Accounting Policies of Shree Cements Ltd. Company
Mar 31, 2023
1. CORPORATE INFORMATION
Shree Cement Limited ("the Company") is a public limited company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed at BSE Limited and National Stock Exchange of India Limited in India. The registered office of the Company is located at Bangur Nagar, Beawar -305901 (Rajasthan), India.
The Company is engaged in the manufacturing and selling of cement and cement related products.
It is regarded as one of the most efficient and environment friendly company in the global cement industry.
For Company''s principal shareholders, Refer Note No. 19.
The standalone financial statements (hereinafter referred to as "financial statements") of the Company have been prepared in accordance with Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015, and amendments made thereafter and the relevant provisions of the Companies Act, 2013 ("the Act") and guidelines issued by the Securities and Exchange Board of India ("SEBI"), as applicable.
These financial statements are approved and adopted by the Board of Directors of the Company in their meeting held on 22nd May 2023.
3. NEW ACCOUNTING PRONOUNCEMENTS
(i) Adoption of New Accounting Pronouncements
(a) Ind AS 103 - Reference to Conceptual Framework
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date.
(b) Ind AS 16 - Proceeds Before Intended Use
The amendment clarifies that excess of net sale proceeds of items produced over the cost
of testing, if any, shall not be recognized in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant and equipment.
(c) Ind AS 37 - Onerous Contracts - Costs of Fulfilling a Contract
The amendments specify that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts.
(d) Ind AS 109 - Annual Improvements to Ind AS (2021)
The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability.
These amendments are effective from 1st April, 2022 and the effect of these amendments has been incorporated in these financial statements to the extent applicable to the Company. These amendments do not have significant impact on the financial statements of the Company.
(ii) Application of New Amendments Issued but Not Yet Effective
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31st March, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from 1st April 2023, as below:
Ind AS 1 - Presentation of Financial Statements This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates.
This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.
The Company does not expect the above amendments to have any significant impact in its financial statements.
4. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Preparation and Measurement
The Financial statements have been prepared on a historical cost basis, except for the following assets and liabilities:
⢠Derivative financial instruments
⢠Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments - note 4 (s))
⢠Employee''s defined benefit plan as per actuarial valuation
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
The financial statements are presented in Indian Rupees (?) and all values are rounded to the nearest crore, except otherwise indicated.
b) Classification of Assets and Liabilities into Current/ Non-Current
The Company has ascertained its operating cycle as twelve months for the purpose of Current/ NonCurrent classification of its Assets and Liabilities. For the purpose of Balance Sheet, an asset is classified as current if:
1. It is expected to be realized, or is intended to be sold or consumed, in the normal operating cycle; or
2. It is held primarily for the purpose of trading; or
3. It is expected to realize the asset within twelve months after the reporting period; or
4. The asset is a cash or cash equivalent unless it is 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. Similarly, a liability is classified as current if:
1. It is expected to be settled in the normal operating cycle; or
2. It is held primarily for the purpose of trading; or
3. It is due to be settled within twelve months after the reporting period; or
4. The Company does not have an unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current. Deferred tax assets/ liabilities are classified as noncurrent assets/ liabilities.
c) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation/ amortization and impairment, if any. Freehold land not containing mineral reserve is disclosed at cost less impairment, if any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition/ bringing the asset to its working condition for its intended use, including relevant borrowing costs.
The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All subsequent costs are charged to statement of profit and loss unless 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.
Capital work-in-progress is carried at cost and directly attributable expenditure/ income during construction period (including financing cost related to borrowed funds for construction or acquisition of qualifying assets) which is allocated to the property, plant and equipment on the completion of project. Advances given towards acquisition or construction of property, plant and
equipment outstanding at each reporting date are disclosed as capital advances under "other noncurrent assets".
Depreciation is provided on written down value method over the estimated useful lives of the assets. Estimated useful lives of the assets are as follows:
|
Nature of |
Estimated |
|
Asset |
Useful Lives |
|
Plant and Equipment |
3-20 Years |
|
Buildings |
20 Years |
|
Roads |
10 Years |
|
Railway Siding |
20 Years |
|
Vehicles |
5-6 Years |
|
Office Equipment |
3-5 Years |
|
Furniture and Fixtures |
5 Years |
Assets individually costing less than or equal to '' 25,000 are fully depreciated in the year of purchase. Freehold land containing mineral reserve is amortized over its estimated commercial life based on the units-of-production method. Depreciation on additions is provided on a pro-rata basis from the date of installation or acquisition and in case of projects, from the date when it is ready for intended use. Depreciation on deduction/ disposals is provided on a pro-rata basis up to the date of deduction / disposal.
Gains or losses arising from de-recognition of assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed and / or derecognized.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
d) Intangible Assets
Intangible assets are stated at cost less accumulated amortization and impairment, if any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition/ bringing the asset to its working condition for its intended use.
Amortization is provided on a written down value method over estimated useful lives, but not exceeding three years except mining rights which is amortized based on units-of-production method. Expenditure on research phase is recognized as
an expense when it is incurred. Expenditure on development phase which results in creation of assets is included in related assets.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an item of intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of such item of intangible asset and are recognised in the statement of profit and loss when the asset is derecognised.
The residual values, useful lives and method of amortization of intangible assets are reviewed at each financial year end and adjusted prospectively.
e) Borrowing Costs
Borrowing costs directly attributable to the acquisition / construction of a qualifying asset that necessarily takes substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consists of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
f) Impairment of Non-Financial Assets
The carrying amounts of non-financial assets are reviewed at each reporting date if there is any indication of impairment based on internal and external factors.
An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. An asset''s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of Cash Generating Unit (CGU) to which the asset belongs. The cash
generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of cash inflows of other assets or group of assets.
A previously recognized impairment loss is further provided or reversed depending on changes in circumstances.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized as income immediately.
Revenue is recognized to depict the transfer of promised products or services to customers. Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amount collected on behalf of third party.
Revenue from sale of products is recognized when products are delivered to the customers. Delivery occurs when the product has been shipped to the customers, the risks of obsolescence and loss have been transferred to customers and the customer has accepted the products in accordance with sales arrangement. Revenue is disclosed net of Goods and Services Tax (GST), discounts, volume rebates and returns, as applicable.
h) Dividend income is recognized when the right to receive the payment is established. Interest income is recognized using the Effective Interest Rate (EIR) method. Difference between the sale price and carrying value of investment is recognized as profit or loss on sale/ redemption of investment on the date of transaction.
i) Insurance, railway and other claims where quantum of accruals cannot be ascertained with reasonable certainty, are recognized only when collection is virtually certain which generally coincides with receipt.
Government grants are recognized when there is reasonable assurance that the Company will
comply with the conditions attached thereto and the grants will be received.
Grants related to income are recognized in statement of profit and loss on a systematic basis over the period to match them with the related costs.
Grants related to assets are included in liabilities as deferred income and are credited to income on a systematic basis over the useful life of the related assets.
The benefit of government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and is recognized in the statement of profit and loss.
k) Employee Benefits1) Defined Contribution Plan
Superannuation, Provident Fund, National Pension Scheme and Employees State Insurance Corporation ("ESIC") are considered as defined contribution plan and the contributions are charged to the statement of profit and loss for the year in which employees have rendered related services.
Gratuity is considered as defined benefit plan and is provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet. Defined benefit costs are categorized as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠re-measurements
The Company presents the first two components of defined benefit costs in statement of profit and loss in the line item ''Employee Benefits Expenses''. Re-measurement, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on net defined benefit liability), are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI) in the period in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.
Contributions as specified by law are paid to the provident fund set up as irrevocable trust in respect of few employees. The Company is generally liable for annual contribution and any shortfall in the fund assets based on the government specified minimum rates of return and recognizes such contribution and shortfall, if any, as an expense in the year incurred.
En-cashable leave in case of employees covered by Cement Wage Board and non en-cashable leave are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the Balance Sheet date. Actuarial gains/ losses, if any, are recognized in statement of profit and loss in the year in which they arise.
A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave in the period the related service is rendered. Liabilities recognized in respect of short-term employee benefits, are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
l) Foreign Currency Transaction
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the ''functional currency''). The Company''s financial statements are presented in Indian Rupees, which is also the Company''s functional currency.
Foreign currency transactions are initially recorded in the functional currency, using the exchange rate at the date of transaction.
At each balance sheet date, foreign currency monetary items are reported using the closing exchange rates. Non-Monetary items, which are
carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction.
Exchange difference arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise except the amount of such exchange differences capitalized in accordance with policy on ''Borrowing Costs''.
Income tax expense represents the sum of current and deferred tax (including Minimum Alternate Tax). Tax is recognized in statement of profit and loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in such case the tax is also recognized directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognized in equity or other comprehensive income is also recognized in equity or other comprehensive income, such change could be for change in tax rate.
Current tax provision is measured on the basis of estimated taxable income computed in accordance with the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the Balance Sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach. Deferred tax liabilities are recognized for all taxable temporary difference and deferred tax assets are recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and deferred taxes relate to same taxable entity and the same taxation authority.
The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilized.
Tax credit is recognized in respect of Minimum Alternate Tax (MAT) paid in terms of section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and the same is reviewed at each balance sheet date. MAT credit are in the form of unused tax credits that are carried forward by the Company for a specified period of time, hence it is grouped with Deferred Tax Asset.
n) Inventories1) Raw Materials, Stores & Spare Parts, Packing Materials and Fuel
These are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Cost is determined on weighted average basis which includes expenditure incurred for acquiring inventories like purchase price, import duties, taxes (net of tax credit) and other costs incurred in bringing the inventories to their present location and condition.
2) Work-in-Progress, Finished Goods and Stock-in-Trade
These are valued at lower of cost and net realizable value. Cost of work-in-progress and finished goods include direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of stock-in-trade includes cost of purchase and other costs incurred in bringing
the inventories to their present location and condition. Cost is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
o) Provisions and Contingencies1) Provisions
Provisions are recognized 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 embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of time value of money is material, provisions are discounted using equivalent period pre-tax government securities interest rate. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.
The Company provides for the expenditure to reclaim the quarries used for mining, in statement of profit and loss based on present value of estimated expenditure required to be made towards restoration and rehabilitation at the time of vacation of mines. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates. The unwinding of the discount on provision is shown as a finance cost in statement of profit and loss.
Contingent liabilities are disclosed when there is a possible obligation as a result of 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 or when there is 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 amount cannot be made.
Contingent assets are not recognized.
At the commencement of a lease, the Company recognises a right of use asset and a lease liability with respect to lease agreements in which it is the lessee.
The lease liability is measured 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 otherwise incremental borrowing rate is used to discount the lease payments. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, less lease payments made.
The right of use asset is measured at inception at the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred. The right of use assets is subsequently measured at cost less accumulated amortization, accumulated impairment losses, if any. Right of use assets are amortized on straight line basis over the shorter period of lease term and useful life of the underlying asset.
For a lease modification that is not accounted as a separate lease, the Company re-measure the lease liability by discounting the revised lease payments using revised discount rate, with corresponding adjustment to the ''right of use asset''. The Company recognize gain or loss in the statement of profit or loss for partial or full termination of lease for lease modifications that decrease the scope of the lease.
The right of use assets and lease liability is presented separately on the face of the Balance sheet as ''Right of Use Assets'' and ''Lease Liability'' respectively.
q) Business Combination
The Company applies the acquisition method in accounting for business combinations. The consideration transferred by the Company to obtain control of a business is calculated as the sum of the fair values of assets transferred, liabilities incurred and assumed and the equity interests issued by the Company as at the
acquisition date i.e. date on which it obtains control of the acquiree which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition-related costs are recognized in the statement of profit and loss as incurred, except to the extent related to the issue of debt or equity securities.
Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values on acquisition date.
Intangible Assets acquired in a business combination and recognised separately from Goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost).
Goodwill is measured as the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed.
Subsequent to initial recognition, intangible assets with definite useful life acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Goodwill and Intangible assets with indefinite useful life, if any, are tested for impairment at the end of each annual reporting period.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the excess is termed as gain on bargain purchase.
In case of a bargain purchase, before recognizing a gain in respect thereof, the Company determines whether there exists clear evidence of the underlying reasons for classifying the business combination as a bargain purchase thereafter, the Company reassesses whether it has correctly identified all the assets acquired and liabilities assumed and recognizes any additional assets or liabilities that are so identified, any gain thereafter is recognized in Other Comprehensive Income ("OG") and accumulated in equity as Capital Reserve. If there does not exist clear evidence of the underlying reasons for classifying the business combination as a bargain purchase, the Company recognizes the gain, after reassessing and reviewing, directly in equity as Capital Reserve.
Contingent consideration is classified either as equity or financial liability. Amount classified as financial liability are subsequently re-measured to fair value with changes in fair value recognised in statement of profit and loss.
The Company''s investments in its subsidiaries are carried at cost less impairment, if any.
On disposal of investments, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of profit and loss.
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.
Initial Recognition and Measurement All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial assets.
These include trade receivables, cash and cash equivalents, other bank balances, fixed deposits with banks, investments, loans and other financial assets.
Classification and Subsequent Measurement
Financial assets are subsequently measured at amortized cost or fair value through other comprehensive income or fair value through profit or loss depending on its business model for managing those financial assets and the asset''s contractual cash flow characteristics.
a) Financial Assets at Amortised Cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
b) Financial Assets at Fair Value Through Other Comprehensive Income
A financial asset is subsequently measured at fair value through other comprehensive income if it 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.
c) Financial Assets at Fair Value Through Profit or Loss
A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss. Dividend and interest income on financial assets at fair value through profit or loss is recognized as dividend and interest income respectively and included in ''Other Income''.
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity and does not retain control of the asset.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit or loss, are assessed for impairment at the end of each reporting period. The Company recognizes 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 on the basis of its historical credit loss experience.
Initial Recognition and Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables or as derivative designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The financial liabilities include trade and other payables, loans and borrowings including bank overdraft and derivative financial instruments.
Classification and Subsequent Measurement
The financial liabilities are classified as either ''financial liabilities at fair value through profit or loss'' or ''other financial liabilities''.
a) Financial Liabilities at Fair Value Through Profit or Loss
Financial liabilities are classified at fair value through profit or loss when the financial liability is held for trading or are designated upon initial recognition as fair value through profit or loss. It includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. All changes in the fair value of such liability are recognized in the statement of profit and loss.
b) Other Financial Liabilities
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using effective interest rate method.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired.
3) Derivative Financial Instruments and Hedge Accounting
The Company uses derivative financial instruments, such as foreign currency forward contracts and cross currency & interest rate swaps to hedge its foreign currency risks and interest rate risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivative is carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss, except for the effective portion of cash flow hedges which is taken in the other comprehensive income (net of tax).
The Company uses cross currency and interest rate swaps to hedge the cash flows of the foreign currency denominated debt related to variation in foreign currency exchange rates and interest rates. The Company also enters into foreign currency forward contracts to hedge the foreign currency exchange risk arising from the forecast purchases. The Company designates these cross currency and interest rate swaps and some foreign currency forward contracts in a cash flow hedging relationship by applying the hedge accounting principles.
These derivatives are stated at fair value at each reporting date. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognized in other comprehensive income (net of tax) and the ineffective portion is recognized immediately in statement of profit and loss. Amounts accumulated in equity are reclassified to profit or loss when the hedged transaction affects the profit or loss. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the nonfinancial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
4) 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 definition of a financial liabilities and an equity instrument. The Company does not have any compound financial 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 the Company are recognized at the proceeds received. Transaction costs related to issue of equity instruments is reduced from equity.
t) Cash and Cash Equivalents
Cash and cash equivalents comprise cash at banks and on hand and short term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
For the purpose of the statement of cash flow, cash and cash equivalents consist of cash at banks and on hand and short term deposits, as defined above, net of outstanding bank overdraft as they are considered an integral part of the Company''s cash management.
u) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. These estimates are reviewed regularly and any change in estimates is adjusted prospectively.
In the process of applying the Company''s accounting policies, management has made the following estimates, assumptions and judgements, which have significant effect on the amounts recognized in the financial statements:
The recognition of deferred tax assets requires assessment of whether it is probable that sufficient future taxable profit will be available against which deferred tax asset can be utilized. The Company reviews at each balance sheet date the carrying amount of deferred tax assets.
b) Property, Plant and Equipment & Intangible Assets
The determination of depreciation and amortization charge depends on the useful lives for which judgements and estimations are required. The residual values, useful lives, and method of depreciation of property, plant and equipment and intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
c) Allowances for Uncollected Trade Receivables
Trade receivables do not carry any interest and are stated at their transaction value as reduced by appropriate allowances for estimated irrecoverable amounts.
Individual trade receivables are written off when management deems them not to be collectible.
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/ claims/ litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
e) Mines Reclamation Obligation
The measurement of mines reclamation obligation requires long term assumptions regarding the phasing of the restoration work to be carried out. Discount rates are determined based on the government securities of similar tenure.
The cost of defined benefit plan and present value of such obligation are determined using actuarial valuation. 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, mortality rates and attrition rate. Due to the long- term nature of the plan, such estimates are subject to significant uncertainty. All assumptions are reviewed at each reporting date. Refer Note 38 for sensitivity analysis.
g) Fair Value Measurement of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model.
The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Mar 31, 2022
1. CORPORATE INFORMATION
Shree Cement Limited ("the Company") is a public limited company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed at BSE Limited and National Stock Exchange of India Limited in India. The registered office of the Company is located at Bangur Nagar, Beawar, District - Ajmer-305901 (Rajasthan), India.
The Company is engaged in the manufacturing and selling of cement and cement related products. It is regarded as one of the most efficient and environment friendly company in the global cement industry.
For Company''s principal shareholders, Refer Note No. 19.
The standalone financial statements (hereinafter referred to as "financial statements") of the Company have been prepared in accordance with Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015, and amendments made thereafter and the relevant provisions of the Companies Act, 2013 ("the Act") and guidelines issued by the Securities and Exchange Board of India ("SEBI"), as applicable.
These financial statements are approved and adopted by the Board of Directors of the Company in their meeting held on 21st May, 2022.
3. NEW ACCOUNTING PRONOUNCEMENTS
(i) Adoption of New Accounting Pronouncements
a) Amendment in Schedule III of the Companies Act, 2013
On 24th March, 2021, the Ministry of Corporate Affairs ("MCA") through a notification amended Schedule III of the Companies Act, 2013 which is applicable from 01st April, 2021. The effect of said amendment has been incorporated in these financial statements to the extent applicable to the Company.
b) Ind AS Amendments
The MCA issued certain amendments to Ind AS dated 18th June, 2021 amending various
standards. These amendments are related to following areas:
⢠Interest rate benchmark related reforms (phase 2);
⢠Extension of practical expedient for rent concession for rent payments upto 30th June, 2022;
⢠Amendments consequent to issue of Conceptual Framework for financial reporting under Ind AS, issued by the Institute of Chartered Accountants of India.
These amendments are effective from 01st April, 2021 and the effect of these amendments has been incorporated in these financial statements to the extent applicable to the Company. There is no material effect of these amendments on the financial statements of the Company.
(ii) Application of New Amendments Issued But Not Yet Effective
MCA notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 23rd March, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from 1st April, 2022, as below:
Ind AS 103 - Reference to Conceptual Framework
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date.
Ind AS 16 - Proceeds before Intended Use
The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognized in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant and equipment.
Ind AS 37 - Onerous Contracts - Costs of Fulfilling a Contract
The amendments specify that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts.
Ind AS 109 - Annual Improvements to Ind AS (2021)
The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability.
The Company does not expect the above amendments to have any significant impact in its financial statements.
4. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Preparation and Measurement
The Financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
⢠Derivative financial instruments
⢠Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments - note 4 (s))
⢠Employee''s defined benefit plan as per actuarial valuation
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
The financial statements are presented in Indian Rupees ("''") and all values are rounded to the nearest crore, except otherwise indicated.
b) Classification of Assets and Liabilities into Current/ Non-Current
The Company has ascertained its operating cycle as twelve months for the purpose of Current/ Non-Current classification of its Assets and Liabilities.
For the purpose of Balance Sheet, an asset is classified as current if:
1. It is expected to be realized, or is intended to be sold or consumed, in the normal operating cycle; or
2. It is held primarily for the purpose of trading; or
3. It is expected to realize the asset within twelve months after the reporting period; or
4. The asset is a cash or cash equivalent unless it is 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.
Similarly, a liability is classified as current if:
1. It is expected to be settled in the normal operating cycle; or
2. It is held primarily for the purpose of trading; or
3. It is due to be settled within twelve months after the reporting period; or
4. The Company does not have an unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
c) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation/ amortization and impairment, if any. Freehold land not containing mineral reserve is disclosed at cost less impairment, if any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition/ bringing the asset
to its working condition for its intended use, including relevant borrowing costs.
T he carrying amount of any component accounted for as a separate asset is derecognized when replaced. All subsequent costs are charged to statement of profit and loss unless 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.
T apital work-in-progress is carried at cost and directly attributable expenditure during construction period (including financing cost related to borrowed funds for construction or acquisition of qualifying assets) which is allocated to the property, plant and equipment on the completion of project. Advances given towards acquisition or construction of property, plant and equipment outstanding at each reporting date are disclosed as capital advances under "other noncurrent assets".
T epreciation is provided on written down value method over the estimated useful lives of the assets. Estimated useful lives of the assets are as follows:
|
Nature of Asset |
Estimated Useful Lives |
|
Plant and Equipment |
3-20 Years |
|
Buildings |
20 Years |
|
Roads |
10 Years |
|
Railway Siding |
20 Years |
|
Vehicles |
5-6 Years |
|
Office Equipment |
3-5 Years |
|
Furniture and Fixtures |
5 Years |
T ssets individually costing less than or equal to '' 25,000 are fully depreciated in the year of purchase. Freehold land containing mineral reserve is amortized over its estimated commercial life based on the units-of-production method.
T epreciation on additions is provided on a pro-rata basis from the date of installation or acquisition and in case of projects, from the date when it is ready for intended use. Depreciation on deduction/disposals is provided on a pro-rata basis up to the date of deduction / disposal.
T ains or losses arising from de-recognition of assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed and / or derecognized.
T he residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
I ntangible assets are stated at cost less accumulated amortization and impairment, if any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition/ bringing the asset to its working condition for its intended use.
A mortization is provided on a written down value method over estimated useful lives, but not exceeding three years except mining rights which is amortized based on units-of-production method.
E xpenditure on research phase is recognized as an expense when it is incurred. Expenditure on development phase which results in creation of assets is included in related assets.
T n intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an item of intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of such item of intangible asset and are recognised in the statement of profit and loss when the asset is derecognised.
T he residual values, useful lives and method of amortization of intangible assets are reviewed at each financial year end and adjusted prospectively.
T orrowing costs directly attributable to the acquisition / construction of a qualifying asset that necessarily takes substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consists of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
f) Impairment of Non-Financial Assets
The carrying amounts of assets are reviewed at each reporting date if there is any indication of impairment based on internal and external factors.
An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. An asset''s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of Cash Generating Unit (CGU) to which the asset belongs. The cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of cash inflows of other assets or group of assets.
A previously recognized impairment loss is further provided or reversed depending on changes in circumstances.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized as income immediately.
Revenue is recognized to depict the transfer of promised products or services to customers. Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amount collected on behalf of third party.
Revenue from sale of products is recognized when products are delivered to the customers. Delivery occurs when the product has been shipped to the customers, the risks of obsolescence and loss have been transferred to customers and the customer has accepted the products in accordance with sales arrangement. Revenue is disclosed net of Goods and Services Tax (GST), discounts, volume rebates and returns, as applicable.
h) Dividend income is recognized when the right to receive the payment is established. Interest is recognized using the Effective Interest Rate (EIR) method. Difference between the sale price and carrying value of investment is recognized as profit or loss on sale/ redemption of investment on the date of transaction.
i) Railway and other claims where quantum of accruals cannot be ascertained with reasonable certainty, are recognized only when collection is virtually certain which generally coincides with receipt.
Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attached thereto and the grants will be received.
Grants related to income are recognized in statement of profit and loss on a systematic basis over the period to match them with the related costs.
Grants related to assets are included in liabilities as deferred income and are credited to income on a systematic basis over the useful life of the related assets.
The benefit of government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and is recognized in the statement of profit and loss.
k) Employee Benefits1) Defined Contribution Plan
Superannuation, Provident Fund, National Pension Scheme and Employees State Insurance Corporation ("ESIC") are considered as defined contribution plan and the contributions are charged to the statement of profit and loss for the year in which employees have rendered related services.
Gratuity is considered as defined benefit plan and is provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet. Defined benefit costs are categorized as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠re-measurements
The Company presents the first two components of defined benefit costs in statement of profit and loss in the line item ''Employee Benefits Expenses''.
Re-measurement, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on net defined benefit liability), are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI) in the period in which they occur. Re-measurements are not reclassified
to statement of profit and loss in subsequent periods.
Contributions as specified by law are paid to the provident fund set up as irrevocable trust in respect of few employees. The Company is generally liable for annual contribution and any shortfall in the fund assets based on the government specified minimum rates of return and recognizes such contribution and shortfall, if any, as an expense in the year incurred.
3) Other Long Term Benefits
En-cashable leave in case of employees covered by Cement Wage Board and non en-cashable leave are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the Balance Sheet date. Actuarial gains/ losses, if any, are recognized in statement of profit and loss in the year in which they arise.
4) Other Short Term Benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave in the period the related service is rendered. Liabilities recognized in respect of short-term employee benefits, are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
l) Foreign Currency Transaction
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the ''functional currency''). The Company''s financial statements are presented in Indian Rupees, which is also the Company''s functional currency.
Foreign currency transactions are initially recorded in the functional currency, using the exchange rate at the date of transaction.
At each balance sheet date, foreign currency monetary items are reported using the closing exchange rates. Non-Monetary items, which are carried in terms of historical cost denominated
in a foreign currency, are reported using the exchange rate at the date of transaction.
Exchange difference arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise except the amount of such exchange differences capitalized in accordance with policy on ''Borrowing Costs''.
Income tax expense represents the sum of current and deferred tax (including Minimum Alternate Tax). Tax is recognized in statement of profit and loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in such case the tax is also recognized directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognized in equity or other comprehensive income is also recognized in equity or other comprehensive income, such change could be for change in tax rate.
Current tax provision is measured on the basis of estimated taxable income computed in accordance with the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the Balance Sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach. Deferred tax liabilities are recognized for all taxable temporary difference and deferred tax assets are recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilized. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply in the year when the asset is realized or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and deferred taxes relate to same taxable entity and the same taxation authority.
The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilized.
Tax credit is recognized in respect of Minimum Alternate Tax (MAT) paid in terms of section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and the same is reviewed at each balance sheet date. MAT credit are in the form of unused tax credits that are carried forward by the Company for a specified period of time, hence it is grouped with Deferred Tax Asset.
n) Inventories1) Raw Materials, Stores & Spare Parts, Packing Materials and Fuel
These are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Cost is determined on weighted average basis which includes expenditure incurred for acquiring inventories like purchase price, import duties, taxes (net of tax credit) and other costs incurred in bringing the inventories to their present location and condition.
2) Work-in-progress, Finished Goods and Stock-in-trade
These are valued at lower of cost and net realizable value. Cost of work-in-progress and
finished goods include direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of stock-in-trade includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
o) Provisions and Contingencies
1) Provisions
Provisions are recognized 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 embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of time value of money is material, provisions are discounted using equivalent period pre-tax government securities interest rate. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.
Mines Reclamation Expenditure
The Company provides for the expenditure to reclaim the quarries used for mining, in statement of profit and loss based on present value of estimated expenditure required to be made towards restoration and rehabilitation at the time of vacation of mines. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates. The unwinding of the discount on provision is shown as a finance cost in statement of profit and loss.
2) Contingencies
Contingent liabilities are disclosed when there is a possible obligation as a result of 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 or when there is 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 amount cannot be made. Contingent assets are not recognized.
p) Leases
At the commencement of a lease, the Company recognises a right of use asset and a lease liability with respect to lease agreements in which it is the lessee.
The lease liability is measured 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 otherwise incremental borrowing rate is used to discount the lease payments. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, less lease payments made.
The right of use asset is measured at inception at the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred. The right of use assets is subsequently measured at cost less accumulated amortization, accumulated impairment losses, if any. Right of use assets are amortized on straight line basis over the shorter period of lease term and useful life of the underlying asset.
The right of use assets and lease liability is presented separately on the face of the Balance sheet as ''Right of Use Assets'' and ''Lease Liability'' respectively.
The Company applies the acquisition method in accounting for business combinations. The consideration transferred by the Company to obtain control of a business is calculated as the sum of the fair values of assets transferred, liabilities incurred and assumed and the equity interests issued by the Company as at the
acquisition date i.e. date on which it obtains control of the acquiree which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition related costs are recognized in the statement of profit and loss as incurred, except to the extent related to the issue of debt or equity securities.
Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values on acquisition date.
Intangible Assets acquired in a business combination and recognised separately from Goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost).
Goodwill is measured as the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed.
Subsequent to initial recognition, intangible assets with definite useful life acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Goodwill and Intangible assets with indefinite useful life, if any, are tested for impairment at the end of each annual reporting period.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the excess is termed as gain on bargain purchase. In case of a bargain purchase, before recognizing a gain in respect thereof, the Company determines whether there exists clear evidence of the underlying reasons for classifying the business combination as a bargain purchase thereafter, the Company reassesses whether it has correctly identified all the assets acquired and liabilities assumed and recognizes any additional assets or liabilities that are so identified, any gain thereafter is recognized in Other Comprehensive Income ("OG") and accumulated in equity as Capital Reserve. If there does not exist clear evidence of
the underlying reasons for classifying the business combination as a bargain purchase, the Company recognizes the gain, after reassessing and reviewing, directly in equity as Capital Reserve.
Contingent consideration is classified either as equity or financial liability. Amount classified as financial liability are subsequently re-measured to fair value with changes in fair value recognised in statement of profit and loss.
The Company''s investments in its subsidiaries are carried at cost less impairment, if any.
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.
Initial Recognition and Measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial assets.
These include trade receivables, cash and cash equivalents, other bank balances, fixed deposits with banks, investments, loans and other financial assets.
Classification and Subsequent Measurement
Financial assets are subsequently measured at amortized cost or fair value through other comprehensive income or fair value through profit or loss depending on its business model for managing those financial assets and the asset''s contractual cash flow characteristics.
a) Financial Assets at Amortised Cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
b) Financial Assets at Fair Value Through Other Comprehensive Income
A financial asset is subsequently measured at fair value through other comprehensive income if it 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.
c) Financial Assets at Fair Value Through Profit or Loss
A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss. Dividend and interest income on financial assets at fair value through profit or loss is recognized as dividend and interest income respectively and included in ''Other Income''.
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity and does not retain control of the asset.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit or loss, are assessed for impairment at the end of each reporting period. The Company recognizes 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 on the basis of its historical credit loss experience.
Initial Recognition and Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables or as derivative designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The financial liabilities include trade and other payables, loans and borrowings including bank overdraft and derivative financial instruments.
Classification and Subsequent Measurement
The financial liabilities are classified as either ''financial liabilities at fair value through profit or loss'' or ''other financial liabilities''.
a) Financial Liabilities at Fair Value Through Profit or Loss
Financial liabilities are classified at fair value through profit or loss when the financial liability is held for trading or are designated upon initial recognition as fair value through profit or loss. It includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. All changes in the fair value of such liability are recognized in the statement of profit and loss.
b) Other Financial Liabilities
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using effective interest rate method.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired.
3) Derivative Financial Instruments and Hedge Accounting
The Company uses derivative financial instruments, such as foreign currency forward contracts and cross currency & interest rate swaps to hedge its foreign currency risks and interest rate risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivative is carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss, except for the effective portion of cash flow hedges which is taken in the other comprehensive income (net of tax).
The Company uses cross currency and interest rate swaps to hedge the cash flows of the foreign currency denominated debt related to variation in foreign currency exchange rates and interest rates. The Company also enters into foreign currency forward contracts to hedge the foreign currency exchange risk arising from the forecast purchases. The Company designates these cross currency and interest rate swaps and some foreign currency forward contracts in a cash flow hedging relationship by applying the hedge accounting principles.
These derivatives are stated at fair value at each reporting date. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognized in other comprehensive income (net of tax) and the ineffective portion is recognized immediately in statement of profit and loss. Amounts accumulated in equity are reclassified to profit or loss when the hedged transaction affects the profit or
loss. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
4) 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 definition of a financial liabilities and an equity instrument. The Company does not have any compound financial instrument.
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 the Company are recognized at the proceeds received. Transaction costs related to issue of equity instruments is reduced from equity.
Cash and cash equivalents comprise cash at banks and on hand and short term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
For the purpose of the statement of cash flow, cash and cash equivalents consist of cash at banks and on hand and short term deposits, as defined above, net of outstanding bank overdraft as they are considered an integral part of the Company''s cash management.
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. These estimates are reviewed regularly and any change in estimates is adjusted prospectively.
In the process of applying the Company''s accounting policies, management has made the following estimates, assumptions and judgements, which have significant effect on the amounts recognized in the financial statements:
a) Deferred Tax Assets
The recognition of deferred tax assets requires assessment of whether it is probable that sufficient future taxable profit will be available against which deferred tax asset can be utilized. The Company reviews at each balance sheet date the carrying amount of deferred tax assets.
b) Property, Plant and Equipment & Intangible Assets
The determination of depreciation and amortization charge depends on the useful lives for which judgements and estimations are required. The residual values, useful lives, and method of depreciation of property, plant and equipment and intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
c) Allowances for Uncollected Trade Receivables
Trade receivables do not carry any interest and are stated at their transaction value as
reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not to be collectible.
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/ claims/ litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
e) Mines Reclamation Obligation
The measurement of mines reclamation obligation requires long term assumptions regarding the phasing of the restoration work to be carried out. Discount rates are determined based on the government securities of similar tenure.
The cost of defined benefit plan and present value of such obligation are determined using actuarial valuation. 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, mortality rates and attrition rate.
Due to the long- term nature of the plan, such estimates are subject to significant uncertainty. All assumptions are reviewed at each reporting date. Refer Note 38 for sensitivity analysis.
g) Fair Value Measurement of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Mar 31, 2021
1. CORPORATE INFORMATION
Shree Cement Limited ("the Company") is a public limited company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed at BSE Limited and National Stock Exchange of India Limited in India. The registered office of the Company is located at Bangur Nagar, Beawar, District- Ajmer-305901 (Rajasthan) India.
The Company is engaged in the manufacturing and selling of cement and cement related products. It is recognised as one of the most efficient and environment friendly company in the global cement industry.
For Company''s principal shareholders, Refer Note No. 19.1.
These financial statements are approved and adopted by the Board of Directors of the Company in their meeting held on May 21, 2021.
The standalone financial statements (hereinafter referred to as "financial statements") of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, and amendments made thereafter and the relevant provisions of the Companies Act, 2013 ("the Act") and guidelines issued by the Securities and Exchange Board of India ("SEBI"), as applicable.
3. NEW ACCOUNTING PRONOUNCEMENTS
(i) Adoption of New Accounting Pronouncements
a) Amendment to Ind AS 103 ''Business Combinations'' - change in definition of Business
The amendments clarify that while businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as a business. The amendments also introduce an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. This amendment does not have material impact on the Company.
b) Amendment to Ind AS 107 and Ind AS 109 -interest rate benchmark reforms
The amendments provide temporary exception from applying specific hedge accounting requirement and allows continuation of hedge accounting when a hedging relationship is directly affected by interest rate benchmark reform only. The amendment also provides for additional disclosure for hedging relationship that is subject to this exception. This amendment does not have material impact on the Company.
c) Amendment to Ind AS 116 ''Leases'' - COVID-19 related rent concessions
The amendment provides a practical expedient which permits lessee not to account for COVID-19 related rent concession as a lease modification. This amendment does not have material impact on the Company.
d) Amendment to Ind AS 1 and Ind AS 8 -definition of ''Material''
The amendment is not intended to change the underlying ''materiality'' concept rather it provides broader guidance and make it easy to understand the meaning of ''material''. This amendment does not have material impact on the Company.
e) Amendment to Ind AS 10 and Ind AS 37 -material non adjusting event
The amendment requires an entity to disclose the nature and estimate of financial effect of a material non-adjusting event after the reporting period. Ind AS 37 specifically requires such disclosure of a non-adjusting material restructuring plan. This amendment does not have material impact on the Company.
Ji) Application of new amendments issued but not
yet effective
(a) Amendment in Schedule III of the Companies Act, 2013
On March 24, 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the Companies Act,
2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021. The amendments are extensive and the Company will evaluate the same to give effect to them as required by law.
4. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Preparation and Measurement
The Financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
⢠Derivative financial instruments
⢠Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments - note 4 (s))
⢠Employee''s defined benefit plan as per actuarial valuation
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
The financial statements are presented in Indian Rupees ("INR") and all values are rounded to the nearest crore, except otherwise indicated.
b) Classification of Assets and Liabilities into Current/ Non-Current
The Company has ascertained its operating cycle as twelve months for the purpose of Current/ Non-Current classification of its Assets and Liabilities.
For the purpose of Balance Sheet, an asset is classified as current if:
1. It is expected to be realised, or is intended to be sold or consumed, in the normal operating cycle; or
2. It is held primarily for the purpose of trading; or
3. It is expected to realise the asset within twelve months after the reporting period; or
4. The asset is a cash or cash equivalent unless it is 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.
Similarly, a liability is classified as current if:
1. It is expected to be settled in the normal operating cycle; or
2. It is held primarily for the purpose of trading; or
3. It is due to be settled within twelve months after the reporting period; or
4. The Company does not have an unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
c) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation/ amortisation and impairment, if any. Freehold land not containing mineral reserve is disclosed at cost less impairment, if any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition/ bringing the asset to its working condition for its intended use, including relevant borrowing costs.
The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All subsequent costs are charged to
statement of profit and loss unless 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.
Capital work in progress is carried at cost and directly attributable expenditure during construction period (including financing cost related to borrowed funds for construction or acquisition of qualifying assets) which is allocated to the property, plant and equipment on the completion of project. Advances given towards acquisition or construction of property, plant and equipment outstanding at each reporting date are disclosed as capital advances under "other noncurrent assets".
Depreciation is provided on written down value method over the estimated useful lives of the assets. Estimated useful lives of the assets are as follows:
|
Nature of Asset |
Estimated Useful Lives |
|
Plant & Machinery |
3-20 Years |
|
Building |
20 Years |
|
Roads |
10 Years |
|
Railway Siding |
20 Years |
|
Vehicles |
5-6 Years |
|
Office Equipment |
3-5 Years |
|
Furniture & Fixtures |
5 Years |
disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of Cash Generating Unit (CGU) to which the asset belongs. The cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of cash inflows of other assets or group of assets.
A previously recognised impairment loss is further provided or reversed depending on changes in circumstances.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.
g) Revenue Recognition
Revenue is recognised to depict the transfer of promised products or services to customers. Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amount collected on behalf of third party.
Revenue from sale of products is recognised when products are delivered to the customers. Delivery occurs when the product has been shipped to the customers, the risks of obsolescence and loss have been transferred to customers and either the customer has accepted the products in accordance with sales arrangement. Revenue is disclosed net of Goods and Services Tax (GST), discounts, volume rebates and returns, as applicable.
Assets individually costing less than or equal to '' 25,000 are fully depreciated in the year of purchase. Freehold land containing mineral reserve is amortised over its estimated commercial life based on the units-of-production method.
Depreciation on additions is provided on a pro-rata basis from the date of installation or acquisition and in case of projects, from the date when it is ready for intended use. Depreciation on deduction/disposals is provided on a pro-rata basis up to the date of deduction/ disposal.
Gains or losses arising from de-recognition of assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is disposed and / or derecognised.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Intangible assets are stated at cost less accumulated amortisation and impairment, if any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition/ bringing the asset to its working condition for its intended use.
Amortisation is provided on a written down value method over estimated useful lives, but not exceeding three years except mining rights which is amortised based on units-of-production method.
Expenditure on research phase is recognised as an expense when it is incurred. Expenditure on development phase which results in creation of assets is included in related assets.
The residual values, useful lives and method of amortisation of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
Borrowing costs directly attributable to the acquisition / construction of a qualifying asset that necessarily takes substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consists of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
f) Impairment of Non-Financial Assets
The carrying amounts of assets are reviewed at each reporting date if there is any indication of impairment based on internal and external factors.
An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. An asset''s recoverable amount is the higher of fair value less costs of
h) Dividend income is recognised when the right to receive the payment is established. Interest is recognised using the Effective Interest Rate (EIR) method. Difference between the sale price and carrying value of investment is recognised as profit or loss on sale/ redemption of investment on the date of transaction.
i) Insurance, railway and other claims where quantum of accruals cannot be ascertained with reasonable certainty, are recognised only when collection is virtually certain which generally coincides with receipt and are netted off from related expenses.
Government grants are recognised when there is reasonable assurance that the Company will comply with the conditions attached thereto and the grants will be received.
Grants related to income are recognised in the statement of profit and loss on a systematic basis over the period to match them with the related costs.
Grants related to assets are included in noncurrent liabilities as deferred income and are credited to income on a systematic basis over the useful life of the related assets.
The benefit of government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and is recognised in the statement of profit and loss.
k) Employee Benefits1) Defined Contribution Plan
Superannuation, Provident Fund, National Pension Scheme and Employees State Insurance Corporation (ESIC) are considered as defined contribution plan and the contributions are charged to the statement of profit and loss for the year in which employees have rendered related services.
Contributions as specified by law are paid to the provident fund set up as irrevocable trust
in respect of few employees. The Company is generally liable for annual contribution and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contribution and shortfall, if any, as an expense in the year incurred.
Gratuity is considered as defined benefit plan and is provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠re-measurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee Benefits Expenses.''
Re- measurement, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on net defined benefit liability), are recognised immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI) in the period in which they occur. Re- measurements are not reclassified to profit or loss in subsequent periods.
En-cashable leave in case of employees covered by Cement Wage Board and non en-cashable leave are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the Balance Sheet date. Actuarial gains/ losses, if any, are recognised in the statement of profit and loss in the year in which they arise.
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave in the period the related service is rendered. Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
l) Foreign Currency Transaction
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the ''functional currency''). The Company''s financial statements are presented in Indian Rupees, which is also the Company''s functional currency.
Foreign currency transactions are initially recorded in the functional currency, using the exchange rate at the date of transaction.
At each balance sheet date, foreign currency monetary items are reported using the closing exchange rates. Non-Monetary items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction.
Exchange difference arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise except the amount of such differences capitalised in accordance with policy on ''Borrowing costs''.
Income tax expense represents the sum of current and deferred tax (including Minimum Alternate Tax). Tax is recognised in the statement of profit and loss except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such case the tax is also recognised directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognised in equity or other comprehensive income is also recognised
in equity or other comprehensive income, such change could be for change in tax rate.
Current tax provision is measured on the basis of estimated taxable income computed in accordance with the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognised on differences betweer the carrying amounts of assets and liabilities in the Balance Sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach. Deferred tax liabilities are recognised for all taxable temporary difference and deferred tax assets are recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and deferred taxes relate to same taxable entity and the same taxation authority.
The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
Tax credit is recognised in respect of Minimum Alternate Tax (MAT) paid in terms of section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and the same is reviewed at each balance sheet
date. MAT credit are in the form of unused tax credits that are carried forward by the Company for a specified period of time, hence it is grouped with Deferred Tax Asset.
n) Inventories1) Raw Materials, Stores & Spare Parts, Packing Materials and Fuel
These are valued at lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis.
2) Work-in-progress and Finished Goods
These are valued at lower of cost and net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
o) Provisions and Contingencies1) Provisions
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 embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of time value of money is material, provisions are discounted using equivalent period pre-tax government securities interest rate. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.
The Company provides for the expenditure to reclaim the quarries used for mining, in the statement of profit and loss based on present value of estimated expenditure required to be made towards restoration and rehabilitation at the time of vacation of mines. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates. The unwinding of the discount on provision is shown as a finance cost in the statement of profit and loss.
Contingent liabilities are disclosed when there is a possible obligation as a result of 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 or when there is 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 amount cannot be made. Contingent assets are not recognised.
At the commencement of a lease, the Company recognises a right of use asset and a lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is measured 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 otherwise incremental borrowing rate is used to discount the lease payments. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, less lease payments made.
The right-of-use asset measured at inception at the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred. The right of use assets is subsequently measured at cost less accumulated amortisation, accumulated impairment losses, if any. Right-of-use assets are amortised on straight line basis over the shorter period of lease term and useful life of the underlying asset.
The right of use assets is presented separately on the face of the Balance sheet as ''Right of Use Assets'' and lease liability is presented within ''other financial liabilities'' classified as current and non-current.
The Company applies the acquisition method in accounting for business combinations. The consideration transferred by the Company to obtain control of a business is calculated as the sum of the fair values of assets transferred, liabilities incurred and assumed and the equity interests issued by the Company as at the acquisition date i.e. date on which it obtains control of the acquiree which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition-related costs are recognised in the statement of profit and loss as incurred, except to the extent related to the issue of debt or equity securities.
Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values on acquisition date.
Intangible Assets acquired in a Business Combination and recognised separately from Goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
Goodwill is measured as the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed.
Subsequent to initial recognition, intangible assets with definite useful life acquired in a Business Combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Goodwill and Intangible assets with indefinite useful life, if any, are tested for impairment at the end of each annual reporting period.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the excess is termed as gain on bargain purchase. In case of a bargain purchase, before recognising a gain in respect thereof, the Company determines whether there exists clear evidence of the underlying reasons for classifying the business combination as a bargain purchase thereafter, the Company reassesses whether it has correctly identified all the assets acquired and liabilities assumed and recognises any additional assets or liabilities that are so identified, any gain thereafter is recognised in OCI and accumulated in equity as Capital Reserve. If there does not exist clear evidence of the underlying reasons for classifying the business combination as a bargain purchase, the Company recognises the gain, after reassessing and reviewing, directly in equity as Capital Reserve.
Contingent consideration is classified either as equity or financial liability. Amount classified as financial liability are subsequently re-measured to fair value with changes in fair value recognised in statement of profit and loss.
The Company''s investments in its subsidiaries are carried at cost less impairment, if any.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Initial Recognition and Measurement
All financial assets are recognised initially at
fair value plus, in the case of financial assets
not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial assets.
These include trade receivables, cash and cash equivalents, other bank balances, fixed deposits with banks, loans, other financial assets and investments.
Classification and Subsequent Measurement
Financial assets are subsequently measured at amortised cost or fair value through other comprehensive income or fair value through profit or loss depending on its business model for managing those financial assets and the asset''s contractual cash flow characteristics.
a) Financial Assets at Amortised Cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
b) Financial Assets at Fair Value Through Other Comprehensive Income
A financial asset is subsequently measured at fair value through other comprehensive income if it 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.
c) Financial Assets at Fair Value Through Profit or Loss
A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss. Dividend and
Equity instruments issued by the Company are recognised at the proceeds received. Transaction costs related to issue of equity instruments is reduced from equity.
t) Cash and Cash Equivalents
Cash and cash equivalents comprise cash at banks and on hand and short term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
For the purpose of the statement of cash flow, cash and cash equivalents consist of cash at banks and on hand 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.
u) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. These estimates are reviewed regularly and any change in estimates is adjusted prospectively.
In the process of applying the Company''s accounting policies, management has made the following estimates, assumptions and judgements, which have significant effect on the amounts recognised in the financial statements:
interest income on financial assets at fair value through profit or loss is recognised as dividend and interest income respectively and included in ''other income''.
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity and does not retain control of the asset.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit or loss, are assessed for 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 on the basis of its historical credit loss experience.
Initial Recognition and Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The financial liabilities include trade and other payables, loans and borrowings including bank overdraft and derivative financial instruments.
Classification and Subsequent Measurement
The financial liabilities are classified as either ''financial liabilities at fair value through profit or loss'' or ''other financial liabilities''.
a) Financial Liabilities at Fair Value Through Profit or Loss
Financial liabilities are classified at fair value through profit or loss when the financial liability is held for trading or are designated upon initial recognition as fair value through profit or loss. It includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. All changes in the fair value of such liability are recognised in the statement of profit and loss.
b) Other Financial Liabilities
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using effective interest rate method.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.
3) Derivative Financial Instruments and Hedge Accounting
The Company uses derivative financial instruments, such as foreign currency forward contracts and cross currency & interest rate swaps to hedge its foreign currency risks and interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss, except for the effective portion of cash flow hedges which is taken in the other comprehensive income (net of tax).
The Company uses cross currency and interest rate swaps to hedge the cash flows of the foreign currency denominated debt related to variation in foreign currency exchange rates and interest rates. The Company also enters into foreign currency forward contracts to hedge the foreign currency exchange risk arising from the forecast purchases. The Company designates these cross currency and interest rate swaps and foreign currency forward contracts in a cash flow hedging relationship by applying the hedge accounting principles.
These derivatives are stated at fair value at each reporting date. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognised in other comprehensive income (net of tax) and the ineffective portion is recognised immediately in the statement of profit and loss. Amounts accumulated in equity are reclassified to the statement of profit and loss when the hedged transaction affects the profit or loss. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a nonfinancial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the nonfinancial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
4) 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 definition of a financial liabilities and an equity instrument. The Company does not have any compound financial instrument.
An Equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
The recognition of deferred tax assets requires assessment of whether it is probable that sufficient future taxable profit will be available against which deferred tax asset can be utilised. The Company reviews at each balance sheet date the carrying amount of deferred tax assets.
b) Property, Plant and Equipment & Intangible Assets
The determination of depreciation and amortisation charge depends on the useful lives for which judgements and estimations are required. The residual values, useful lives and method of depreciation of property, plant and equipment and intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
c) Allowances for Uncollected Trade Receivables
Trade receivables do not carry any interest and are stated at their transaction value as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not to be collectible.
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/ claims/ litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
e) Mines Reclamation Obligation
The measurement of mines reclamation obligation requires long term assumptions regarding the phasing of the restoration work to be carried out. Discount rates are determined based on the government bonds of similar tenure.
The cost of defined benefit plan and present value of such obligation are determined using actuarial valuation. 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, mortality rates and attrition rate. Due to the long- term nature of the plan, such estimates are subject to significant uncertainty. All assumptions are reviewed at each reporting date. Refer Note 38 for sensitivity analysis.
g) Fair Value Measurement of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Mar 31, 2019
a) Basis of Preparation and Measurement
The Financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
- Derivative financial instruments
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments - note 5 (t))
- Employee''s defined benefit plan as per actuarial valuation
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
The financial statements are presented in Indian Rupees ("INR") and all values are rounded to the nearest crore, except otherwise indicated.
b) Classification of Assets and Liabilities into Current/Non-Current
The Company has ascertained its operating cycle as twelve months for the purpose of Current/NonCurrent classification of its Assets and Liabilities.
For the purpose of Balance Sheet, an asset is classified as current if:
1. It is expected to be realized, or is intended to be sold or consumed, in the normal operating cycle; or
2. It is held primarily for the purpose of trading; or
3. It is expected to realize the asset within twelve months after the reporting period; or
4. The asset is a cash or cash equivalent unless it is 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. Similarly, a liability is classified as current if:
1. It is expected to be settled in the normal operating cycle; or
2. It is held primarily for the purpose of trading; or
3. It is due to be settled within twelve months after the reporting period; or
4. The Company does not have an unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as noncurrent.
c) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation/amortization and impairment, if any. Freehold land not containing mineral reserve is disclosed at cost less impairment, if any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition/bringing the asset to its working condition for its intended use, including relevant borrowing costs.
The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All subsequent costs are charged to statement of profit and loss unless 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.
Capital work in progress is carried at cost and directly attributable expenditure during construction period (including financing cost related to borrowed funds for construction or acquisition of qualifying assets) which is allocated to the property, plant and equipment on the completion of project. Advances given towards acquisition or construction of property, plant and equipment outstanding at each reporting date are disclosed as capital advances under "other noncurrent assets".
Depreciation is provided on written down value method over the estimated useful lives of the assets. Estimated useful lives of the assets are as follows:
Assets individually costing less than or equal to Rs. 5,000 are fully depreciated in the year of purchase. Leasehold land classified as finance lease is amortized over the period of lease on a straight line basis. Freehold land containing mineral reserve is amortized over its estimated commercial life based on the units-of-production method.
Depreciation on additions is provided on a prorata basis from the date of installation or acquisition and in case of projects, from the date when it is ready for intended use. Depreciation on deduction/disposals is provided on a pro-rata basis upto the date of deduction/disposal.
Gains or losses arising from de-recognition of assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed and / or derecognized.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
d) Intangible Assets
Intangible assets are stated at cost less accumulated amortization and impairment, if any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition/bringing the asset to its working condition for its intended use.
Amortization is provided on a written down value method over estimated useful lives, but not exceeding three years except mining rights which is amortized based on units-of-production method.
Expenditure on research phase is recognized as an expense when it is incurred. Expenditure on development phase which results in creation of assets is included in related assets.
The residual values, useful lives and method of amortization of Intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
e) Borrowing Costs
Borrowing costs directly attributable to the acquisition / construction of a qualifying asset that necessarily takes substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consists of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
f) Impairment of Non-Financial Assets
The carrying amount of assets are reviewed at each reporting date if there is any indication of impairment based on internal and external factors.
An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. An asset''s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
A previously recognized impairment loss is further provided or reversed depending on changes in circumstances.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized as income immediately.
g) Revenue Recognition
Revenue is recognized to depict the transfer of promised goods or services to customers. Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amount collected on behalf of third party.
Revenue from sale of goods and power is recognized when products are delivered to the customers. Delivery occurs when the product has been shipped to the customers, the risks of obsolescence and loss have been transferred to customers and either the customer has accepted the products in accordance with sales arrangement. Revenue is disclosed net of Goods and Services Tax (GST)/Sales Tax/VAT, discounts, volume rebates & returns, as applicable. Revenue is inclusive of excise duty till 30th June, 2017.
h) Dividend income is recognized when the right to receive the payment is established. Interest is recognized using the Effective Interest Rate (EIR) method. Difference between the sale price and carrying value of investment is recognized as profit or loss on sale/ redemption of investment on the date of transaction.
i) Insurance, railway and other claims where quantum of accruals cannot be ascertained with reasonable certainty, are recognized only when collection is virtually certain which generally coincides with receipt and are netted off from related expenses.
j) Government Grants
Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attached thereto and the grants will be received.
Grants related to income are recognized in the statement of profit and loss on a systematic basis over the period to match them with the related costs.
Grants related to assets are included in noncurrent liabilities as deferred income and are credited to income on a systematic basis over the useful life of the related assets.
The benefit of government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and is recognized in the statement of profit and loss.
k) Employee Benefits
1) Defined Contribution Plan
Superannuation, Provident Fund, National Pension Scheme and Employees State Insurance Corporation (ESIC) are considered as defined contribution plan and the contributions are charged to the statement of profit and loss for the year in which employees have rendered related services.
Contributions as specified by law are paid to the provident fund set up as irrevocable trust in respect of few employees. The Company is generally liable for annual contribution and any shortfall in the fund assets based on the government specified minimum rates of return and recognizes such contribution and shortfall, if any, as an expense in the year incurred.
2) Defined Benefit Plan
Gratuity is considered as defined benefit plan and is provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet. Defined benefit costs are categorized as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- re-measurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense''.
Re-measurement, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on net defined benefit liability), are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI) in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
3) Other Long Term Benefits
En-cashable leave in case of employees covered by Cement Wage Board and non encashable leave are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the Balance Sheet date. Actuarial gains/losses, if any, are recognized in the statement of profit and loss in the year in which they arises.
4) Other Short term Benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave in the period the related service is rendered. Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
l) Foreign Currency Transaction
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the ''functional currency''). The Company''s financial statements are presented in Indian Rupees, which is also the Company''s functional currency.
Foreign currency transactions are initially recorded in the functional currency, using the exchange rate at the date of transaction.
At each balance sheet date, foreign currency monetary items are reported using the closing exchange rates. Non-Monetary items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction.
Exchange difference arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise except the amount of such differences capitalized in accordance with policy on ''Borrowing costs''.
m) Taxation
Income tax expense represents the sum of current and deferred tax (including MAT). Tax is recognized in the statement of profit and loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in such case the tax is also recognized directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognized in equity or other comprehensive income is also recognized in equity or other comprehensive income, such change could be for change in tax rate.
Current tax provision is measured on the basis of estimated taxable income computed in accordance with the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the Balance Sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach. Deferred tax liabilities are recognized for all taxable temporary difference and deferred tax assets are recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and deferred taxes relate to same taxable entity and the same taxation authority.
The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilized.
Tax credit is recognized in respect of Minimum Alternate Tax (MAT) paid in terms of section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and the same is reviewed at each balance sheet date. MAT credit are in the form of unused tax credits that are carried forward by the Company for a specified period of time, hence it is grouped with Deferred Tax Asset.
n) Inventories
1) Raw Materials, Stores & Spare Parts, Packing Materials and Fuel
These are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis.
2) Work-in-progress and Finished goods
These are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty till 30th June, 2017. Cost is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
o) Provisions and Contingencies
1) Provisions
Provisions are recognized 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 embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of time value of money is material, provisions are discounted using equivalent period pre-tax government securities interest rate. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.
Mines Reclamation Expenditure
The Company provides for the expenditure to reclaim the quarries used for mining in the statement of profit and loss based on present value of estimated expenditure required to be made towards restoration and rehabilitation at the time of vacation of mines. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates. The unwinding of the discount on provision is shown as a finance cost in the statement of profit and loss.
2) Contingencies
Contingent liabilities are disclosed when there is a possible obligation as a result of 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 or when there is 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 amount cannot be made. Contingent assets are not recognized.
p) Leases
At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement.
1) Assets Taken on Finance Lease
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. A finance lease is recognized as an asset and a liability at the commencement of the lease, at the lower of the fair value of the asset and the present value of the minimum lease payments. Initial direct costs, if any, are also capitalized and, subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
2) Operating Lease
Leases other than finance leases are operating leases. Payments made under operating leases are recognized in the statement of profit and 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 compensate for the expected inflationary cost increases.
q) Segment Reporting
Segment is identified and reported taking into account the nature of products and services, the different risks and returns and the internal business reporting systems. These business segments are reviewed by the chief operating decision maker. Inter segment transfers are accounted for as if the sales or transfers were to third parties at market price.
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Assets, Liabilities, Revenue and Expenses which are not allocable to segments are included under "unallocated".
r) Business Combination
The Company applies the acquisition method in accounting for business combinations. The consideration transferred by the Company to obtain control of a business is calculated as the sum of the fair values of assets transferred, liabilities incurred and assumed and the equity interests issued by the Company as at the acquisition date i.e. date on which it obtains control of the acquiree which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition-related costs are recognized in the statement of profit and loss as incurred, except to the extent related to the issue of debt or equity securities.
Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values on acquisition-date.
Intangible Assets acquired in a Business Combination and recognised separately from Goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost).
Goodwill is measured as the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed.
Subsequent to initial recognition, intangible assets with definite useful life acquired in a Business Combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Goodwill and Intangible assets with indefinite useful life, if any, are tested for impairment at the end of each annual reporting period.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the excess is termed as gain on bargain purchase. In case of a bargain purchase, before recognizing a gain in respect thereof, the Company determines whether there exists clear evidence of the underlying reasons for classifying the business combination as a bargain purchase thereafter, the Company reassesses whether it has correctly identified all the assets acquired and liabilities assumed and recognizes any additional assets or liabilities that are so identified, any gain thereafter is recognized in OCI and accumulated in equity as Capital Reserve. If there does not exist clear evidence of the underlying reasons for classifying the business combination as a bargain purchase, the Company recognizes the gain, after reassessing and reviewing, directly in equity as Capital Reserve.
Contingent consideration is classified either as equity or financial liability. Amount classified as financial liability are subsequently re-measured to fair value with changes in fair value recognised in statement of profit and loss.
s) Investment in Subsidiaries
The Company''s investment in its subsidiaries are carried at cost.
t) Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.
1) Financial Assets
Initial Recognition and Measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial assets.
These include trade receivables, cash and cash equivalents, other bank balances, fixed deposits with banks, loans, other financial assets and investments.
Classification and Subsequent Measurement
Financial assets are subsequently measured at amortized cost or fair value through other comprehensive income or fair value through profit or loss depending on its business model for managing those financial assets and the asset contractual cash flow characteristics.
a) Financial Assets at Amortised Cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
b) Financial Assets at Fair Value Through Other Comprehensive Income
A financial asset is subsequently measured at fair value through other comprehensive income if it 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.
c) Financial Assets at Fair Value Through Profit or Loss
A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss.
Derecognition
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity and does not retain control of the asset.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. The Company recognizes 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 on the basis of its historical credit loss experience.
2) Financial Liabilities
Initial Recognition and Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
Classification and Subsequent Measurement
The financial liabilities are classified as either ''financial liabilities at fair value through profit or loss'' or ''other financial liabilities''.
a) Financial liabilities at Fair Value Through Profit or Loss
Financial liabilities are classified at fair value through profit or loss when the financial liability is held for trading or are designated upon initial recognition as fair value through profit or loss. It includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. All changes in the fair value of such liability are recognized in the statement of profit and loss.
b) Other Financial Liabilities
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using effective interest rate method.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired.
3) Derivative Financial Instruments and Hedge Accounting
The Company uses derivative financial instruments, such as forward currency contracts and cross currency & interest rate swaps to hedge its foreign currency risks and interest rate risks, respectively. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss, except for the effective portion of cash flow hedges which is taken in the other comprehensive income (net of tax).
The Company uses cross currency and interest rate swaps to hedge the cash flows of the foreign currency denominated debt related to variation in foreign currency exchange rates and interest rates. The Company designates these cross currency and interest rate swaps in a cash flow hedging relationship by applying the hedge accounting principles.
These cross currency and interest rate swaps are stated at fair value at each reporting date. Changes in the fair value of these swaps that are designated and effective as hedges of future cash flows are recognized in other comprehensive income (net of tax) and the ineffective portion is recognized immediately in the statement of profit and loss. Amounts accumulated in equity are reclassified to the statement of profit and loss when the hedged transaction affects the profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
4) 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 definition of a financial liabilities and an equity instrument. The Company does not have any compound financial instruments.
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 the Company are recognized at the proceeds received.
u) Cash and Cash Equivalents
Cash and cash equivalents comprise cash at banks and on hand and short term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
For the purpose of the statement of cash flow, cash and cash equivalents consist of cash at banks and on hand 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.
v) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. These estimates are reviewed regularly and any change in estimates are adjusted prospectively.
In the process of applying the Company''s accounting policies, management has made the following estimates, assumptions and judgements, which have significant effect on the amounts recognized in the financial statements:
a) Deferred Tax Assets
The recognition of deferred tax assets requires assessment of whether it is probable that sufficient future taxable profit will be available against which deferred tax asset can be utilized. The Company reviews at each balance sheet date the carrying amount of deferred tax assets.
b) Property, Plant and Equipment & Intangible Assets
The determination of depreciation and amortization charge depends on the useful lives for which judgements and estimations are required. The residual values, useful lives, and method of depreciation of property, plant and equipment and intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
c) Allowances for Uncollected Trade Receivables
Trade receivables do not carry any interest and are stated at their transaction value as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not to be collectible.
d) Contingencies
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claims/ litigation against the Company as it is not possible to predict the outcome of pending matters with accuracy.
e) Mines Reclamation Obligation
The measurement of mines reclamation obligation requires long term assumptions regarding the phasing of the restoration work to be carried out. Discount rates are determined based on the government bonds of similar tenure.
f) Defined Benefit Plan
The cost of defined benefit plan and present value of such obligation are determined using actuarial valuation. 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, mortality rates and attrition rate. Due to the long-term nature of the plan, such estimates are subject to significant uncertainty. All assumption are reviewed at each reporting date. Refer Note 40 for sensitivity analysis.
g) Fair Value Measurement of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Mar 31, 2018
a) Basis of Preparation and Measurement
The Financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
- Derivative financial instruments
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments- note 3 (r))
- Employeeâs defined benefit plan as per actuarial valuation
Historical cost is generally based on the lair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would rake those characteristics into account when pricing the asset or liability at the measurement date.
The financial statements are presented in Indian Rupees (âINRâ) and all values are rounded to the nearest crore, except otherwise indicated.
b) Classification of Assets and Liabilities into Current/Non -Current
The Company has ascertained its operating cycle as twelve months for the purpose of Current/Non Current classification of its Assets and Liabilities.
For the purpose of Balance Sheet, an asset is classified as current if:
1. It is expected to be realized, or is intended to be sold or consumed, in the normal operating cycle; or
2. It is held primarily for the purpose of trading; or
3. It is expected to realize the asset within twelve months after the reporting period; or
4. The asset is a cash or cash equivalent unless it is 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.
Similarly, a liability is classified as current if:
1. It is expected to be settled in the normal operating cycle; or
2. It Is held primarily for the purpose of trading; or
3. It is due to be settled within twelve months after the reporting period: or
4. The Company does not have an unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non -current.
e) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation/amortization and impairment if any. Freehold land not containing mineral reserve is disclosed at cost less impairment, if any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition / bringing [he asset to its working Condition for its intended use.
The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All subsequent costs are charged to Statement of Profit and Loss unless it is probate that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Capital work in progress is carried at cost and directly attributable expenditure during construction period which Is allocated to the property, plant and equipment on the completion of project Advances given towards acquisition or construction of property, plant and equipment outstanding at each reporting date are disclosed as Capital advances under âother non-current assets*.
Assets individually costing less than or equal to Rs. 5,000 are fully deprecated in the year of purchase, leasehold land classified as finance lease is amortized over the period of lease on a straight line basis. Freehold tend containing mineral reserve is amortized over its estimated commercial life based on the units-of-production method.
Depreciation on additions Is provided on a pro-rata basis from the date of installation or acquisition and in case of Projects from the date of when it Is ready Tor intended use. Depreciation on deduction/ disposals is provided on a pro-rata basis upto the dale of deduction/disposal.
Gains or losses arising from de-recognition of assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and ere recognized in the Statement of Profit and Loss when the asset is disposed and/or derecognized.
The residual values useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
d) intangible Assets
Intangible assets are stated at cost less accumulated amortization and impairment. If any. Cost comprises of purchase price and directly attributable cost (net of credit availed, if any) of acquisition/bringing the asset to its working condition for its intended use.
Amortization is provided on a written down value method over estimated useful lives, but not exceeding three years except mining rights which is amortized based on units-of-production method.
Expenditure on research phase is recognized as an expense when it is incurred, Expenditure on development phase which results In creation of assets is included in related assets.
The residual values, useful lives and method of amortisation of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate,
e) Borrowing Costs
Borrowing costs directly attributable to the acquisition / construction of a qualifying asset that necessarily takes substantial period or time to get ready for its intended use are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur, Borrowing cost consists of Interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowings cost also includes exchange differences to the extent regarded as an adjustment to the borrowing cost.
f) Impairment of Non-Financial Assets
The carrying amount of assets are reviewed at each reporting date if there is any indication of impairment based on internal and external factors.
An Impairment loss is recognized wherever die carrying amount of an asset exceeds its recoverable amount An assetâs recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset* In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
A previously recognized impairment loss is further provided or reversed depending on changes in circumstances.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount That would have been determined had no impairment loss been recognized for the asset in prior years, A reversal of an impairment loss is recognized as income immediately.
g) Revenue Recognition
Revenue is recognized to the extent that it i s probable that the economic benefits will flow to the Company and the amount can be reliably measured. Revenue i s measured at fair value of consideration received or receivable,
- Revenue from sale of goods and power is recognized when significant risks and rewards of ownership is transferred to the buyer. Revenue is disclosed net of Goods and Service Tax (GST}/ sales tax/VAT, discounts, volume rebates and returns, as applicable. Revenue is inclusive of excise duty till 30th June, 2011,
- Dividend income is recognised when the right to receive the payment is established.
* interest is recognized using the Effective Interest Rate (ElR) method.
h) Insurance, Railway and other Claims where quantum of accruals cannot be ascertained with reasonable certainty, are recognized only when collection is virtually certain which generally coincides with receipt and are netted off from related expenses.
i) Government Grants
Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attached thereto and the grants will be received, Grants related to income are recognized in the Statement of Profit and Loss on a systematic basis over the period to match them with the related costs. Grants related to an assets are included in non-current liabilities as deferred income and are credited to income on a systematic basis over the useful life of the related assets.
J) Employee Benefits
1) Defined Contribution Plan
Superannuation. Provident Fund, National Pension Scheme and employees State Insurance Corporation (ESIC) are considered as defined contribution plan and the contributions arc charged to the Statement of Profit and Loss for the year in which employees have rendered related services.
Contributions as specified by !aw are paid to the provident fund set up as irrevocable trust in respect of few employees. The Company is generally liable for annual contribution and any shortfall In the fund assets based on the government specified minimum rates of return and recognizes such contribution and shortfall, if any, as an expense in the yea r incurred.
2) Defined Benefit Plan
Gratuity is considered as defined benefit plan and Is provided for on the basis of an actuarial valuation, using the projected un it credit method. as at the date of the Balance Sheet, defined benefit costs are categorized a s follows:
- service cost (Including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- re-measurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expensesâ.
Re-measurement, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest On the net defined benefit liability and the return on plan assets (excluding amounts Included in net interest an net defined benefit liability), are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI) in the period In which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
3) Other Long Term Benefits
Encashable leave in case of employees covered by Cement Wage Board and non encashable leave are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the Balance Sheet date. Actuarial gains/losses, if any, are recognized in the Statement Of Profit and Logs in the year in which they arises,
k) Foreign Currency Transaction
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the âfunctional currencyâ). The Companyâs financial statements are presented In Indian Rupees, which Is also Companyâs Functions l currency.
Foreign currency transactions are initially recorded In the functional currency, using the exchange rate 31 the date of transaction.
At each balance sheet date, foreign currency monetary Hems are reported using the closing exchange rates. Nan-Monetary Items, which are carried In terms of historical cost denominated in a foreign currency, ant reported using the exchange rate at the dale of transaction.
Exchange difference arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise.
I) Taxation
Income tax expense represents the sum of current and deferred tax [including MAT]. Tax is recognised in the Statement of Profit and Loss except to the extent That it relates to items recognised directly in equity or other comprehensive income, in such case the tax is also recognized directly in equity or In other comprehensive Income. Any subsequent change In direct Us on items initially recognised in equity or other comprehensive income is also recognized in equity or other comprehensive income. Such change could he for change in tax rate.
Current tax provision is measured on the basis Of estimated taxable income computed in accordance with the provisions Of the Income Tax Act, 1961 and other applicable tax Laws.
Current tax assets and liabilities are offset only If there is a legally enforceable right to set of the recoqnized amounts, and It is intended to realize the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Balance Sheet and the corresponding tax bases used In the computation of taxable profit and are accounted for using the balance sheet approach. Deferred tax liabilities are recognized for all taxable temporary difference and deferred tax assets are recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses a no allowances can be utilized. Deferred tax assets and liabilities are measured a i the lax rates that are expected to apply In the year when the asset Is realized or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to Set off current tax assets against current tax liabilities and deferred taxes relate to same taxable entity and the same taxation authority.
The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that It Is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilized.
Tax Credit is recognized in respect of Minimum Alternate Tax (MAT) paid in terms of section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and the same is reviewed at each balance sheet date. MAT credit are in the form of unused tax credits that are carried forward by the Company for a specified period of time, hence it Is grouted with Deferred Tax Asset.
m) Inventories
1) Raw Materials, Stores ft Spare Parts, Packing Materials and Fuel
These ere valued at lower of cost end net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products m which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis.
2) Work-in-progress and finished floods
These are valued at lower of cost and net realisable value. Cost included direct material and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty till 30th June, 2017. Cost is determined on a weighted average basis.
Net readable value Is the estimated selling price In the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
n) Provisions and Contingencies
1) Provisions
Provisions are recognized 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 embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of time value of money is material, provisions are discounted using equivalent period pre-tax government securities interest rate. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost Provisions are reviewed at each balance sheet dale and are adjusted to reflect the current best estimates.
Mines Reclamation Expenditure
The Company provides for the expenditure to reclaim the quarries used for mining in the Statement of Profit and Loss based on present value of estimated expenditure required to be made towards restoration and rehabilitation al the time of vacation 006Ff mines. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates The unwinding of the discount on provision Is Shown as a finance cost in the Statement of Profit and Loss.
2) Contingencies
Contingent Liabilities arc disclosed when there Is a possible obligation as a result of 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 or when there is a present obligation that arises from past events where it Is either not probable that an outflow of resources will he required to settle at a reliable estimate of amount cannot be made, Contingent assets are not recognized.
O) Leases
At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement.
1) Assets Taken on Finance Least
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease, A finance Lease is recognised as an asset and a liability at the commencement of the lease, at the lower of the Fair value of the asset and the present value of the minimum Lease payments. Initial direct costs, if any are also capitalized and, subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the Liability.
2) Operating Lease
Leases other than finance leases are operating leases. Payments made under operating leases are recognized in the Statement of Profit and 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 compensate for the expected inflationary cost increases.
p) Segment Reporting
Segment is identified and reported taking into account the nature of products and services, the different risks and returns and the internal business reporting systems, These business segments are reviewed by the chief operating decision maker.
Inter segment Transfers are accounted for as if the sales or transfers were to third parties at market price.
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.
Assets, Liabilities Revenue and Expenses which are not allocable to segments are included under âunallocatedâ.
q) Investments in Subsidiaries
The Company has accounted For its investment in subsidiary at cost.
r) Financial Instruments
Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments.
l) Financial Assets
Initial Recognition and Measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial assets.
These include trade receivables. cash and cash equivalents other Dank balances, fined deposits with Banks, other financial assets and investments,
Classification and Subsequent Measurement
Financial assets are subsequently measured at amortized cost or fair value through other comprehensive income or fair value through profit or loss depending On its business model for managing those financial assets and the asset contractual cash flow characteristics,
a) Financial Assets at A mortised Cost
a financial asset b subsequently measured at amortised cost if It is hold within a business model whose objective is to hold the asset in order to collect contractual cash Haws and the Contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest cm the principal amount outstanding.
b) Financial Assets at Fair Value Through Other Comprehensive Income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within 5 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,
c) Financial Assets at Fair Value Through Profit or Loss
A financial asset which Is not classified In any of the above categories is subsequently fair valued through profit or loss.
Derecognition
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expires or its transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
Impairment of Financial Assets
Financial assets, other than those at Fair value through profit or loss, 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 on the basis of its historical credit loss experience.
2) Financial Liabilities
Initial Recognition and Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables or as derivatives designated as hedging Instruments in an effective hedge, as appropriate.
All financial liabilities are recognized Initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
Clarification and Subsequent Measurement
The financial liabilities are classified as either âfinancial liabilities at fair value through profit or loss âor âother financial liabilitiesâ.
a) Financial liabilities at Fair Value Through Profit or Loss
Financial liabilities ore classified at fair value through profit or toss when the financial liability is held for trading or are designated upon initial recognition as fair value through profit or loss. It includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. All changes in the fair value of such liability are recognised in the statement of profit and loss,
b) Other Financial Liabilities
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using effective interest method.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or can celled or expired.
3) Derivative Financial Instruments and Hedge Accounting
The Company uses derivative financial instruments, such as forward currency contracts and cross currency & interest rate swaps to hedge its foreign currency risks and interest rate risks, respectively. Such derivative financial Instruments are initially recogniaed at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value, Derivatives are earned as financial assets when The fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from chanqes In the Fair value of derivatives a re taken directly to Statement of Profit and Loss, except for the effective portion of cash flow hedges which is taken in the other comprehensive Income (net of tax).
The Company uses cross currency and interest rate swaps to hedge the cash flows of the foreign currency denominated debt related to variation
In foreign currency exchange rates and interest rates. The Company designates these cross currency and interest rate swaps In a cash flow hedging relationship by applying the hedge accounting principles.
These Cross currency and Interest rate swaps are stated at fair value at each reporting date. Changes in the fair value of these swaps that are designated and effective as fledges of future cash flows are recognized in other comprehensive income (net of tax) and the ineffective portion Is recognized immediately in the Statement of Profit and Loss. Amounts accumulated in equity are reclassified to the Statement of Profit and Loss when the hedged transaction affects the profit or loss.
Hedge accounting is discontinued when the hedqing instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
s) Cash and Cash Equivalents
Cash and Cash equivalents comprise cash at banks and on hand and short term deposits with an original maturity of three months or Iess, which are subject to insignificant risk of changes in value.
For the purpose of the statement of cash flow, cash and cash equivalents consist of cash at banks and on hand and short term deposits, as defined above, net of outstanding bank ovendrafts as they are considered an Integral part of the Companyâs cash management
t) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose or calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2017
1. Significant Accounting Policies
a) Basis of Measurement
The Financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
- Derivatives financial instruments
- Certain Financial assets measured at fair value (refer accounting policy regarding financial instruments)
The financial statements are presented in Indian Rupees (âINRâ) and all values are rounded to the nearest crore, except otherwise indicated.
b) Property, Plant and Equipment
On transition to Ind AS, the Company has adopted optional exemption under Ind AS 101 to measure Property, Plant and Equipment at previous GAAP carrying value. Consequently the previous GAAP carrying value has been assumed to be deemed cost of Property, Plant and Equipment on the date of transition (Refer Note 55). Subsequently, Property, plant and equipment are stated at cost less accumulated depreciation/amortization and i m pa i r m en t , i f an y. F re eh ol d l a n d n o t containing mineral reserve is disclosed at cost less impairment, if any. Cost comprises of purchase price and directly attributable cost of acquisition/ bringing the asset to its working condition for its intended use (net of credit availed, if any).
When significant parts of the plant and equipment are required to be replaced at intervals the Company depreciates them separately based on their specific useful lives. Capital work in progress is carried at cost and directly attributable expenditure during construction period which is allocated to the property, plant and equipment on the completion of project.
Borrowing costs directly attributable to the acquisition / construction of a qualifying asset are capitalized as part of the cost of such asset till such time the asset is ready for its intended use. Other borrowing costs are recognized as an expense in the period in which they are incurred.
Depreciation is provided on written down value method over the estimated useful lives of the assets. Estimated useful lives of the assets are as follows:
Leasehold land is amortized over the period of lease on a straight line basis. Freehold land containing mineral reserve is amortized over its estimated commercial life based on the units-of-production method.
Gains or losses arising from de-recognition of assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
c) Intangible Assets
On transition to Ind AS, the Company has adopted optional exemption under Ind AS 101 to measure Intangible Assets at previous GAAP carrying value. Consequently the previous GAAP carrying value has been assumed to be deemed cost of Intangible Assets on the date of transition (Refer Note 55). Subsequently, Intangible assets are stated at cost less accumulated amortization and impairment, if any. Cost comprises of purchase price and directly attributable cost of acquisition/bringing the asset to its working condition for its intended use (net of credit availed, if any).
Amortization is provided on a Written down Value method over estimated useful lives, but not exceeding three years except mining rights which is amortized based on units-of-production method.
Expenditure on research phase is recognized as an expense when it is incurred. Expenditure on development phase which results in creation of assets is included in related assets.
The residual values, useful lives and method of depreciation of Intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
d) Impairment of Non-Financial Assets
The carrying amount of assets are reviewed at each reporting date if there is any indication of impairment based on internal and external factors.
An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. An assetâs recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
A previously recognized impairment loss is further provided or reversed depending on changes in circumstances.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.
e) Revenue Recognition
Revenue is measured at fair value of consideration received or receivable. Revenues are recognized when collectability of the resulting receivable is reasonably assured.
- Revenue from sale of goods and power is recognized when significant risks and rewards of ownership is transferred to the buyer. Revenue is disclosed net of sales tax / VAT, discounts, volume rebates and returns, as applicable. Revenue is inclusive of excise duty.
- Dividend income is recognized when the right to receive the payment is established.
- Interest is recognized using the Effective Interest rate (EIR) method.
- Insurance, Railway and other Claims where quantum of accruals cannot be ascertained with reasonable certainty, are recognized as income only when revenue is virtually certain which generally coincides with receipts.
f) Provisions and Contingencies
1) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of time value of money is material, provisions are discounted using equivalent period government securities interest rate. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.
Mines Reclamation Expenditure
The Company provides for the expenditure to reclaim the quarries used for mining in the Statement of Profit and Loss based on present value of estimated expenditure required to be made towards restoration and rehabilitation at the time of vacation of mine. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates. The unwinding of the discount on provision is shown as a finance cost in the Statement of Profit and Loss.
2) Contingencies
Contingent liabilities are disclosed when there is a possible obligation as a result of 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 or 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 amount cannot be made. Contingent assets are not recognized.
g) Foreign Currency Transaction
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The Companyâs financial statements are presented in Indian Rupees, which is also Companyâs functional currency.
Foreign currency transactions are initially recorded in the functional currency, using the exchange rate at the date of transaction.
At each Balance sheet date, foreign currency monetary items are reported using the closing exchange rates. Non-Monetary items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction. Exchange difference arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise.
h) Inventories
1) Raw Materials, Stores & Spare Parts, Packing Materials and Fuel
These are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis.
2) Work-in-progress and Finished goods
These are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis.
3) Energy Saving Certificates
These are valued at lower of cost and net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
i) Leases
At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement.
1) Assets Taken on Finance Lease
A finance lease is recognized as an asset and a liability at the commencement of the lease, at the lower of the fair value of the asset and the present value of the minimum lease payments. Initial direct costs, if any, are also capitalized and, subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
2) Operating Lease
Leases other than finance leases are operating leases. Payments made under operating leases are recognized in the Statement of Profit and 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 compensate for the expected inflationary cost increases.
j) Taxation
Income tax expense represents the sum of current and deferred tax (including MAT). Tax is recognized in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in such case the tax is also recognized directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognized in equity or other comprehensive income is also recognized in equity or other comprehensive income, such change could be for change in tax rate.
Current tax provision is measured on the basis of estimated taxable income computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the Balance Sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach. Deferred tax liabilities are recognized for all taxable temporary difference and deferred tax assets are recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilized. Deferred tax asset and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and deferred taxes relate to same taxable entity and the same taxation authority.
The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilized. Tax credit is recognized in respect of Minimum Alternate Tax (MAT) paid in terms of section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and the same is reviewed at each balance sheet date.
k) Employee Benefits
1) Defined Contribution Plan
Superannuation, Provident Fund, National Pension Scheme and Employees State Insurance Corporation (ESIC) are considered as defined contribution plan and the contributions are charged to the Statement of Profit and Loss for the year in which employees have rendered related services.
Contributions as specified by law are paid to the provident fund set up as irrevocable trust in respect of few employees. The Company is generally liable for annual contribution and any shortfall in the fund assets based on the government specified minimum rates of return and recognizes such contribution and shortfall, if any, as an expense in the year incurred.
2) Defined Benefit Plan
Gratuity is considered as defined benefit plan and is provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.
Re-measurement gains and losses
Re-measurement, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on net defined benefit liability), are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
3) Other Long Term Benefits
Encashable leave in case of employees covered by Cement Wage Board and non encashable leave are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the Balance Sheet date. Actuarial gains/losses, if any, are recognized in the Statement of Profit and Loss in the year in which they arises.
l) Government Grants
Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attached thereto and the grants will be received. Grants related to income are recognized in the Statement of Profit and Loss on a systematic basis over the period to match them with the related costs. Grants related to an assets are recognized as income on a systematic basis over the useful life of the related assets.
m) Segment Reporting
Segment is identified and reported taking into account the nature of products and services, the different risks and returns and the internal business reporting systems. These business segments are reviewed by the chief operating decision maker. The identification of geographical segment is based on the areas in which major operating divisions of the Company operates.
Inter Segment Transfers are accounted for as if the sales or transfers were to third parties at market price.
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.
Assets, Liabilities, Revenue and Expenses which are not allocable to segments are included under âunallocatedâ.
n) Financial 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.
1) Financial Assets
Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial assets.
These include trade receivables, cash and cash equivalents, other bank balances, fixed deposits with banks, other financial assets and investments.
Subsequent measurement
Financial assets are subsequently measured at amortised cost or fair value through profit or loss depending on its business model for managing those financial assets and the asset contractual cash flow characteristics.
Derecognition
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
Investments in Subsidiaries
The Company has accounted for its investment in subsidiary at cost.
Impairment of Financial Assets
The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the financial assets. If credit risk has not increased significantly, 12 months ECL is used to provide for impairment loss. If credit risks has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the Statement of Profit and Loss.
2) Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification are described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. All changes in the fair value of such liability are recognized in the statement of profit and loss.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized costs using EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired.
3) Derivative Financial Instruments and Hedge Accounting
The Company uses derivative financial instruments, such as forward currency contracts and cross currency & interest rate swaps to hedge its foreign currency risks and interest rate risks, respectively. Such Derivatives financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss, except for the effective portion of cash flow hedges.
The Company uses cross currency and interest rate swaps to hedge the cash flows of the foreign currency denominated debt related to variation in foreign currency exchange rates and interest rates. The Company designates these cross currency and interest rate swaps in a cash flow hedging relationship by applying the hedge accounting principles.
These Cross currency and interest rate swaps are stated at fair value at each reporting date. Changes in the fair value of these swaps that are designated and effective as hedges of future cash flows are recognized in other comprehensive income (net of tax) and the ineffective portion is recognized immediately in the Statement of Profit and Loss. Amounts accumulated in equity are reclassified to the Statement of Profit and Loss when the hedged transaction affects the profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
o) Cash and Cash equivalents
Cash and Cash equivalents comprise cash at banks and on hand and short term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
For the purpose of the statement of cash flow, 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.
p) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of equity shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Jun 30, 2015
I. Accounting Convention
The Financial statements of the Company are prepared under the
historical cost convention using the accrual method of accounting and
comply with the Accounting Standards specified under Section 133 of the
Companies Act, 2013, read with Rule 7 of the Company (Accounts) Rules,
2014 and the relevant provisions of the Companies Act, 2013 unless
stated otherwise hereinafter. Accounting Policies not specifically
referred to, are consistent with Generally Accepted Accounting
Principles in India.
II. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
III. Fixed Assets
Fixed assets (Tangible and Intangible) are disclosed at cost less
accumulated depreciation/amortisation and impairment loss, if any. Cost
comprises of purchase price and attributable cost of
acquisition/bringing the asset to its working condition for its
intended use (net of credit availed, if any) except free hold land not
containing mineral reserves which is disclosed at cost less impairment
loss, if any.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognised in the Statement of Profit and
Loss when the asset is derecognised.
IV. Capital Work In Progress
a) Capital work in progress is carried at cost and Pre-operative
expenditure during construction period which is allocated to the fixed
assets on the completion of project.
b) Expenditures on construction of assets for Company's use at premises
owned by Government/Local Authorities/others are charged to Statement
of Profit and Loss in the year of expenditure.
V. Impairment of Assets
The carrying amount of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal/ external
factors.
An impairment loss is recognised wherever the carrying amount of an
asset exceeds its recoverable amount. An asset's recoverable amount is
the higher of the asset's net selling price and 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. Net selling price is the amount obtainable from
sale of the asset in an arm's length transaction between knowledgeable,
willing parties, less the cost of disposal.
A previously recognised impairment loss is further provided or reversed
depending on changes in circumstances.
VI. Depreciation and Amortisation Tangible Assets
a) Depreciation is provided on Written down Value method in accordance
with the provisions of Schedule II to the Companies Act, 2013 or the
rates prescribed in the Income Tax Act, 1961 and rules made thereunder,
whichever is higher. However, in case of those assets whose WDV as per
the Income Tax Act, 1961 is lower than the WDV as per books, additional
depreciation is provided to align the Book WDV with WDV as per the
Income Tax Act, 1961.
b) Leasehold land not containing mineral reserve is amortised over the
period of lease.
c) Land bearing mineral reserves is amortised over its estimated
commercial life based on the unit-of-production method. Intangible
Assets
a) Expenditure on Computer Software is amortised in the year in which
it is capitalised.
b) Amount paid for Mining rights is amortised in the year in which
amount is paid.
c) Goodwill is amortised within one year.
VII. Foreign Currency Transactions
Foreign currency transactions are recorded by applying the exchange
rates on the date of transaction.
At each Balance sheet date, foreign currency monetary items are
reported using the closing rates. Non Monetary items, which are carried
in terms of historical cost denominated in a foreign currency, are
reported using the exchange rate at the date of transaction. Exchange
difference arising on the settlement of monetary items or on reporting
monetary items at rates different from those at which they were
initially recorded during the year, or reported in previous financial
statements, are recognised as income or as expense in the year in which
they arise.
Derivative Instruments
Derivative financial instruments are used to hedge risk associated with
foreign currency fluctuations and interest rates. The derivative
contracts are closely linked with the underlying transactions and are
intended to be held till maturity. These are accounted on the date of
their settlement and realised gain/loss in respect of settled contracts
is recognised in the Statement of Profit and Loss.
The premium or discount on forward exchange contracts is amortised over
the life of the contract.
VIII. Investments
Investments, that are intended to be held for not more than one year,
from the date of acquisition, are classified as current investments.
All other investments are classified as long term investments.
Current Investments are carried at lower of cost or fair market value.
Long term investments are stated at cost. Provision for diminution in
the value of long term investments is made only if such decline is
other than temporary.
IX. Inventories
a) Raw Materials, Stores & Spare Parts, Packing Materials and Fuel
These are valued at lower of cost and net realisable value. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost. Cost is
determined on a weighted average basis.
b) Work-in-progress and Finished goods
These are valued at lower of cost and net realisable value. Cost
includes direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. Cost of finished goods
includes excise duty. Cost is determined on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
X. Cash and Cash Equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprises cash on hand, balances with banks and fixed deposits with
banks with an original maturity of three months or less.
XI. Revenue Recognition
Revenue is recognised to the extent it is probable that the economic
benefit will flow to the Company and the revenue can be reliably
measured
a) Revenue from sale of goods and power is recognised when significant
risks and rewards of ownership is transferred to the buyer. Sales are
disclosed net of sales tax / VAT, trade discounts and returns, as
applicable.
b) Power supplied under banking arrangements is accounted for as per
terms of related agreements. Quantity of power banked is recorded as
loan transaction valued at cost or net realisable value, whichever is
lower and recognised as revenue when the same is returned and sold to
an ultimate customer.
c) Dividend income on investments is accounted for when the right to
receive the payment is established.
d) Interest is recognised using the time-proportion method, based on
rates implicit in the transaction.
e) Certain insurance, railway and other claims where quantum of
accruals cannot be ascertained with reasonable certainty, are accounted
on acceptance basis.
XII. Government Grants/Subsidies
Government grants are recognised when there is reasonable assurance
that the Company will comply with the conditions attached thereto and
the grants will be received.
Government grants/subsidies, which are capital in nature, are credited
to capital reserve.
Government grants related to revenue are recognised on a systematic
basis in the Statement of Profit and Loss over the period to match them
with the related costs.
XIII. Employee Benefits Defined Contribution Plan
Superannuation, Provident Fund and National Pension Scheme are
considered as defined contribution plan and the contributions are
charged to the Statement of Profit and Loss of the year in which the
contributions to the respective funds are due.
Defined Benefit Plan
a) Gratuity is considered as defined benefit plan and is provided for
on the basis of an actuarial valuation, using the projected unit credit
method, as at the date of the Balance Sheet.
b) Contribution to provident Fund set up by the Company in respect of a
few employees is also defined benefit plan and contribution is charged
to Statement of Profit and Loss of the year in which the contribution
is due.
c) Encashable leave in case of employees covered by Cement Wage Board
is considered as defined benefit plan and is accounted for on the basis
of actuarial valuation, as at the Balance Sheet date.
Other Benefits
Non encashable leave are provided for on the basis of an actuarial
valuation, using the projected unit credit method, as at the date of
Balance sheet.
Actuarial gains and losses, if any, are recognised in the Statement of
Profit and Loss in the year in which they arise.
XIV. Operating Leases
Assets acquired under leases where a significant portion of the risks
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Statement of Profit
and Loss on a straight-line basis over the lease term.
XV. Borrowing Costs
Borrowing costs directly attributable to the acquisition / construction
of a qualifying asset are capitalised as part of the cost of such asset
till such time the asset is ready for its intended use. Other borrowing
costs are recognised as an expense in the period in which they are
incurred.
XVI. Research and Development
Expenditure on research phase is recognised as an expense when it is
incurred. Expenditure on development phase which results in creation of
assets is included in related Fixed Assets.
XVII. Mines Reclamation Expenditure
The Company provides for the expenditure to reclaim the quarries used
for mining. The total estimate of reclamation expenses is apportioned
over the estimate of mineral reserves and a provision is made based on
the minerals extracted.
XVIII. Segment Reporting
Segment is identified and reported taking into account the nature of
products and services, the different risks and returns and the internal
business reporting systems. The identification of geographical segment
is based on the areas in which major operating divisions of the Company
operates.
Inter Segment Transfers are accounted for as if the sales or transfers
were to third parties at market price.
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Assets, Liabilities, Revenue and Expenses which are not allocable to
segments are included under "unallocated".
XIX. Taxation
Tax expenses comprises of Current and Deferred Tax.
Current Tax is measured on the basis of estimated taxable income
computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax is recognised for all the timing differences. Deferred tax assets
are recognised only to the extent that there is reasonable certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realised.
Tax credit is recognised in respect of Minimum Alternate Tax (MAT) paid
in terms of Section 115JAA of the Income Tax Act, 1961 based on
convincing evidence that the Company will pay normal income tax within
the statutory time frame and the same is reviewed at each Balance sheet
date.
XX. Provisions, Contingent Liabilities and Contingent Assets
Provisions in respect of present obligation arising out of past events
are made in the accounts if it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. These are reviewed at each Balance Sheet
date and adjusted to reflect the current best estimates.
The contingent liabilities are disclosed, unless the possibility of
outflow of resources is remote. Contingent Assets are generally neither
recognised nor disclosed in the financial statements.
XXI. Earnings per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of equity shares outstanding during the
period are adjusted for the effects of all dilutive potential equity
shares.
Jun 30, 2014
I. Accounting Convention
The Financial statements of the Company are prepared under the
historical cost convention using the accrual method of accounting and
comply with the Accounting Standards notified in the Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956, read with general circular No.
15/2013 dated 13.09.2013, issued by the Ministry of Corporate Affairs,
in respect of section 133 of the Companies Act, 2013 unless stated
otherwise hereinafter. Accounting Policies not specifically referred
to, are consistent with Generally Accepted Accounting Principles in
India.
II. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
III. Fixed Assets
Fixed assets are disclosed at cost less accumulated
depreciation/amortization and impairment loss, if any. Cost comprises
of purchase price and attributable cost of acquisition/bringing the
asset to its working condition for its intended use (net of credit
availed, if any) except free hold land not containing mineral reserves
which is disclosed at cost less impairment loss, if any.
IV. Capital Work-in-Progress
a) Capital work-in-progress is carried at cost and Pre-operative
expenditure during construction period which is allocated to the fixed
assets on the completion of project.
b) Expenditures on construction of assets for Company''s use at premises
owned by Government/ Local Authorities/others are charged to Statement
of Profit and Loss in the year of expenditure.
V. Impairment of Assets
The carrying amount of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal/external
factors.
An impairment loss is recognized wherever the carrying amount of an
asset exceeds its recoverable amount. An asset''s recoverable amount is
the higher of the asset''s net selling price and 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. Net selling price is the amount obtainable from
sale of the asset in an arm''s length transaction between knowledgeable,
willing parties, less the cost of disposal.
A previously recognized impairment loss is further provided or reversed
depending on changes in circumstances.
VI. Depreciation and Amortization Tangible Assets
(a) Depreciation is provided on Written down Value method at the rates
specified in Schedule XIV of the Companies Act, 1956 or the rates
prescribed in the Income Tax Act, 1961, whichever is higher. However,
in case of those assets whose WDV as per the Income Tax Act, 1961 is
lower than the WDV as per books, additional depreciation is provided to
align the Book WDV with WDV as per the Income Tax Act, 1961.
(b) Leasehold land not containing mineral reserve is amortized over the
period of lease.
(c) Land bearing mineral reserves is amortized over its estimated
commercial life based on the unit-of- production method.
Intangible Assets
(a) Expenditure on Computer Software is amortized in the year in which
it is capitalized.
(b) Amount paid for Mining rights is amortized in the year in which
amount is paid.
VII. Foreign Currency Transactions
Foreign currency transactions are recorded by applying the exchange
rates on the date of transaction.
At each Balance sheet date, foreign currency monetary items are
reported usingthe closing rates. Non Monetary items, which are carried
in terms of historical cost denominated in a foreign currency, are
reported using the exchange rate at the date of transaction.
Exchange difference arising on the settlement of monetary items or on
reporting monetary items at rates different from those at which they
were initially recorded during the year, or reported in previous
financial statements, are recognized as income or as expense in the
year in which they arise.
Derivative Instruments
Derivative financial instruments are used to hedge risk associated with
foreign currency fluctuations and interest rates. The derivative
contracts are closely linked with the underlying transactions and are
intended to be held till maturity. These are accounted on the date of
their settlement and realized gain/loss in respect of settled contracts
is recognized in the Statement of Profit and Loss.
The premium or discount on forward exchange contracts is amortized over
the life of the contract.
VIII. Investments
Investments, that are intended to be held for not more than one year,
from the date of acquisition, are classified as current investments.
All other investments are classified as long term
investments/non-current investments.
Current Investments are carried at lower of cost or fair market value.
Long term investments are stated at cost. Provision for diminution in
the value of long term investments is made only if such decline is
other than temporary.
IX. Inventories
a) Raw Materials, Stores & Spare Parts, Packing Materials and Fuel:
These are valued at lower of cost and net realizable value. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost. Cost is
determined on a weighted average basis.
b) Work-in-progress and Finished goods:
These are valued at lower of cost and net realizable value. Cost
includes direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. Cost of finished goods
includes excise duty. Cost is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
X. Cash and Cash Equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprises cash on hand, balances with banks and fixed deposits with
banks with an original maturity of three months or less.
XL Revenue Recognition
Revenue is recognized to the extent it is probable that the economic
benefit will flow to the company and the revenue can be reliably
measured
a) Revenue from sale of goods and power is recognized when significant
risks and rewards of ownership is transferred to the buyer. Sales are
disclosed net of sales tax / VAT, trade discounts and returns, as
applicable.
b) Power supplied under banking arrangements is accounted for as per
terms of related agreements. Quantity of power banked is recorded as
loan transaction valued at cost or net realizable value, whichever is
lower and recognized as revenue when the same is returned and sold to
an ultimate customer.
c) Dividend income on investments is accounted for when the right to
receive the payment is established.
d) Interest is recognized using the time-proportion method, based on
rates implicit in the transaction.
e) Certain insurance, railway and other claims where quantum of
accruals cannot be ascertained with reasonable certainty, are accounted
on acceptance basis.
XII. Government Grants/Subsidies
Government grants are recognized when there is reasonable assurance
that the Company will comply with the conditions attached thereto and
the grants will be received. Government grants/subsidies, which are
capital in nature, are credited to capital reserve.
Government grants related to revenue are recognized on a systematic
basis in the Statement of Profit and Loss over the period to match them
with the related costs.
XIII. Employee Benefits Defined Contribution Plan
Superannuation, Provident Fund and National Pension Scheme are
considered as defined contribution plan and the contributions are
charged to the Statement of Profit and Loss of the year in which the
contributions to the respective funds are due.
Defined Benefit Plan
a) Gratuity is considered as defined benefit plan and is provided for
on the basis of an actuarial valuation, using the projected unit credit
method, as at the date of the Balance Sheet.
b) Contribution to provident Fund set up by the Company in respect of a
few employees is also defined benefit plan and contribution is charged
to Statement of Profit and Loss of the year in which the contribution
is due.
c) Encashable leave in case of employees covered by Cement Wage Board
is considered as defined benefit plan and is accounted for on the basis
of actuarial valuation, as at the Balance Sheet date.
Other Benefits
Non-encashable leaves are provided for on the basis of an actuarial
valuation, using the projected unit credit method, as at the date of
Balance sheet.
Actuarial gains and losses, if any, are recognized in the Statement of
Profit and Loss in the year in which they arise.
XIV. Operating Leases
Assets acquired under leases where a significant portion of the risks
and rewards of ownership are retained
by the lessor are classified as operating leases. Lease rentals are
charged to the Statement of Profit and Loss on accrual basis.
XV. Borrowing Costs
Borrowing costs directly attributable to the acquisition / construction
of a qualifying asset are capitalized as part of the cost of such asset
till such time the asset is ready for its intended use. Other borrowing
costs are recognized as an expense in the period in which they are
incurred.
XVI. Research and Development
Expenditure on research phase is recognized as an expense when it is
incurred. Expenditure on development phase which results in creation of
assets is included in related Fixed Assets.
XVII.Mines Reclamation Expenditure
The Company provides for the expenditure to reclaim the quarries used
for mining. The total estimate of reclamation expenses is apportioned
over the estimate of mineral reserves and a provision is made based on
the minerals extracted.
XVIII. Segment Reporting
Segment is identified and reported taking into account the nature of
products and services, the different risks and returns and the internal
business reporting systems. The identification of geographical segment
is based on the areas in which major operating divisions of the Company
operates.
Inter Segment Transfers are accounted for as if the sales or transfers
were to third parties at market price.
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Assets, Liabilities, Revenue and Expenses which are not allocable to
segments are included under "unallocated".
XIX. Taxation
Tax expense comprises of Current and Deferred Tax.
Current Tax is measured on the basis of estimated taxable income
computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax is recognized for all the timing differences. Deferred tax assets
are recognized only to the extent that there is reasonable certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realized.
Tax credit is recognized in respect of Minimum Alternate Tax (MAT) paid
in terms of Section 115JAA of the Income Tax Act, 1961 based on
convincing evidence that the Company will pay normal income tax within
the statutory time frame and the same is reviewed at each Balance sheet
date.
XX. Provisions, Contingent Liabilities and Contingent Assets
Provisions in respect of present obligation arising out of past events
are made in the accounts if it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. These are reviewed at each Balance
Sheet date and adjusted to reflect the current best estimates.
The contingent liabilities are disclosed, unless the possibility of
outflowof resources is remote. Contingent Assets are generally neither
recognized nor disclosed in the financial statements.
XXI. Earnings per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of equity shares outstanding during the
period are adjusted for the effects of all dilutive potential equity
shares.
Jun 30, 2012
I. Accounting Convention
The Financial statements of the Company are prepared under the
historical cost convention using the accrual method of accounting and
comply with the Accounting Standards prescribed in the Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of
Companies Act, 1956 unless stated otherwise hereinafter. Accounting
Policies not specifically referred to, are consistent with Generally
Accepted Accounting Principles.
During the period ended 30th June 2012, the revised schedule VI
notified under the Companies Act, 1956 has become applicable to the
company, for preparation and presentation of its financial statements.
The adoption of revised schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosure made in the financial statements. The company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
II. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
III. Fixed Assets
Tangible Assets
a) Free hold land not containing mineral reserves is disclosed at cost.
b) Other Fixed assets are disclosed at cost less accumulated
depreciation/amortization and impairment loss, if any. Cost comprises
of purchase price and attributable cost of bringing the asset to its
working condition for its intended use (net of credit availed, if any).
Intangible assets
Intangible assets are recognized only if its cost can be measured
reliably and it is possible that future economic benefits will flow to
the Company. Such assets are stated at cost (net of credit availed, if
any) less accumulated amortization. Cost includes any directly
attributable expenditure on making the assets ready for its intended
use.
Impairment of Assets
The carrying amount of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. A previously recognized
impairment loss is further provided or reversed depending on changes in
circumstances.
IV. Foreign Currency Transactions
Foreign currency transactions are recorded by applying the exchange
rates on the date of transaction.
At each Balance sheet date, foreign currency monetary items are
reported using the closing rates. Non Monetary items which are carried
in terms of historical cost denominated in a foreign currency are
reported using the exchange rate at the date of transaction.
Exchange difference arising on the settlement of monetary items/
foreign exchange contracts are recognized as income or expense in the
period in which they arise.
Derivative Instruments
Derivative financial instruments are used to hedge risk associated with
foreign currency fluctuations and interest rates. The derivative
contracts are closely linked with the underlying transactions and are
intended to be held to maturity. These are accounted on the date of
their settlement and realized gain/loss in respect of settled contracts
is recognized in the Statement of Profit and Loss.
V. Capital Work In Progress
Capital work in progress is carried at direct cost and Pre-operative
expenditure during construction period is allocated to the fixed assets
on the completion of project.
Expenditures on construction of assets for Company's use at premises
owned by Government/Local Authorities/others are charged to Statement
of Profit and Loss in the year of expenditure.
VI. Investments
Investments are classified into current and long-term investments.
Current Investments are carried at lower of cost or fair market value.
Long term investments are stated at cost. Provision for diminution in
the value of long term investments is made only if such decline is
other than temporary.
VII. Inventories
a. Raw Materials, Stores & Spare Parts, Packing Materials and Fuels
These are valued at lower of cost and net realizable value. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost. Cost is
determined on a weighted average basis.
b. Work-in-progress and Finished goods
These are valued at lower of cost and net realizable value. Cost
includes direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. Cost of finished goods
includes excise duty. Cost is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
VIII. Revenue Recognition
Revenue from sale of goods and power is recognized when significant
risks and rewards of ownership is transferred to the buyer.
Dividend income on investments is accounted for when the right to
receive the payment is established.
Interest is recognized using the time-proportion method, based on rates
implicit in the transaction.
Certain insurance, railway and other claims where quantum of accruals
cannot be ascertained with reasonable certainty, are accounted on
mutually agreed price.
Sale of Certified Emission Reductions (CERs) is recognized as income on
the delivery of the CERs to the buyer's account as evidenced by the
receipt of confirmation of execution of delivery instructions.
IX. Government Grants / Subsidies
Government grants are recognized when there is reasonable assurance
that the Company will comply with the conditions attached thereto and
the grants will be received.
Government grants/subsidies, which are capital in nature, are credited
to capital reserve.
Government grants related to revenue are recognized on a systematic
basis in the Statement of Profit and Loss over the period to match them
with the related costs.
X. Employee Benefits
(a) Defined Contribution Plan
Superannuation and Provident Fund are considered as defined
contribution plan and the contributions are charged to the Statement of
Profit & Loss of the year in which the contributions to the respective
funds are due.
(b) Defined Benefit Plan
Gratuity is considered as defined benefit plan and is provided for on
the basis of an actuarial valuation, using the projected unit credit
method, as at the date of the Balance Sheet.
Contribution to provident Fund set up by the Company in respect of a
few employees is also defined benefit plan and contribution is charged
to Statement of Profit and Loss of the year in which the contribution
is due.
Encashable leave in case of employees covered by Cement Wage Board is
considered as defined benefit plan and is accounted for on the basis of
actuarial valuation, as at the Balance Sheet date.
(c) Other Benefits
Non encashable leave are provided for on the basis of an actuarial
valuation, using the projected unit credit method, as at the date of
balance sheet.
Actuarial gains and losses, if any, are recognized in the Statement of
Profit & Loss in the year in which they arise.
XI. Leases
Assets acquired under leases where a significant portion of the risks
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Statement of Profit
and Loss on accrual basis.
XII. Borrowing Costs
Borrowing costs directly attributable to the acquisition / construction
of a qualifying asset are capitalized as part of the cost of the asset
till the date the asset is put to use. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
XIII. Depreciation and Amortization
Tangible Assets
(a) Depreciation is provided on Written down Value method at the rates
specified in Schedule XIV of the Companies Act, 1956 or the rates
prescribed in the Income Tax Act 1961, whichever is higher. However, in
case of those assets whose WDV as per Income Tax Act, 1961 is lower
than the WDV as per books, additional depreciation is provided to align
the Book WDV with WDV as per Income Tax Act, 1961.
(b) Leasehold land not containing mineral reserve is amortized over the
period of lease.
(c) Land bearing mineral reserves is valued at cost and are amortized
over their estimated commercial lives based on the unit-of-production
method.
Intangible Assets
(a) Expenditure incurred on Clean Development Mechanism Projects is
amortized against sale proceeds.
(b) Expenditure on Computer Software is amortized in the year in which
it is capitalized.
(c) Amount paid for Mining rights is amortized in the same year.
XIV. Research and Development
Expenditure on research phase is recognized as an expense when it is
incurred. Expenditure on development phase which results in creation of
assets is included in related Fixed Assets.
XV. Mines Reclamation Expenditure
The Company provides for the expenditure to reclaim the quarries used
for mining. The total estimate of reclamation expenses is apportioned
over the estimate of mineral reserves and a provision is made based on
the minerals extracted.
XVI. Segment Reporting
Segment is identified and reported taking into account the nature of
products and services, the different risks and returns and the internal
business reporting systems. The identification of geographical segment
is based on the areas in which major operating divisions of the Company
operates.
Inter Segment Transfers are accounted for as if the sales or transfers
were to third parties at market price.
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Assets, Liabilities, Revenue and Expenses which are not allocable to
segments are included under "unallocated".
XVII.Taxation
Current Tax is measured on the basis of estimated taxable income
computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax is recognized, for all the timing differences. 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 against which such deferred tax assets can be
realized.
Tax credit is recognised in respect of Minimum Alternate Tax (MAT) paid
in terms of Section 115JAA of the Income Tax Act, 1961 based on
convincing evidence that the Company will pay normal income tax within
the statutory time frame and the same is reviewed at each balance sheet
date.
XVIII. Provisions and Contingent Liabilities /Assets
Provisions in respect of present obligation arising out of past events
are made in the accounts when reliable estimate can be made of the
amount of the obligations. These are reviewed at each Balance Sheet
date and adjusted to reflect the current best estimates.
The contingent liabilities are disclosed, unless the possibility of
outflow of resources is remote. Contingent Assets are generally neither
recognized nor disclosed in the financial statements.
XIX. Earnings per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2011
01. Accounting Convention
The Financial statements of the Company are prepared under the
historical cost convention using the accrual method of accounting and
comply with the Accounting Standards prescribed in the Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of
Companies Act, 1956 unless stated otherwise hereinafter. Accounting
Policies not specifically referred to, are consistent with Generally
Accepted Accounting Principles.
02. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
03. Fixed Assets Tangible Assets
a) Free hold and Lease hold land are disclosed at cost. b) Fixed
assets other than land are disclosed at cost less accumulated
depreciation and impairment loss, if any. Cost comprises of purchase
price and attributable cost of bringing the asset to its working
condition for its intended use (net of credit availed, if any).
Intangible assets
Intangible assets are recognized only if its cost can be measured
reliably and it is possible that future economic benefits will flow to
the Company. Such assets are stated at cost (net of credit availed, if
any) less accumulated amortization. Cost includes any directly
attributable expenditure on making the assets ready for its intended
use.
Impairment of Assets
The carrying amount of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. A previously recognized
impairment loss is further provided or reversed depending on changes in
circumstances.
04. Foreign Currency Transactions
Foreign currency transactions are recorded by applying the exchange
rates on the date of transaction.
At each Balance sheet date, foreign currency monetary items are
reported using the closing rates. Non-Monetary items which are carried
in terms of historical cost denominated in a foreign currency are
reported using the exchange rate at the date of transaction. Exchange
difference arising on the settlement of monetary items/ foreign
exchange contracts are recognized as income or expense in the period in
which they arise.
Derivative Instruments
Derivative financial instruments are used to hedge risk associated with
foreign currency fluctuations and interest rates. The derivative
contracts are closely linked with the underlying transactions and are
intended to be held to maturity. These are accounted on the date of
their settlement and realized gain / loss in respect of settled
contracts is recognized in the Profit and Loss Account.
05. Capital Work In Progress
Capital work in progress is carried at direct cost (including advances)
and Pre-operative expenditure during construction period is allocated
to the fixed assets on the completion of project.
Expenditures on construction of assets for Companys use at premises
owned by Government / Local Authorities / others are charged to Profit
& Loss Accounts in the year of expenditure.
06. Investments
Investments are classified into current and long-term investments.
Current Investments are carried at lower of cost or fair market value.
Long term investments are stated at cost. Provision for diminution in
the value of long term investments is made only if such decline is
other than temporary.
07. Inventories
Inventories are stated at cost or net realizable value, whichever is
lower. The material costs are determined on weighted average basis. The
valuation of manufactured goods represents the combined cost of
material, labour and manufacturing overheads and includes excise duty
in case of finished goods only.
08. Revenue Recognition
Revenue from sale of goods and power is recognized when significant
risks and rewards of ownership is transferred to the buyer. Dividend
income on investments is accounted for when the right to receive the
payment is established.
Interest is recognized using the time-proportion method, based on rates
implicit in the transaction.
Certain insurance, railway and other claims where quantum of accruals
cannot be ascertained with reasonable certainty, are accounted on
mutually agreed price.
Sale of Certified Emission Reductions (CERs) is recognized as income on
the delivery of the CERs to the buyers account as evidenced by the
receipt of confirmation of execution of delivery instructions.
09. Government Grants / Subsidies
Government grants are recognized when there is a reasonable assurance
that the Company will comply with the conditions attached thereto and
the grants will be received.
Government grants in the form of promoters contribution are credited
to capital reserve.
Government grants related to revenue are recognized on a systematic
basis in the Profit and Loss Account over the period to match them with
the related costs.
10. Employee Benefits
(a) Defined Contribution Plan
Superannuation and Provident Fund are considered as defined
contribution plan and the contributions are charged to the Profit &
Loss Account of the year in which the contributions to the respective
funds are due.
(b) Defined Benefit Plan
Gratuity is considered as defined benefit plan and is provided for on
the basis of an actuarial valuation, using the projected unit credit
method, as at the date of the Balance Sheet. Contribution to provident
Fund set up by the Company in respect of a few employees is also
defined benefit plan and contribution is charged to Profit & Loss
Accounts of the year in which the contribution is due.
Encashable leave in case of employees covered by Cement Wage Board is
considered as defined benefit plan and is accounted for on the basis of
actuarial valuation, as at the Balance Sheet date.
Actuarial gains and losses, if any, are recognized in the Profit & Loss
Account in the year in which they arise.
11. Leases
Assets acquired under leases where a significant portion of the risks
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the profit and loss
account on accrual basis.
12. Borrowing Costs
Borrowing costs directly attributable to the acquisition / construction
of a qualifying asset are capitalized as part of the cost of the asset
till the date the asset is put to use. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
13. Depreciation Tangible Assets
(a) Depreciation is provided on Written down Value method at the rates
specified in Schedule XIV of the Companies Act, 1956 or the rates
prescribed in the Income Tax Act 1961, whichever is higher. However, in
case of those assets whose WDV as per Income Tax Act, 1961 is lower
than the WDV as per books, additional depreciation is provided to align
the Book WDV with WDV as per Income Tax Act, 1961. (b) Leasehold land
is not amortized being long term in nature.
Intangible Assets
(a) Expenditure incurred on Clean Development Mechanism Projects is
amortized against sale proceeds.
(b) Expenditure on Computer Software is amortized in the year in which
it is capitalized.
(c) Amount paid for Mining rights is amortized in the same year.
14. Research and Development
Expenditure on research phase is recognized as an expense when it is
incurred. Expenditure on development phase which results in creation of
assets is included in related Fixed Assets.
15. Mines Reclamation Expenditure
The Company provides for the expenditure to reclaim the quarries used
for mining. The total estimate of reclamation expenses is apportioned
over the estimate of mineral reserves and a provision is made based on
the minerals extracted.
16. Segment Reporting
Segment is identified and reported taking into account the nature of
products and services, the different risks and returns and the internal
business reporting systems. The identification of geographical segment
is based on the areas in which major operating divisions of the Company
operates.
Inter Segment Transfers are accounted for as if the sales or transfers
were to third parties at market price. Common allocable costs are
allocated to each segment according to the relative contribution of
each segment to the total common costs.
Assets, Liabilities, Revenue and Expenses which are not allocable to
segments are included under "unallocatedÃ.
17. Taxation
Provision is made for current and deferred taxes. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax is
recognized, for all the timing differences. 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 against which such deferred tax assets can be realized.
18. Provisions and Contingent Liabilities /Assets
Provisions in respect of present obligation arising out of past events
are made in the accounts when reliable estimate can be made of the
amount of the obligations.
The contingent liabilities are disclosed, unless the possibility of
outflow of resources is remote. Contingent Assets are generally neither
recognized nor disclosed in the financial statements.
19. Earnings per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. For the
purpose of calculating diluted earnings per share, the net profit or
loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2010
01. Accounting Convention
The Financial statements of the Company are prepared under the
historical cost convention using the accrual method of accounting and
comply with the Accounting Standards prescribed in the Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of
Companies Act, 1956 unless stated otherwise hereinafter.Accounting
Policies not specifically referred to, are consistent with Generally
Accepted Accounting Principles.
02. Fixed Assets
Tangible Assets
a) Free hold and Lease hold land are disclosed at cost.
b) Fixed assets other than land are disclosed at cost less accumulated
depreciation and impairment loss, if any.Cost comprises of purchase
price and attributable cost of bringing the asset to its working
condition for its intended use (net of credit availed, if any).
Intangible assets
Intangible assets are recognized only if its cost can be measured
reliably and it is possible that future economic benefits will flow to
the Company.Such assets are stated at cost (net of credit availed, if
any) less accumulated amortization.Cost includes any directly
attributable expenditure on making the assets ready for its intended
use.
Impairment of Assets
The carrying amount of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal/external
factors.An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount.A previously recognized
impairment loss is further provided or reversed depending on changes in
circumstances.
03. Foreign Currency Transactions
Foreign currency transactions are recorded by applying the exchange
rates on the date of transaction.
At each Balance sheet date, monetary foreign currency items are
reported using the closing rates.
Exchange difference arising on the settlement of monetary items/
foreign exchange contracts are recognized as income or expense in the
period in which they arise.
04. Capital Work In Progress
Capital work in progress is carried at direct cost (including advances)
and Pre.operative expenditure during construction period is allocated
to the fixed assets on the completion of project.
Expenditures on construction of assets for Companys use at premises
owned by Government/Local Authorities/others are charged to Profit &
Loss Account in the year of expenditure.
05. Investments
Investments are classified into current and long.term investments.
Current Investments are carried at lower of cost or fair market value.
Long term investments are stated at cost. Provision for diminution in
the value of long term investments is made only if such decline is
other than temporary.
06. Inventories
Inventories are stated at cost or net realizable value whichever is
lower.The material costs are determined on weighted average basis.The
valuation of manufactured goods represents the combined cost of
material, labour and manufacturing overheads and includes excise duty
in case of finished goods only.
07. Revenue Recognition
Sales revenue is recognized on the transfer of significant risks and
rewards of the ownership of goods to the buyer.
Dividend income on investments is accounted for when the right to
receive the payment is established.
Interest is recognized using the time.proportion method, based on rates
implicit in the transaction.
Certain insurance, railway and other claims where quantum of accruals
cannot be ascertained with reasonable certainty, are accounted on
mutually agreed price.
Sale of Certified Emission Reductions (CERs) is recognized as income on
the delivery of the CERs to the buyers account as evidenced by the
receipt of confirmation of execution of delivery instructions.
08. Government Grants/Subsidies
Government grants are recognized when there is a reasonable assurance
that the Company will comply with the conditions attached thereto and
the grants will be received.
Government grants in the form of promoters contribution are credited
to capital reserve.
Government grants related to revenue are recognized on a systematic
basis in the Profit and Loss Account over the period to match them with
the related costs.
09. Employee Benefits:
(a) Defined Contribution Plan
Superannuation and Provident Fund are considered as defined
contribution plan and the contributions are charged to the Profit &
Loss Account of the year in which the contributions to the respective
funds are due.
(b) Defined Benefit Plan
Gratuity is considered as defined benefit plan and is provided for on
the basis of an actuarial valuation, using the projected unit credit
method, as at the date of the Balance Sheet.
Contribution to provident Fund set up by the Company in respect of a
few employees is also defined benefit plan and contribution is charged
to Profit & Loss Account of the year in which the contribution is due.
Encashable leave in case of employees covered by Cement Wage Board is
considered as defined benefit plan and is accounted for on the basis of
actuarial valuation, as at the Balance Sheet date.
Actuarial gains and losses, if any, are recognized in the Profit & Loss
Account in the year in which they arise.
10. Borrowing Costs
Borrowing costs directly attributable to the acquisition / construction
of a qualifying asset are capitalized as part of the cost of the asset
till the date the asset is put to use.Other borrowing costs are
recognized as an expense in the period in which they are incurred.
11. Depreciation Tangible Assets:
(a) Depreciation is provided on Written down Value method at the rates
specified in Schedule XIV of the Companies Act, 1956 or the rates
prescribed in the Income Tax Act 1961, whichever is higher.However, in
case of those assets whose WDV as per Income Ta x Act 1961 is lower
than the WDV as per books, additional depreciation is provided to align
the Book WDV with WDV as per Income Tax Act, 1961.
(b) Leasehold land is not amortized being long term in nature.
Intangible Assets:
(a) The amount of amortization is allocated on a systematic basis over
the estimated/legal life not exceeding 10 years commencing when asset
is available for use except Clean Development Mechanism Projects which
are amortized against sale proceeds.
(b) Expenditure on Computer Software is amortized in the year in which
it is capitalized.
12. Research and Development
Expenditure on research phase is recognized as an expense when it is
incurred.Expenditure on development phase which results in creation of
assets is included in related Fixed Assets.
13. Mines Reclamation Expenditure
The Company provides for the expenditure to reclaim the quarries used
for mining.The total estimate of reclamation expenses is apportioned
over the estimate of mineral reserves and a provision is made based on
the minerals extracted.
14. Segment Reporting
Segment is identified and reported taking into account the nature of
products and services, the different risks and returns and the internal
business reporting systems.The identification of geographical segment
is based on the areas in which major operating divisions of the Company
operate.
Inter Segment Transfers are accounted for as if the sales or transfers
were to third parties at market price.
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Assets, Liabilities, Revenue and Expenses which are not allocable to
segments are included under ÃunallocatedÃ.
15. Taxation
Provision is made for current and deferred taxes.Deferred tax is
recognized, for all the timing differences.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 against which such deferred tax assets can be realized.
16. Provisions and Contingent Liabilities /Assets
Provisions in respect of present obligation arising out of past events
are made in the accounts when reliable estimate can be made of the
amount of the obligations.
The contingent liabilities are disclosed, unless the possibility of
outflow of resources is remote. Contingent Assets are
generally neither recognized nor disclosed in the financial statements.
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