the Government are recognized when there is a reasonable assurance that Grant / Subsidy are received and all attached conditions complied with. Grant related to specific fixed assets are presented in the Balance Sheet by showing such Grant as deduction from the Fixed Asset concerned. Grants received in the nature of promoters contribution is credited to Capital Reserve and treated as a part of Shareholders'' fund.
XIV. Earnings per Share :
a) Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split and consolidation of shares, if any.
b) For the purpose of calculating diluted earnings per share, the profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
XV. Provisions and Contingencies :
a) A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources would be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
b) A Contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognise a contingent liability but discloses its existence in the financial statements.
c) Contingent Assets are neither accounted for nor disclosed
XVI. Cash and Cash equivalents :
a) Cash flow is reported using the indirect method, whereby net profit / loss before tax is adjusted for the effects of transaction of a non cash nature and any deferrals or accruals of past or future cash receipts or payments.
The cash flow comprises regular revenue generating, investing and financing activities of the company. Cash and cash equivalents in the balance sheet comprise of cash at bank and in hand and short term, highly liquid investments with an original maturity of three months or less, that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.