Mar 31, 2023
1 Company Overview
Shree Digvijay Cement Company Limited (the ''Company'') is a public limited Company domiciled in India with its registered office address being Digvijaygram, Dist: Jamnagar, Gujarat - 361140. The Company is listed on the Bombay Stock Exchange (BSE) & National stock exchange (NSE). The Company''s principal business is manufacturing and selling of cement. The Company has one manufacturing facility at Sikka (via Jamnagar). The Company caters mainly to the domestic market.
2(A) Summary of significant accounting policies2.01 Basis of preparation
a) Compliance with Indian Accounting Standards (Ind AS)
The standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 ("the Act") [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
b) Historical cost convention
The standalone financial statements have been prepared on a historical cost basis, except for following items:
i) Employee''s Defined Benefit Plan as per actuarial valuation.
ii) Employee share based payments measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date 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.
c) Current versus non-current classification
All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of the products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). Managing director (MD) of the Company has been identified as CODM who assesses the financial performance and position of the Company, and makes strategic decisions.
2.03 Foreign Currency Transactions
a) Functional and presentation currency
The standalone financial statements are presented in Indian Rupees (INR), which is the Company''s functional and presentation currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the standalone statement of profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Non-monetary items that are measured at historical cost in foreign currency are translated using the exchange rate at the date of the transaction.
Revenue from sale of goods is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company assesses promises in the contract that are separate performance obligations to which a portion of transaction price is allocated.
Revenue is measured based on the transaction price as specified in the contract with the customer. It excludes discounts, incentives, volume rebates, goods & services tax and amounts collected on behalf of third parties. In determining the transaction price, the Company considers below, if any:
This includes discounts, incentives, volume rebates, etc. It is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. It is reassessed at end of each reporting period.
Consideration payable to a customer :
Such amounts are accounted as reduction of transaction price and therefore, of revenue unless the payment to the customer is in exchange for a distinct good that the customer transfers to the Company.
Further, in accordance with Ind AS 37, the Company recognises a provision for onerous contract when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received.
Trade receivables that do not contain a significant financing component are measured at transaction price.
Contract liabilities : A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Company performs under the contract.
Significant payment terms :
Generally, the Company provides 21 days credit period for trade type customers and 30 days for non-trade type customers. Further, trade customers are eligible for certain discounts as per basis quantity upliftment by the customer on monthly, quarterly and annual.
Interest income :
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the amortised cost and at the effective interest rate applicable.
General and specific borrowing costs that are attributable to the acquisition, construction or production 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 or sale and borrowing costs are being incurred. Qualifying assets are assets that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.
2.06 Leases - As a lessee Ind AS H6 - Leases:
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A Contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideratoin.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the site on which it is located, less any lease incentives received. Certain lease arrangements include the option to extend or terminate the lease before the end of the lease term.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprises of fixed payments, including in-substance fixed payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option.
The lease liability is subsequently remeasured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Lease liability and the right of use asset have been separately presented in the balance sheet and lease payments have been classified as financing activities.
The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or equal to 12 months with no purchase option and assets with low value leases. The Company recognises the lease payments associated with these leases as an expense in standalone statement of profit and loss over the lease term. The related cash flows are classified as operating activities.
a) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
b) Other long-term employee benefit obligations
Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the period are treated as other long term employee benefits for measurement purpose. The Company''s liability is actuarially determined by an independent actuary using the Projected Unit Credit method at the end of each period. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in standalone statement of profit and loss.
The Company operates the following post-employment schemes:
- defined benefit plans such as gratuity
- defined contribution plans such as provident fund and superannuation fund
i) Gratuity obligations
The liability recognised in the standalone balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is determined at the year end by independent actuary using the projected unit credit method.
The present value of the defined benefit obligation denominated in Indian Rupees is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the standalone statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the standalone statement of changes in equity. Remeasurements are not reclassified to profit and loss in the subsequent periods.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in standalone statement of profit and loss as past service cost.
ii) Defined contribution plans Provident fund
The Company pays contributions towards provident fund to the regulatory authorities as per local regulations where the Company has no further payment obligations. The contributions are recognised as employee benefit expense when they are due.
Superannuation Fund
Contribution towards superannuation fund for qualifying employees as per the Company''s policy is made to Life Insurance Corporation of India where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from contribution made on monthly basis.
Income tax expense or credit represents the sum of the current tax and deferred tax.
Current and deferred tax is recognised in the Standalone Statement of Profit and Loss except to the extent it relates to items recognised in ''Other comprehensive income'' or directly in equity, in which case it is recognised in ''Other comprehensive income'' or directly in equity, respectively.
Current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the standalone statement of profit and loss because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority. The Company periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilities in the standalone balance sheet and the corresponding tax bases used in the computation of taxable profit. It is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the reporting date.
A deferred tax asset shall be recognised for the carry-forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised.
Deferred income tax assets and liabilities are off-set against each other and the resultant net amount is presented in the standalone balance sheet, if and only when, (a) the Company currently has a legally enforceable right to set-off the current income tax assets and liabilities, and (b) when the Deferred income tax assets and liabilities relate to income tax levied by the same taxation authority.
Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
2.09 Property, plant and equipment
All items of property, plant and equipment ("PPE") are stated at historical cost less accumulated depreciation less accumulated impairment losses. The cost of property, plant and equipment includes purchase price including import duties, non-refundable taxes and expenditure that is directly attributable to acquisition and installation, cost of dismantling and removing the item and restoring the site on which it is located.
Capital work in progress is carried at cost, less any recognised impairment loss. Depreciation of these assets commences when the assets are substantially ready for their intended use. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under "Other non-current Assets".
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the standalone statement of profit and loss during the reporting period in which they are incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in Standalone Statement of Profit and Loss.
Depreciation methods, estimated useful lives and residual value
Depreciation is provided on a pro-rata basis on the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as per technical evaluation. Estimated useful lives of the assets thereof are as under:
Assets class |
Life of Assets in Years |
Buildings |
30 - 60 |
Railway Sidings |
21 |
Plant and Equipment |
5 - 21 |
Electric Installations |
5 - 20 |
Rolling Stocks and Locomotives |
18 |
Furniture and Fixtures |
5 - 20 |
Office Equipments & Computers |
3 - 6 |
Vehicles |
5 - 10 |
Jetty and Wharf |
20 - 21 |
Estimated useful lives, residual values and depreciation methods are reviewed annually, taking into account commercial and technological obsolescence as well as normal wear and tear and adjusted prospectively, if appropriate.
2.10 Intangible Assets and Amortisation
Intangible assets with finite useful life are recognised when the Company controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Company and the cost of the asset can be reliably measured. Intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any.
Amortisation methods and periods
The Company amortises intangible assets with finite useful life using straight line method over the following periods:
Asset class |
Life of Assets in Years |
Computer Software and Licenses |
3 to 6 |
Asset Retirement Obligation |
10 to 16 |
Mining rights (Land) |
Based on extractions of reserve |
The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Standalone Statement of Profit and Loss.
Intangible assets under development is carried at cost, less any recognised impairment loss. Amortisation of these assets commences when the assets are substantially ready for their intended use.
Mines Reclamation provision and related asset
An obligation for restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing extraction from mines. The Company recognizes unavoidable obligations, legal or assumed, to restore the mines upon exhaustion of reserves/end of lease period whichever is earlier. These obligations represent the net present value of cash flows expected to be incurred for the restoration process and initially recognized as assets under mining rights (land) which are amortised over its remaining useful life. The obligation is estimated on the basis of cash flows expected to be incurred as per applicable mining regulations, which mainly includes cost of plantation, fencing, biodiversity management, sustainable development, rainwater harvesting etc. The increase in liability due to unwinding of discount is recognised in the Standalone Statement of Profit and Loss under finance cost. Subsequent adjustments to the obligation for changes in the estimated cash flows/disbursement period/discount rate are made against fixed assets and depreciation/amortisation is modified prospectively.
2.11 Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
Inventories are stated at the lower of cost and net realisable value. Cost of raw materials, packing materials and fuels comprises cost of purchases. Cost of work-in progress and finished goods comprises direct materials, direct labour, other direct costs and related production overheads. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Cost is determined using the weighted average method. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
2.13 Cash and cash equivalents
For the purpose of presentation in the Standalone Statement of Cash Flows, cash and cash equivalents includes cash on hand, demand deposits with banks, short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Assets
i) Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss),
- those measured at amortised cost.
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in the Standalone Statement of Profit or Loss or other comprehensive income.
For investments in debt instruments, this will depend on the business model in which the investment is held.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through statement of profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through statement of profit or loss are expensed in standalone statement of profit and loss.
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognised in standalone statement of profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in standalone profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to statement of profit or loss and recognised in other income. Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through statement of profit and loss (FVTPL): Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through standalone statement of profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through statement of profit or loss is recognised in standalone statement of profit or loss in the period in which it arises. Interest income from these financial assets is included in other income.
iii) Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through standalone statement of profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date is recognized as an impairment gain or loss in standalone statement of profit and loss.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables. As a practical expedient, the Company uses a provision matrix to determine impairment loss of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. The ECL loss allowance (or reversal) during the year is recognized in the standalone statement of profit and loss.
iv) De-recognition of financial assets
A financial asset is derecognised only when:
- the Company has transferred the rights to receive cash flows from the financial asset or
- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
v) Trade Receivables
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 (FVTP L), transaction costs that are attributable to the acquisition of the financial asset. However, trade receivables that do not contain a significant financing component are measured at transaction price.
i) Classification
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 liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
ii) Measurement
Financial liabilities are initially recognised at fair value, reduced by transaction costs (in case of financial liability not at fair value through statement of profit or loss), that are directly attributable to the issue of financial liability. After initial recognition, financial liabilities are measured at amortised cost using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash outflow (including all fees paid, transaction cost, and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. At the time of initial recognition, there is no financial liability irrevocably designated as measured at fair value through statement of profit and loss.
iii) Derecognition:
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the standalone statement of profit and loss.
iv) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in standalone statement of profit and loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in standalone statement of profit and loss.
v) Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
2.15 Provisions and contingent liabilities Provisions
Provisions are recognised when the Company has a present legal or constructive obligation 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 amount of the obligation can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the management''s best estimate of the expenditure required to settle the present obligation at the Balance sheet date. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.
Contingent liabilities
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company 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 the amount cannot be made.
Contingent Assets
A contingent asset is disclosed, where an inflow of economic benefits is probable.
Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted earnings per share, adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
2.17 Employee Share based payments:
Equity- settled share-based payments to employees are measured at the fair value of the employee stock options at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is amortised over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the Standalone Statement of Profit and Loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the Share Option Outstanding.
The Company measures the cost of equity-settled transactions with employees using Black-Scholes model to determine the fair value of the liability incurred on the grant date. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant.
This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.
The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 44
2.18 Investment in Subsidiaries :
The Company''s investment in its subsidiary is carried at cost net of accumulated impairment loss, if any. On disposal of the Investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the Standalone Statement of Profit and Loss.
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 31 March 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from 1 April 2023, as below:
Ind AS 1 Presentation of Financial Statements - Disclosure of Accounting Policies
The amendments replace all instances of the term ''significant accounting policies'' with ''material accounting policy information''. Accounting policy information is material if, when considered together with other information included in an entity''s financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The supporting paragraph in Ind AS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors-Defmition of Accounting Estimates
The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 12 Income Taxes-Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences. Equal taxable and deductible temporary differences may arise on initial recognition of an asset and liability in a transaction that is not a business combination and affects neither accounting nor taxable profit. For example, this may arise upon recognition of a lease liability and the corresponding right-of-use asset applying Ind AS 116 Leases at the commencement date of a lease. The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognized for all deductible and taxable temporary differences associated with leases and decommissioning obligations. The Company does not expect the amendment to have any significant impact in its financial statements.
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
2(B) Critical estimates and judgements
The preparation of standalone financial statements requires the use of accounting estimates. Management also needs to exercise judgement in applying the Company''s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. The areas involving critical estimates or judgements are:
a) Mines Reclamation Provision and related asset
In determining the fair value of the Mines Restoration Obligation, assumptions and estimates are made in relation to discount rates, the expected cost of mines restoration and the expected timing of those costs. (Refer note 2(A) 2.10 and 18).
b) Provisions & Contingent Liabilities
The Company exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. If a loss arising from these litigations and/or claims is probable and can be reasonably estimated, the management record the amount of the estimated loss. If a loss is reasonably possible, but not probable, the management discloses the nature of the significant contingency and, if quantifiable, the possible loss that could result from the resolution of the matter. As additional information becomes available, the management reassess any potential liability related to these litigations and claims and may need to revise the estimates. Such revisions or ultimate resolution of these matters could materially impact the results of operations, cash flows or financial statements of the Company. (Refer Note 23 and 25)
c) Current tax expense and deferred tax
The calculation of the Company''s tax charge necessarily involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these items may give rise to material adjustment to taxable profits/losses (Refer note 7 and 24).
Recognition of deferred tax assets
The recognition of deferred tax assets is based upon whether it is probable that sufficient taxable profits will be available in the future against which the reversal of temporary differences will be offset. To determine the future taxable profits, the management considers the nature of the deferred tax assets, recent operating results, future market growth, forecasted earnings and future taxable income in the jurisdictions in which the Company operate. (Refer Note 19).
d) Useful lives of property, plant and equipment and intangibles
The Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period or even earlier in case, circumstances change such that the recorded value of an asset may not be recoverable. The estimate of useful life requires significant management judgment and requires assumptions that can include: planned use of equipments, future volume trends, revenue and expense growth rates and annual operating plans, and in addition, external factors such as changes in macroeconomic trends which are considered in connection with the Company''s long-term strategic planning. (Refer note 2(A) 2.09 and 2(A) 2.10).
e) Employee benefit plans
The Company''s obligation on account of gratuity and compensated absences is determined based on actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the
complexities involved in the valuation and its long-term nature, these liabilities are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases are based on expected future inflation rates.Further details about gratuity obligations are given in Note 30A(ii).
Mar 31, 2022
1 Company Overview
Shree Digvijay Cement Company Limited (the ''Company'') is a public limited Company domiciled in India with its registered office address being Digvijaygram, Dist: Jamnagar, Gujarat - 361140. The Company is listed on the Bombay Stock Exchange (BSE) & National stock exchange (NSE). The Company''s principal business is manufacturing and selling of cement. The Company has one manufacturing facility at Sikka (via Jamnagar) with installed capacity of 12 lacs MT per annum. The Company caters mainly to the domestic market.
2(A)Summary of significant accounting policies2.01 Basis of preparationa) Compliance with Indian Accounting Standards (Ind AS)
The standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 ("the Act") [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The standalone financial statements have been prepared on a historical cost basis, except for following items:
i) Employee''s Defined Benefit Plan as per actuarial valuation.
ii) Employee share based payments measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date 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.
c) Current versus non-current classification
All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of the products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). Chief executive officer (CEO) and Managing director (MD) of the Company has been identified as CODM who assesses the financial performance and position of the Company, and makes strategic decisions.
2.03 Foreign Currency Transactionsa) Functional and presentation currency
The standalone financial statements are presented in Indian Rupees (INR), which is the Company''s functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the standalone statement of profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Non-monetary items that are measured at historical cost in foreign currency are translated using the exchange rate at the date of the transaction.
Revenue from sale of goods is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company assesses promises in the contract that are separate performance obligations to which a portion of transaction price is allocated.
Revenue is measured based on the transaction price as specified in the contract with the customer. It excludes discounts, incentives, volume rebates, goods & services tax and amounts collected on behalf of third parties. In determining the transaction price, the Company considers below, if any:
This includes discounts, incentives, volume rebates, etc. It is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. It is reassessed at end of each reporting period.
Consideration payable to a customer :
Such amounts are accounted as reduction of transaction price and therefore, of revenue unless the payment to the customer is in exchange for a distinct good that the customer transfers to the Company.
Further, in accordance with Ind AS 37, the Company recognises a provision for onerous contract when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received.
Trade receivables : A receivable represents the Company''s right to an amount of consideration that is unconditional i.e. only the passage of time is required before payment of consideration is due.
Contract liabilities : A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Company performs under the contract.
Generally, the Company provides 21 days credit period for trade type customers and 30 days for non-trade type customers. Further, trade customers are eligible for certain discounts as per basis quantity upliftment by the customer on monthly, quarterly and annual.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the amortised cost and at the effective interest rate applicable.
General and specific borrowing costs that are attributable to the acquisition, construction or production 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 or sale and borrowing costs are being incurred. Qualifying assets are assets that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.
2.06 Leasing - As a lessee Ind AS 116 - Leases:
Ind AS 116 Leases replaces existing lease accounting guidance i.e. Ind AS 17 Leases. It sets out principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases, except short-term leases and leases for low-value items, under a single on-balance sheet lease accounting model. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the site on which it is located, less any lease incentives received. Certain lease arrangements include the option to extend or terminate the lease before the end of the lease term.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprises of fixed payments, including in-substance fixed payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option.
The lease liability is subsequently remeasured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Lease liability and the right of use asset have been separately presented in the balance sheet and lease payments have been classified as financing activities.
The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or equal to 12 months with no purchase option and assets with low value leases. The Company recognises the lease payments associated with these leases as an expense in standalone statement of profit and loss over the lease term. The related cash flows are classified as operating activities.
2.07 Employee benefitsa) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
b) Other long-term employee benefit obligations
Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the period are treated as other long term employee benefits for measurement purpose. The Company''s liability is actuarially determined by an independent actuary using the Projected Unit Credit method at the end of each period. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in standalone statement of profit and loss.
The Company operates the following post-employment schemes:
- defined benefit plans such as gratuity
- defined contribution plans such as provident fund and superannuation fund
The liability recognised in the standalone balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is determined at the year end by independent actuary using the projected unit credit method.
The present value of the defined benefit obligation denominated in Indian Rupees is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the standalone statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the standalone statement of changes in equity. Remeasurements are not reclassified to profit and loss in the subsequent periods.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in standalone statement of profit and loss as past service cost.
ii) Defined contribution plans Provident fund
The Company pays contributions towards provident fund to the regulatory authorities as per local regulations where the Company has no further payment obligations. The contributions are recognised as employee benefit expense when they are due.
Contribution towards superannuation fund for qualifying employees as per the Company''s policy is made to Life Insurance Corporation of India where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from contribution made on monthly basis.
Income tax expense or credit represents the sum of the current tax and deferred tax.
Current and deferred tax is recognised in the Standalone Statement of Profit and Loss except to the extent it relates to items recognised in ''Other comprehensive income'' or directly in equity, in which case it is recognised in ''Other comprehensive income'' or directly in equity, respectively.
Current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the standalone statement of profit and loss because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority. The Company periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilities in the standalone balance sheet and the corresponding tax bases used in the computation of taxable profit. It is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the reporting date.
A deferred tax asset shall be recognised for the carry-forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised.
Deferred income tax assets and liabilities are off-set against each other and the resultant net amount is presented in the standalone balance sheet, if and only when, (a) the Company currently has a legally enforceable right to setoff the current income tax assets and liabilities, and (b) when the Deferred income tax assets and liabilities relate to income tax levied by the same taxation authority.
Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Minimum Alternate Tax (''MAT'') credit entitlement is generally recognised as an asset if it is probable (more likely than not) that MAT credit can be used in future years to reduce the regular tax liability.
The carrying amount of deferred tax assets and MAT credit is reviewed at each reporting date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
2.09 Property, plant and equipment
All items of property, plant and equipment ("PPE") are stated at historical cost less accumulated depreciation less accumulated impairment losses. The cost of property, plant and equipment includes purchase price including import duties, non-refundable taxes and expenditure that is directly attributable to acquisition and installation, cost of dismantling and removing the item and restoring the site on which it is located.
Capital work in progress is carried at cost, less any recognised impairment loss. Depreciation of these assets commences when the assets are substantially ready for their intended use. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under "Other non-current Assets".
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the standalone statement of profit and loss during the reporting period in which they are incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in Standalone Statement of Profit and Loss.
Depreciation methods, estimated useful lives and residual value
Depreciation is provided on a pro-rata basis on the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as per technical evaluation. Estimated useful lives of the assets thereof are as under:
Assets class |
Life of Assets in Years |
Buildings |
30 - 60 |
Railway Sidings |
21 |
Plant and Equipment |
5 - 21 |
Electric Installations |
5 - 20 |
Rolling Stocks and Locomotives |
18 |
Furniture and Fixtures |
5 - 20 |
Office Equipments & Computers |
3 - 6 |
Vehicles |
5 - 10 |
Jetty and Wharf |
20 - 21 |
Estimated useful lives, residual values and depreciation methods are reviewed annually, taking into account commercial and technological obsolescence as well as normal wear and tear and adjusted prospectively, if appropriate.
2.10 Intangible Assets and Amortisation
Intangible assets with finite useful life are recognised when the Company controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Company and the cost of the asset can be reliably measured. Intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any.
Amortisation methods and periods
The Company amortises intangible assets with finite useful life using straight line method over the following periods:
Asset class |
Life of Assets in Years |
Computer Software and Licenses |
3 to 6 |
Mining rights (Land) |
Based on extractions of reserve |
The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Standalone Statement of Profit and Loss.
Intangible assets under development is carried at cost, less any recognised impairment loss. Amortisation of these assets commences when the assets are substantially ready for their intended use.
Mine Reclamation provision and related asset
An obligation for restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing extraction from mines. The Company recognizes unavoidable obligations, legal or assumed, to restore the mines upon exhaustion of reserves/end of lease period whichever is earlier. These obligations represent the net present value of cash flows expected to be incurred for the restoration process and initially recognized as assets under mining rights (land) which are amortised over its remaining useful life. The obligation is estimated on the basis of cash flows expected to be incurred as per applicable mining regulations, which mainly includes cost of plantation, fencing, biodiversity management, sustainable development, rainwater harvesting etc. The increase in liability due to unwinding of discount is recognised in the Standalone Statement of Profit and Loss under finance cost. Subsequent adjustments to the obligation for changes in the estimated cash flows/disbursement period/discount rate are made against fixed assets and depreciation/amortisation is modified prospectively.
2.11 Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
Inventories are stated at the lower of cost and net realisable value. Cost of raw materials, packing materials and fuels comprises cost of purchases. Cost of work-in progress and finished goods comprises direct materials, direct labour, other direct costs and related production overheads. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Cost is determined using the weighted average method. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
2.13 Cash and cash equivalents
For the purpose of presentation in the Standalone Statement of Cash Flows, cash and cash equivalents includes cash on hand, demand deposits with banks, short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Assetsi) Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss),
- those measured at amortised cost.
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in the Standalone Statement of Profit or Loss or other comprehensive income.
For investments in debt instruments, this will depend on the business model in which the investment is held.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through statement of profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through statement of profit or loss are expensed in standalone statement of profit and loss.
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Amortised cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognised in standalone statement of profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in standalone profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to statement of profit or loss and recognised in other income. Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through statement of profit and loss (FVTPL):
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through standalone statement of profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through statement of profit or loss is recognised in standalone statement of profit or loss in the period in which it arises. Interest income from these financial assets is included in other income.
iii) Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through standalone statement of profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date is recognized as an impairment gain or loss in standalone statement of profit and loss.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables. As a practical expedient, the Company uses a provision matrix to determine impairment loss of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. The ECL loss allowance (or reversal) during the year is recognized in the standalone statement of profit and loss.
iv) De-recognition of financial assets
A financial asset is derecognised only when:
- the Company has transferred the rights to receive cash flows from the financial asset or
- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
Financial Liabilitiesi) Classification
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 liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Financial liabilities are initially recognised at fair value, reduced by transaction costs (in case of financial liability not at fair value through statement of profit or loss), that are directly attributable to the issue of financial liability. After initial recognition, financial liabilities are measured at amortised cost using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash outflow (including all fees paid, transaction cost, and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. At the time of initial recognition, there is no financial liability irrevocably designated as measured at fair value through statement of profit and loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the standalone statement of profit and loss.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in standalone statement of profit and loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in standalone statement of profit and loss.
Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
2.15 Provisions and contingent liabilities Provisions
Provisions are recognised when the Company has a present legal or constructive obligation 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 amount of the obligation can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the management''s best estimate of the expenditure required to settle the present obligation at the Balance sheet date. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company 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 the amount cannot be made.
A contingent asset is disclosed, where an inflow of economic benefits is probable.
Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted earnings per share, adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
2.17 Employee Share based payments:
Equity- settled share-based payments to employees are measured at the fair value of the employee stock options at the grant date
The fair value determined at the grant date of the equity-settled share-based payments is amortised over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the Standalone Statement of Profit and Loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the Share Option Outstanding.
The Company measures the cost of equity-settled transactions with employees using Black-Scholes model to determine the fair value of the liability incurred on the grant date. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant.
This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.
The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 44
2.18 Investment in Subsidiaries :
The Company''s investment in its subsidiary is carried at cost net of accumulated impairment loss, if any. On disposal of the Investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the Standalone Statement of Profit and Loss.
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 March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from April 1st, 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. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 16 - Proceeds before intended use
The amendments mainly prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, an entity will recognise such sales proceeds and related cost in profit or loss. The Company does not expect the amendments to have any impact in its recognition of its property, plant and equipment in its financial statements.
Ind AS 37 - Onerous Contracts - Costs of Fulfilling a Contract
The amendments specify that 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. The amendment is essentially a clarification and the Company does not expect the amendment to have any significant impact in its financial statements.
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 amendment to have any significant impact in its financial statements.
Ind AS 106 - Annual Improvements to Ind AS (2021)
The amendments remove the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives were described in that illustration. The Company does not expect the amendment to have any significant impact in its financial statements.
All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
2(B) Critical estimates and judgements
The preparation of standalone financial statements requires the use of accounting estimates. Management also needs to exercise judgement in applying the Company''s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. The areas involving critical estimates or judgements are:
a. ) Mines Reclamation Provisions and related asset
In determining the fair value of the Mines Restoration Obligation, assumptions and estimates are made in relation to discount rates, the expected cost of mines restoration and the expected timing of those costs. (Refer note 2(A) 2.10 and 19).
b. ) Provisions & Contingent Liabilities
The Company exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. If a loss arising from these litigations and/or claims is probable and can be reasonably estimated, the management record the amount of the estimated loss. If a loss is reasonably possible, but not probable, the management discloses the nature of the significant contingency and, if quantifiable, the possible loss that could result from the resolution of the matter. As additional information becomes available, the management reassess any potential liability related to these litigations and claims and may need to revise the estimates. Such revisions or ultimate resolution of these matters could materially impact the results of operations, cash flows or financial statements of the Company. (Refer Note 23 and 25)
c. ) Current tax expense and deferred tax
The calculation of the Company''s tax charge necessarily involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these items may give rise to material adjustment to taxable profits/losses (Refer note 7 and 24).
Recognition of deferred tax assets
The recognition of deferred tax assets is based upon whether it is probable that sufficient taxable profits will be available in the future against which the reversal of temporary differences will be offset. To determine the future taxable profits, the management considers the nature of the deferred tax assets, recent operating results, future market growth, forecasted earnings and future taxable income in the jurisdictions in which the Company operate. (Refer Note 8).
d. ) Useful lives of property, plant and equipment and intangibles
The Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period or even earlier in case, circumstances change such that the recorded value of an asset may not be recoverable. The estimate of useful life requires significant management judgment and requires assumptions that can include: planned use of equipments, future volume trends, revenue and expense growth rates and annual operating plans, and in addition, external factors such as changes in macroeconomic trends which are considered in connection with the Company''s long-term strategic planning. (Refer note 2(A) 2.09 and 2(A) 2.10).
The Company''s obligation on account of gratuity and compensated absences is determined based on actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, these liabilities are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 30A(ii).
Mar 31, 2018
1(A) Summary of significant accounting policies
1.1 Basis of preparation
a) Compliance with Indian Accounting Standards (Ind AS)
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (âthe Actâ) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The financial statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP).
These financial statements are the first financial statements of the Company under Ind AS. Refer note 48 for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
b) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for following items:
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.
c) Current versus non-current classification
All the assets and liabilities have been classified as current or non-current as per the companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of the products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
1.2 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). Chief executive officer (CEO) and Whole time director (WTD) of the Company has been identified as CODM who assesses the financial performance and position of the company, and makes strategic decisions.
1.3 Foreign Currency Transactions
a) Functional and presentation currency
The financial statements are presented in Indian Rupees (INR), which is the Companyâs functional and presentation currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Non-monetary items that are measured at historical cost in foreign currency are translated using the exchange rate at the date of the transaction.
1.4 Revenue Recognition
Revenue is measured at the fair value of consideration received or receivable. Amounts disclosed as revenue is inclusive of excise duty and net of discounts, volume rebates, value added taxes, goods & services tax and amounts collected on behalf of third parties.
Sale of goods:
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:
- the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
- the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
- the amount of revenue can be measured reliably;
- I t is probable that the economic benefits associated with the transaction will flow to the Company; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Interest income :
I nterest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the amortised cost and at the effective interest rate applicable.
1.5 Borrowing costs
General and specific borrowing costs that are attributable to the acquisition, construction or production 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 or sale and borrowing costs are being incurred. Qualifying assets are assets that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.
1.6 Leasing - As a lessee
Leases of property, plant and equipment where the company as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to 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 lessorâs expected inflationary cost increases.
1.7 Employee benefits
a) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
b) Other long-term employee benefit obligations
Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the period are treated as other long term employee benefits for measurement purpose. The Companyâs liability is actuarially determined by an independent actuary using the Projected Unit Credit method at the end of each period. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in statement of profit and loss.
c) Post employee obligations
The Company operates the following post-employment schemes:
- defined benefit plans such as gratuity
- defined contribution plans such as provident fund and superannuation fund
i) Gratuity obligations
The liability recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is determined at the year end by independent actuary using the projected unit credit method.
The present value of the defined benefit obligation denominated in Indian Rupees is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity. Remeasurements are not reclassified to profit and loss in the subsequent periods.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in statement of profit and loss as past service cost.
ii) Defined contribution plans Provident fund
The Company pays contributions toward provident fund to the regulatory authorities as per local regulations where the Company has no further payment obligations. The contributions are recognised as employee benefit expense when they are due.
Superannuation Fund
Contribution towards superannuation fund for qualifying employees as per the companyâs policy is made to Life Insurance Corporation of India where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from contribution made on monthly basis.
d) Bonus plans
The Company recognise a liability and an expense for bonuses. The Company recognise a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
e) Termination Benefits:
A liability for a termination benefit is recognised at the earlier of
- when the entity can no longer withdraw the offer of the termination benefit and
- when the entity recognises costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of terminations benefits.
1.8 Current and deferred tax
Income tax expense or credit represents the sum of the current tax and deferred tax.
Current and deferred tax is recognised in the Statement of Profit and Loss except to the extent it relates to items recognised in âOther comprehensive incomeâ or directly in equity, in which case it is recognised in âOther comprehensive incomeâ or directly in equity, respectively.
Current tax
Current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Statement of profit and loss because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible. The Companyâs current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority. The Company periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary 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. It is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the reporting date.
A deferred tax asset shall be recognised for the carry-forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised.
Deferred income tax assets and liabilities are off-set against each other and the resultant net amount is presented in the Balance sheet, if and only when, (a) the Company currently has a legally enforceable right to set-off the current income tax assets and liabilities, and (b) when the Deferred income tax assets and liabilities relate to income tax levied by the same taxation authority.
Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Minimum Alternate Tax (âMATâ) credit entitlement is generally recognised as an asset if it is probable (more likely than not) that MAT credit can be used in future years to reduce the regular tax liability.
The carrying amount of deferred tax assets and MAT credit is reviewed at each reporting date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
1.9 Property, plant and equipment
All items of property, plant and equipment (âPPEâ) are stated at historical cost less accumulated depreciation less accumulated impairment losses. The cost of property, plant and equipment includes purchase price including import duties, non-refundable taxes and expenditure that is directly attributable to acquisition and installation, cost of dismantling and removing the item and restoring the site on which it is located.
Capital work in progress is carried at cost, less any recognised impairment loss. Depreciation of these assets commences when the assets are substantially ready for their intended use. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under âOther non-current Assetsâ.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the statement of profit and loss during the reporting period in which they are incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in statement of profit and loss.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at April 01, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives and residual value
Depreciation is provided on a pro-rata basis on the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as per technical evaluation. Estimated useful lives of the assets thereof are as under:
Estimated useful lives, residual values and depreciation methods are reviewed annually, taking into account commercial and technological obsolescence as well as normal wear and tear and adjusted prospectively, if appropriate.
1.10 Intangible Assets and Amortisation
I ntangible assets with finite useful life are recognised when the Company controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Company and the cost of the asset can be reliably measured. Intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any.
Amortisation methods and periods
The Company amortises intangible assets with finite useful life using straight line method over the following periods:
The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement of Profit and Loss.
Mine Reclamation provision and related asset
An obligation for restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing extraction from mines. The Company recognizes unavoidable obligations, legal or assumed, to restore the mines upon exhaustion of reserves/end of lease period whichever is earlier. These obligations represent the net present value of cash flows expected to be incurred for the restoration process and initially recognized as assets under mining rights (land) which are amortised over its remaining useful life. The obligation is estimated on the basis of cash flows expected to be incurred as per applicable mining regulations, which mainly includes cost of plantation, fencing, biodiversity management, sustainable development, rainwater harvesting etc. The increase in liability due to unwinding of discount is recognised in the Statement of Profit and Loss under finance cost. Subsequent adjustments to the obligation for changes in the estimated cash flows/disbursement period/discount rate are made against fixed assets and depreciation/amortisation is modified prospectively.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognised as at April 1, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets after making necessary adjustment for mine reclamation provision.
1.11 Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
1.12 Inventories
I nventories are stated at the lower of cost and net realisable value. Cost of raw materials, packing materials and fuels comprises cost of purchases. Cost of work-in progress and finished goods comprises direct materials, direct labour, other direct costs and related production overheads. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Cost is determined using the weighted average method. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
1.13 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, demand deposits with banks, short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
1.14 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.
Financial Assets
i) Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss),
- those measured at amortised cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in statement of profit or loss or other comprehensive income.
For investments in debt instruments, this will depend on the business model in which the investment is held.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through statement of profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through statement of profit or loss are expensed in statement of profit and loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognised in statement of profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to statement of profit or loss and recognised in other income. Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through statement of profit and loss (FVTPL): Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through statement of profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through statement of profit or loss is recognised in statement of profit or loss in the period in which it arises. Interest income from these financial assets is included in other income.
iii) Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through statement of profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date is recognized as an impairment gain or loss in statement of profit and loss.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables. As a practical expedient, the company uses a provision matrix to determine impairment loss of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. The ECL loss allowance (or reversal) during the year is recognized in the statement of profit and loss.
iv) De-recognition of financial assets
A financial asset is derecognised only when:
- the Company has transferred the rights to receive cash flows from the financial asset or
- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
v) Trade Receivable
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
Financial Liabilities
i) Classification
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 liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
ii) Measurement
Financial liabilities are initially recognised at fair value, reduced by transaction costs (in case of financial liability not at fair value through statement of profit and loss), that are directly attributable to the issue of financial liability. After initial recognition, financial liabilities are measured at amortised cost using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash outflow (including all fees paid, transaction cost, and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. At the time of initial recognition, there is no financial liability irrevocably designated as measured at fair value through statement of profit and loss.
iii) Derecognition:
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
iv) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in statement of profit and loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in statement of profit and loss.
v) Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the company prior to the end of financial year which are unpaid. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.
1.15 Provisions and contingent liabilities Provision
Provisions are recognised when the company has a present legal or constructive obligation 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 amount of the obligation can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the managementâs best estimate of the expenditure required to settle the present obligation at the Balance sheet date. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.
Contingent liabilities
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company 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 the amount cannot be made.
Contingent Assets
A contingent asset is disclosed, where an inflow of economic benefits is probable.
1.16 Contributed equity
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
1.17 Earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted earnings per share, adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
1.18 New standards/ amendments to existing standards issued but not yet adopted
Ind AS 115 Revenue from Contracts with Customers
The Ministry of Corporate Affairs (MCA) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 on March 28, 2018 notifying Ind AS 115 Revenue from Contracts with Customers.
These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB).
I nd AS 115 replaces Ind AS 18 which covers contracts for goods and services and Ind AS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer - so the notion of control replaces the existing notion of risks and rewards.
I t establishes a five-step model to account for revenue arising from contracts with customer. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The Company is in the process of analysing the impact of the new standard. This standard will come into force from accounting period commencing on or after April 01, 2018.
There are no other standards, changes in standards and interpretations that are not in force up to reporting period that the Company expects to have a material impact arising from its application in its financial statements.
1.19 Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
Mar 31, 2017
NOTES TO THE FINANCIAL STATEMENTS
1 Background
Shree Digvijay Cement Company Limited (the ''Company'') is a public limited Company domiciled in India and is listed on the Bombay Stock Exchange (BSE). It is engaged in Manufacturing and selling of cement. The Company has one manufacturing facility at Sikka (via Jamnagar) with installed capacity of 10.75 lacs MT per annum. The Company caters mainly to the domestic market.
2 Summary of significant accounting policies
2.1 Basis of preparation
These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to Section 133 of Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rule, 2014, till the Standard of Accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. The Ministry of Corporate Affairs (MCA) has notified the Companies (Accounting Standards) Amendment Rules, 2016 vide its notification dated March 30, 2016. The said notification read with Rule 3(2) of the Companies (Accounting Standard) Rules, 2006 is applicable to accounting period commencing on or after the date of notification i.e. April 01, 2016. Consequently, these financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211 (3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 2013.
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cydeand other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
2.2 Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the period in which the results are known/materialize.
2.3 a) Tangible Assets and Depreciation
Tangible assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost comprises purchase price including import duties & non-refundable taxes and expenses directly attributable to bringing the asset to its working condition for the intended use. Subsequent expenditure related to an item of fixed asset are added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance.
Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realizable value and are shown separately in the financial statements. Any expected loss is recognized immediately in the Statement of Profit and Loss.
Gains or losses arising from disposal or retirement of tangible fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized net, within "Other income "or "Other Expenses", as the case maybe, in the Statement of Profit and Loss in the year of disposal or retirement.
Depreciation is provided on a pro-rata basis on the straight-line method over the estimated useful life as per technical evaluation. Estimated useful life of the assets/significant component thereof are as under:
Depreciation methods and useful lives are reviewed at each financial yearend and adjusted if appropriate. Amortization of leased assets are over the Lease period,
b) Asset Retirement Obligation
Effective April 01,2016, in accordance with Accounting Standard 10 (Revised), Property Plant and Equipment, the Company recognizes unavoidable obligations, legal or assumed, to restore the mines upon exhaustion of reserves/end of lease period whichever is earlier. These obligations represent the net present value of cash flows expected to be incurred for the restoration process and initially recognized as assets which are depreciated over its remaining useful life. The obligation is estimated on the basis of cash flows expected to be incurred as per applicable mining regulations, which mainly includes cost of plantation, fencing, biodiversity management, sustainable development, rainwater harvesting etc. The increase in liability due to unwinding of discount is recognized in the Statement of Profit and Loss under Finance cost. Subsequent adjustments to the obligation for changes in the estimated cash flows/disbursement period/discount rate, are made against fixed assets and depreciation is modified prospectively.
2.4 Intangible Assets and Amortization
Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight-line basis over their estimated useful lives as under:
Asset class Useful life in years
Computer Software and Licenses 3to6
The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly.
Gains or losses arising from the retirement or disposal of an intangible asset are deter inked as the difference between the net disposal proceeds and the carrying amount of the asset and recognized as income or expense in the Statement of Profit and Loss.
2.5 Impairment
Assessment is done at each Balance Sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset/cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is higher of an asset''s or cash generating unit''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased.
2.6 Inventories
Inventories are stated at lower of cost and net realizable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated cost necessary to make the sale.
2.7 Revenue Recognition
Sale of goods: Sales are recognized when the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract and are recognized net of trade discounts, rebates, sales taxes and excise duties.
Other income
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
2.8 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in Statement of Profit and Loss in the period in which they are incurred.
2.9 Foreign Currency Transactions Initial Recognition
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
All monetary assets and liabilities in foreign currency are restated at the end of the accounting period. Exchange differences on restatement of all monetary items are recognized in the Statement of Profit and Loss.
2.10 Current and deferred tax
Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is recognized for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. In situations, where the Company has unabsorbed depreciation or carry forward losses under tax laws, all deferred tax assets are recognized only to the extent that there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits, At each Balance sheet date, the Company re-assesses unrecognized deferred tax assets, if any.
Current tax assets and current tax liabilities are offset when there is a legal ly enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.
Minimum Alternate Tax credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
2.11 Provisions and contingent liabilities
Provisions: Provisions are recognized when there is a present obligation 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 there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company 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 the amount cannot be made.
2.12 Cash and cash equivalents
In the cash flow statement, cash and cash equivalents includes cash in hand, demand deposits with banks, other short term highly liquid investments with original maturities of three months or less.
2.13 Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Companyâs earnings per share is the net profit for the year. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. 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 is adjusted for the effects of all dilutive potential equity shares.
2.14 Employee benefits
i) Defined-contribution plans
The Company contributes on a defined contribution basis to Employees'' Provident Fund / Pension Fund and Superannuation Fund. The contributions towards Provident Fund / Pension Fund is made to regulatory authorities and contribution towards Superannuation Fund is made to Life Insurance Corporation of India. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.
ii) Defined-benefit plans
The Company has a Defined Benefit Plan namely Gratuity (the "Gratuity Planâ) for all its employees, which is funded. The Company provides for gratuity covering eligible employees in accordance with the Gratuity Scheme. The Gratuity Plan provides lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of the employment. The Company''s liability is actuarially determined (using the Projected Unit Credit Method) at the end of each year. Acturial losses/gains are recognized in the Statement of Profit and Loss in the year in which they arise. The fund is recognized by the Income tax authorities and administered through appropriate authorities / insurers.
Gratuity Fund contributions are made tea trust administered by the Company. The contributions made to the trust are recognized as plan assets. The defined benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as reduced by the fair value of plan assets.
iii) Other employee benefits
Compensated Absences: Accumulated compensated absences, which are expected to be availed or encased within 12 months from the end of the year end are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be pa id as a result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or encased beyond 12 months from the end of the year end are treated as other long term employee benefits. The Companyâs liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are recognized in the Statement of Profit and Loss in the year in which they arise.
Termination Benefits: Termination benefits in the nature of voluntary retirement benefits are recognized in the Statement of Profit and Loss as and when incurred.
2.15 Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals in respect of assets taken on operating leases are recognized in the Statement of Profit and Loss aspersers of the lease agreement.
b) Rights, preferences and restrictions attached to equity shares
The company has one class of equity shares having a par value of 0 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.
c) 265,212 equity shares (March 31,2016:265,212) are kept in abeyance out of the Rights Issue entitlement pending settlement of disputes.
f) There are no shares allotted either as fully paid up by way of bonus shares or under any contract without payment received in cash during 5 years immediately preceding March 31,2017.
Deferred tax assets and deferred tax liabilities have been offset as they relate to the same governing taxation laws. In the absence of virtual certainty supported by convincing evidence, deferred tax assets are recognized to the extent of deferred tax liabilities.
Dec 31, 2014
1.1 Basis of preparation
These Financial Statements have been prepared in accordance with
generally accepted accounting principles in India under the historical
cost convention on accrual basis. Pursuant to circular 15/2013 dated
September 13, 2013 read with circular 08/2014 dated April 4, 2014, till
the standard of accounting or any addendum thereto are prescribed by
Central Government in consultation and recommendation of the National
Financial Reporting Authority, the existing Accounting Standards
notified under the Companies Act, 1956 shall continue to apply.
Consequently, these Financial Statements have been prepared to comply
in all material aspects with the Accounting Standards notified under
Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as
amended] and other relevant provisions of the Companies Act,1956.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in Revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and the time between acquisition of
assets for processing and their realisation in cash and cash
equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current - non current classification of
assets and liabilities.
1.2 Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities on the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Differences between actual
results and estimates are recognised in the period in which the results
are known/materialise.
1.3 Tangible Assets and Depreciation
Tangible assets are stated at acquisition cost, net of accumulated
depreciation and accumulated impairment losses, if any. Cost comprises
purchase price and expenses directly attributable to bringing the asset
to its working condition for the intended use. Subsequent expenditure
related to an item of fixed asset are added to its book value only if
it increases the future benefits from the existing asset beyond its
previously assessed standard of performance.
Items of fixed assets that have been retired from active use and are
held for disposal are stated at the lower of their net book value and
net realisable value and are shown separately in the financial
statements. Any expected loss is recognised immediately in the
Statement of Profit and Loss. Gains or losses arising from disposal or
retirement of tangible fixed assets are measured as the difference
between the net disposal proceeds and the carrying amount of the asset
and are recognised net, within "Other Income" or "Other Expenses", as
the case maybe, in the Statement of Profit and Loss in the year of
disposal or retirement.
Depreciation is provided on a pro-rata basis using the straight-line
method over the estimated useful lives of the assets or at the rates
prescribed under Schedule XIV of the Companies Act, 1956, whichever is
higher. Estimated useful life of assets are mentioned below:
Assets class Useful life in years
Buildings 29 to 60
Railway Sidings 21
Plant and Equipment 8 to 22
Electric Installations 21
Rolling Stocks and Locomotives 19
Furniture and Fixtures 6 to 15
Office Equipments 14 to 22
Vehicles 5 to 12
Jetty and Wharf 21
All tangible assets costing less than Rs. 5,000 individually are fully
depreciated in the year of purchase. Depreciation methods and useful
lives are reviewed at each financial year end and adjusted if
appropriate.
1.4 Intangible Assets and Amortisation
Intangible assets are stated at acquisition cost, net of accumulated
amortisation and accumulated impairment losses, if any. Intangible
assets are amortised on a straight-line basis over their estimated
useful lives as mentioned below:
Asset class Useful life in years
Computer Software and Licenses 3 to 5
The amortisation period and the amortisation method are reviewed at
least at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortisation period is changed accordingly.
Gains or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the net
disposal proceeds and the carrying amount of the asset and recognised
as income or expense in the Statement of Profit and Loss.
1.5 Impairment
Assessment is done at each Balance Sheet date as to whether there is
any indication that an asset (tangible and intangible) may be impaired.
For the purpose of assessing impairment, the smallest identifiable
group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows from other assets or groups
of assets, is considered as a cash generating unit. If any such
indication exists, an estimate of the recoverable amount of the
asset/cash generating unit is made. Assets whose carrying value exceeds
their recoverable amount are written down to the recoverable amount.
Recoverable amount is higher of an asset''s or cash generating unit''s
net selling price and its value in use. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its
useful life. Assessment is also done at each Balance Sheet date as to
whether there is any indication that an impairment loss recognised for
an asset in prior accounting periods may no longer exist or may have
decreased.
1.6 Investments
Investments that are readily realisable and are intended to be held for
not more than one year from the date, on which such investments are
made, are classified as current investments. All other investments are
classified as long term investments. Current investments are carried at
cost or fair value, whichever is lower. Long-term investments are
carried at cost. However, provision for diminution is made to recognise
a decline, other than temporary, in the value of the long term
investments, such reduction being determined and made for each
investment individually.
1.7 Inventories
Finished goods and work-in progress valued at the lower of the cost and
the net realisable value. Costs include the cost of materials
consumed, labour and a systematic allocation of variable and fixed
production overheads. 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 the ordinary course of business less
estimated cost of completion and estimated cost necessary to make the
sales.
Raw material and packing material are valued at the lower of cost and
net realisable value. Stores and spare parts and fuel are carried at
cost. Necessary provision is made and charged to the Statement of
Profit and Loss in the case of identified obsolete and non - moving
items and where the cost exceeds net realisable value. In the case of
raw materials, packing materials, stores and spare parts and fuels,
cost is determined on the basis of the corresponding weighted average.
Costs include the purchase price, non-refundable taxes and delivery and
handling costs.
1.8 Revenue Recognition
Sale of goods: Sales are recognised when the significant risks and
rewards of ownership in the goods are transferred to the buyer as per
the terms of the contract and are recognised net of trade discounts,
rebates, sales taxes and excise duties.
Other income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividend income is recognised when the right to receive dividend is
established.
1.9 Borrowing costs
General and specific borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised in
Statement of Profit and Loss in the period in which they are incurred.
1.10 Derivative instruments
The Company has entered cross currency interest rate swap contracts in
year 2011, with a view to hedge the risks of foreign currency and
interest rate fluctuations on foreign currency borrowings. Based on
confirmation received in 2013 from the Authorised Dealer, the notional
amounts of instruments outstanding with respect to principal as at the
year-end, are restated at closing- date rates and unrealised
translation differences are included in the Statement of Profit & Loss
in accordance with Accounting Standard 11 ''The Effects of Changes in
Foreign Exchange Rates''. The interest component of the instrument is
accounted in accordance with the Announcement of the Institute of
Chartered Accountants of India dated March 29, 2008 on ''Accounting for
Derivatives''.
1.11 Foreign Currency Transactions
Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms
of historical cost denominated in a foreign currency are reported using
the exchange rate at the date of the transaction.
All monetary assets and liabilities in foreign currency are restated at
the end of the accounting period. Exchange differences on restatement
of all monetary items are recognised in the Statement of Profit and
Loss.
1.12 Current and deferred tax
Tax expense for the period, comprising current tax and deferred tax,
are included in the determination of the net profit or loss for the
period. Current tax is measured at the amount expected to be paid to
the tax authorities in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognised for all the timing differences, subject to
the consideration of prudence in respect of deferred tax assets.
Deferred tax assets are recognised and carried forward only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. Deferred tax assets are not recognised in case there
is unabsorbed depreciation and carried forward of losses under tax
laws, unless there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets and liabilities are measured using the tax rates and tax laws
that have been enacted or substantively enacted by the Balance Sheet
date. At each Balance Sheet date, the Company re-assesses unrecognised
deferred tax assets, if any.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognised amounts and there
is an intention to settle the asset and the liability on a net basis.
Deferred tax assets and deferred tax liabilities are offset when there
is a legally enforceable right to set off assets against liabilities
representing current tax and where the deferred tax assets and the
deferred tax liabilities relate to taxes on income levied by the same
governing taxation laws. Minimum Alternative Tax credit is recognised
as an asset only when and to the extent there is convincing evidence
that the company will pay normal income tax during the specified
period. Such asset is reviewed at each Balance Sheet date and the
carrying amount of the MAT credit asset is written down to the extent
there is no longer a convincing evidence to the effect that the Company
will pay normal income tax during the specified period.
1.13 Provisions and contingent liabilities
Provisions: Provisions are recognised when there is a present
obligation 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 there is a reliable estimate of the amount of
the obligation. Provisions are measured at the best estimate of the
expenditure required to settle the present obligation at the Balance
sheet date and are not discounted to its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there
is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future events not wholly within the control of the
company 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 the amount cannot be made.
1.14 Cash and cash equivalents
In the cash flow statement, cash and cash equivalents includes cash in
hand and demand deposits with banks.
1.15 Earnings per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Earnings
considered in ascertaining the Company''s earnings per share is the net
profit for the year. The weighted average number of equity shares
outstanding during the period and for all periods presented is adjusted
for events, such as bonus shares, other than the conversion of
potential equity shares, that have changed the number of equity shares
outstanding, without a corresponding change in resources. 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 is
adjusted for the effects of all dilutive potential equity shares.
1.16 Employee benefits
i) Defined-contribution plans
The Company contributes on a defined contribution basis to Employees''
Provident Fund / Pension Fund and Superannuation Fund. The
contributions towards Provident Fund / Pension Fund is made to
regulatory authoritries and contribution towards Superannuation Fund is
made to Life Insurance Corporation of India. Such benefits are
classified as Defined Contribution Schemes as the Company does not
carry any further obligations, apart from the contributions made on a
monthly basis.
ii) Defined-benefit plans
The company has a Defined Benefit Plan namely Gratuity (the "Gratuity
Plan") for all its employees, which is funded. The Company provides for
gratuity covering eligible employees in accordance with the Gratuity
Scheme. The Gratuity Plan provides lump sum payment to vested employees
at retirement, death, incapacitation or termination of employment, of
an amount based on the respective employee''s salary and the tenure of
the employment. The Company''s liability is actuarially determined
(using the Projected Unit Credit Method) at the end of each year.
Acturial losses/ gains are recognised in the Statment of Profit and
Loss in the year in which they arise. The fund is recognised by the
Income tax authorities and administered through appropriate authorities
/ insurers.
iii) Other employee benefits
Compensated Absences: Accumulated compensated absences, which are
expected to be availed or encashed within 12 months from the end of the
year end are treated as short term employee benefits. The obligation
towards the same is measured at the expected cost of accumulating
compensated absences as the additional amount expected to be paid as a
result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or
encashed beyond 12 months from the end of the year end are treated as
other long term employee benefits. The Company''s liability is
actuarially determined (using the Projected Unit Credit method) at the
end of each year. Actuarial losses/ gains are recognised in the
Statement of Profit and Loss in the year in which they arise.
Termination Benefits: Termination benefits in the nature of voluntary
retirement benefits are recognised in the Statement of Profit and Loss
as and when incurred.
1.17 Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals in respect of assets taken on operating
leases are recognised in the Statement of Profit and Loss as per terms
of the lease agreement.
Dec 31, 2013
2.1 Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on an accrual basis. These financial statements have
been prepared to comply in all material aspects with the accounting
standards notified under the Companies Act, 1956 of India read with the
General Circular 15/ 2013 dated September 13, 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013
of India. All assets and liabilities have been classified as current
or non-current as per the Company''s normal operating cycle and other
criteria set out in Revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and the time between acquisition of
assets for processing and their realisation in cash and cash
equivalents, the Company has ascertained its operating cycle as 12 months
for the purpose of current - noncurrent classification of assets and liabilities.
2.2 Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities on the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Differences between actual
results and estimates are recognised in the period in which the results
are known/materialise.
2.3 Tangible Assets and Depreciation
Tangible assets are stated at acquisition cost, net of accumulated
depreciation and accumulated impairment losses, if any. Cost comprises
purchase price and expenses directly attributable to bringing the asset
to its working condition for the intended use. Subsequent expenditure
related to an item of fixed asset are added to its book value only if
it increases the future benefits from the existing asset beyond its
previously assessed standard of performance.
Items of fixed assets that have been retired from active use and are
held for disposal are stated at the lower of their net book value and
net realisable value and are shown separately in the financial
statements. Any expected loss is recognised immediately in the
Statement of Profit and Loss. Gains or losses arising from disposal or
retirement of tangible fixed assets are measured as the difference
between the net disposal proceeds and the carrying amount of the asset
and are recognised net, within "Other Income" or "Other
Expenses", as the case maybe, in the Statement of Profit and Loss in
the year of disposal or retirement.
All tangible assets costing less than Rs. 5,000 individually are fully
depreciated in the year of purchase.
Depreciation methods and useful lives are reviewed at each financial
year end and adjusted if appropriate.
2.4 Intangible Assets and Amortisation
Intangible assets are stated at acquisition cost, net of accumulated
amortisation and accumulated impairment losses, if any. Intangible
assets are amortised on a straight-line basis over their estimated
useful lives as mentioned below:
Assets class Useful life in years
Computer Software and Licenses 3 to 5
The amortisation period and the amortisation method are reviewed at
least at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortisation period is changed accordingly.
Gains or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the net
disposal proceeds and the carrying amount of the asset and recognised
as income or expense in the Statement of Profit and Loss.
2.5 Impairment
Assessment is done at each Balance Sheet date as to whether there is
any indication that an asset (tangible and intangible) may be impaired.
For the purpose of assessing impairment, the smallest identifiable
group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows from other assets or groups
of assets, is considered as a cash generating unit. If any such
indication exists, an estimate of the recoverable amount of the
asset/cash generating unit is made. Assets whose carrying value exceeds
their recoverable amount are written down to the recoverable amount.
Recoverable amount is higher of an asset''s or cash generating unit''s
net selling price and its value in use. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its
useful life. Assessment is also done at each Balance Sheet date as to
whether there is any indication that an impairment loss recognised for
an asset in prior accounting periods may no longer exist or may have
decreased.
2.6 Investments
Investments that are readily realisable and are intended to be held for
not more than one year from the date, on which such investments are
made, are classified as current investments. All other investments are
classified as long term investments. Current investments are carried at
cost or fair value, whichever is lower. Long-term investments are
carried at cost. However, provision for diminution is made to recognise
a decline, other than temporary, in the value of the long term
investments, such reduction being determined and made for each
investment individually.
2.7 Inventory
Finished goods and work-in progress valued at the lower of the cost and
the net realisable value. Costs include the cost of materials
consumed, labour and a systematic allocation of variable and fixed
production overheads. 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 cost of completion and estimated cost necessary to make the
sales.
Raw material and packing material are valued at the lower of cost and
net realisable value. Stores and spare parts and fuel are carried at
cost. Necessary provision is made and charged to the Statement of
Profit and Loss in the case of identified obsolete and non - moving
items. In the case of raw materials, packing materials, stores and
spare parts and fuels, cost is determined on the basis of the
corresponding weighted average. Costs include the purchase price,
non-refundable taxes and delivery and handling costs.
2.8 Revenue Recognition
Sale of goods: Sales are recognised when the significant risks and
rewards of ownership in the goods are transferred to the buyer as per
the terms of the contract and are recognised net of trade discounts,
rebates, sales taxes and excise duties.
Other income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividend income is recognised when the right to receive dividend is
established.
2.9 Borrowing costs
General and specific borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised in
Statement of Profit and Loss in the period in which they are incurred.
2.10 Derivative instruments
The Company has entered cross currency interest rate swap contracts
with a view to hedge the risks of foreign currency and interest rate
fluctuations on foreign currency borrowings. The notional amounts of
instruments outstanding with respect to principal as at the year-end,
are restated at closing-date rates and unrealised translation
differences are included in the Statement of Profit & Loss in
accordance with Accounting Standard 11 ''The Effects of Changes in
Foreign Exchange Rates''. The interest component of the instrument is
accounted in accordance with the Announcement of the Institute of
Chartered Accountants of India dated March 29, 2008 on ''Accounting
for Derivatives''.
2.11 Foreign Currency Transactions Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms
of historical cost denominated in a foreign currency are reported using
the exchange rate at the date of the transaction. All non- monetary
items which are carried at fair value or other similar valuation
denominated in a foreign currency are reported using the exchange rates
that existed when the values were determined.
All monetary assets and liabilities in foreign currency are restated at
the end of the accounting period. Exchange differences on restatement
of all monetary items are recognised in the Statement of Profit and
Loss.
2.12 Current and deferred tax
Tax expense for the period, comprising current tax and deferred tax,
are included in the determination of the net profit or loss for the
period. Current tax is measured at the amount expected to be paid to
the tax authorities in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognised for all the timing differences, subject to
the consideration of prudence in respect of deferred tax assets.
Deferred tax assets are recognised and carried forward only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. Deferred tax assets are not recognised in case there
is unabsorbed depreciation and carried forward of losses under tax
laws, unless there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets and liabilities are measured using the tax rates and tax laws
that have been enacted or substantively enacted by the Balance Sheet
date. At each Balance Sheet date, the Company re-assesses unrecognised
deferred tax assets, if any.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognised amounts and there
is an intention to settle the asset and the liability on a net basis.
Deferred tax assets and deferred tax liabilities are offset when there
is a legally enforceable right to set off assets against liabilities
representing current tax and where the deferred tax assets and the
deferred tax liabilities relate to taxes on income levied by the same
governing taxation laws.
Minimum Alternative Tax credit is recognised as an asset only when and
to the extent there is convincing evidence that the company will pay
normal income tax during the specified period. Such asset is reviewed
at each Balance Sheet date and the carrying amount of the MAT credit
asset is written down to the extent there is no longer a convincing
evidence to the effect that the Company will pay normal income tax
during the specified period.
2.13 Provisions and contingent liabilities
Provisions: Provisions are recognised when there is a present
obligation 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 there is a reliable estimate of the amount of
the obligation. Provisions are
measured at the best estimate of the expenditure required to settle the
present obligation at the Balance sheet date and are not discounted to
its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there
is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future events not wholly within the control of the
company 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 the amount cannot be made.
2.14 Cash and cash equivalents
In the cash flow statement, cash and cash equivalents includes cash in
hand and demand deposits with banks.
2.15 Earnings per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Earnings
considered in ascertaining the Company''s earnings per share is the net
profit for the year. The weighted average number of equity shares
outstanding during the period and for all periods presented is adjusted
for events, such as bonus shares, other than the conversion of
potential equity shares, that have changed the number of equity shares
outstanding, without a corresponding change in resources. 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 is
adjusted for the effects of all dilutive potential equity shares.
2.16 Employee benefits
i) Defined-contribution plans
The Company contributes on a defined contribution basis to Employees''
Provident Fund / Pension Fund and Superannuation Fund. The
contributions towards Provident Fund / Pension Fund is made to
regulatory authoritries and contribution towards Superannuation Fund is
made to a trust administered by the Company. Such benefits are
classified as Defined Contribution Schemes as the Company does not
carry any further obligations, apart from the contributions made on a
monthly basis.
ii) Defined-benefit plans
The company has a Defined Benefit Plan namely Gratuity (the "Gratuity
Plan") for all its employees, which is funded. The Company provides
for gratuity covering eligible employees in accordance with the
Gratuity Scheme. The Gratuity Plan provides lump sum payment to vested
employees at retirement, death, incapacitation or termination of
employment, of an amount based on the respective employee''s salary and
the tenure of the employment. The Company''s liability is actuariually
determined (using the Projected Unit Credit Method) at the end of each
year. Acturial losses/ gains are recognised in the Statement of Profit
and Loss in the year in which they arise. The fund is recognised by the
Income tax authorities and administered through appropriate authorities
/ insurers.
iii) Other employee benefits
Compensated Absences: Accumulated compensated absences, which are
expected to be availed or encased within 12 months from the end of the
year end are treated as short term employee benefits. The obligation
towards the same is measured at the expected cost of accumulating
compensated absences as the additional amount expected to be paid as a
result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or
encashed beyond 12 months from the end of the year end are treated as
other long term employee benefits. The Company''s liability is
actuarially determined (using the Projected Unit Credit method) at the
end of each year. Actuarial losses/ gains are recognised in the
Statement of Profit and Loss in the year in which they arise.
Termination Benefits: Termination benefits in the nature of voluntary
retirement benefits are recognised in the Statement of Profit and Loss
as and when incurred.
2.17 Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals in respect of assets taken on operating
leases are recognised in the Statement of Profit and Loss as per terms
of the lease agreement.
Dec 31, 2012
1.1 Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India ("Indian GAAP") under
the historical cost convention on an accrual basis. These financial
statements have been prepared to comply in all material aspects with
the accounting standards notified under Section 211 (3C) [Companies
(Accounting Standards) Rules, 2006, as amended].
Assets and liabilities have been classified as Current or Non-Current
on the basis of the Company''s normal operating cycle and other criteria
set out in Schedule VI (revised) to the Companies Act, 1956.
The accounting policies adopted in the preparation of these financial
statements are consistent with those of the previous years.
1.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and differences between actual
results and estimates are recognised in the periods in which the
results are known/materialise.
1.3 Tangible Assets and Depreciation
Tangible assets are stated at acquisition cost, net of accumulated
depreciation and accumulated impairment losses, if any. Cost comprises
purchase price and expenses directly attributable to bringing the asset
to its working condition for the intended use. Subsequent expenditure
related to an item of fixed asset are added to its book value only if
it increases the future benefits from the existing asset beyond its
previously assessed standard of performance.
Items of fixed assets that have been retired from active use and are
held for disposal are stated at the lower of their net book value and
net realisable value and are shown separately in the financial
statements.
Gains or losses arising from disposal or retirement of tangible fixed
assets are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised net, within
"Other Income" or "Other Expenses", as the case maybe, in the Statement
of Profit and Loss in the year of disposal or retirement.
Depreciation is provided on a pro-rata basis using the straight-line
method over the estimated useful lives of the assets or at the rates
prescribed under Schedule XIV ofthe Companies Act, 1956, whichever is
higher.
All tangible assets costing less than Rs. 5,000 individually are fully
depreciated in the year of purchase.
Depreciation methods and useful lives are reviewed at each financial
year end and adjusted if appropriate.
1.4 Intangible Assets and Amortisation
Intangible assets are stated at acquisition cost, net of accumulated
amortisation and accumulated impairment losses, if any.
Cost of an intangible asset includes purchase price, non-refundable
taxes and duties and any other directly attributable expenditure on
making the asset ready for its intended use and net of any trade
discounts and rebates. Subsequent expenditure on an intangible asset is
charged to the Statement of Profit and Loss as an expense unless it is
probable that such expenditure will enable the intangible asset
increase the future benefits from the existing asset beyond its
previously assessed standard of performance and such expenditure can be
measured and attributed to the intangible asset reliably in which case,
such expenditure is capitalised.
Intangible assets are amortised on a straight-line basis over their
estimated useful lives. A rebuttable presumption that the useful life
of an intangible asset will not exceed ten years from the date when the
asset is available for use is considered by the management. The
amortisation period and the amortisation method are reviewed at least
at each reporting date. If the expected useful life of the asset is
significantly different from previous estimates, the amortisation
period is changed accordingly.
Gains or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the net
disposal proceeds and the carrying amount of the asset and recognised
as income or expense in the Statement of Profit and Loss in the year of
disposal.
All intangible assets costing less than Rs. 5,000 individually are
fully amortised in the year of acquisition.
1.5 Impairment
Assessment is done at each Balance Sheet date as to whether there is
any indication that an asset (tangible and intangible) may be impaired.
For the purpose of assessing impairment, the smallest identifiable
group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows from other assets or groups
of assets, is considered as a cash generating unit. If any such
indication exists, an estimate of the recoverable amount of the
asset/cash generating unit is made. Assets whose carrying value exceeds
their recoverable amount are written down to the recoverable amount.
Recoverable amount is higher of an asset''s or cash generating unit''s
net selling price and its value in use. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its
useful life. Assessment is also done at each Balance Sheet date as to
whether there is any indication that an impairment loss recognised for
an asset in prior accounting periods may no longer exist or may have
decreased.
1.6 Investments
Investments that are readily realisable and are intended to be held for
not more than one year from the date, on which such investments are
made, are classified as current investments. All other investments are
classified as Non Current investments. Current investments are carried
at cost or fair value, whichever is lower. Non current investments are
carried at cost. However, provision for diminution is made to recognise
a decline, other than temporary, in the value of the long term
investments, such reduction being determined and made for each
investment individually.
1.7 Inventory
Finished goods and Work in progress are valued at the lower of the cost
and the net realisable value. Costs include the cost of materials
consumed, labour and a systematic allocation of variable and fixed
production overheads. Net realisable value is estimated at the expected
selling price less estimated completion and selling costs.
Raw material and packing material are valued at the lower of cost and
net realisable value. Stores and spare parts and fuel are carried at
cost. Necessary provision is made and charged to the Statement of
Profit and Loss in the case of identified obsolete and non - moving
items. In the case of raw materials, packing materials, stores and
spare parts and fuels, cost determined on the basis of the
corresponding weighted average. Costs include the purchase price,
non-refundable taxes and delivery and handling costs.
1.8 Revenue Recognition
Sales of goods are net off trade discounts and include excise duty but
exclude sales tax, state value added tax.
Revenue is recognised when practically all risks and rights connected
with ownership have been transferred to the buyer. This usually occurs
upon dispatch, after the price has been determined and collection of
the sales proceeds is reasonably certain.
Other income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding on the financial instrument and the rate
applicable.
Dividend income is recognised when the right to receive the dividend is
established.
1.9 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
1.10 Derivative instruments
The Company has entered cross currency interest rate swap contracts
with a view to hedge the risks of foreign currency and interest rate
fluctuations on foreign currency borrowings. The notional amounts of
instruments outstanding as at the year-end, are restated at
closing-date rates and unrealised translation differences are included
in the Statement of Profit & Loss. The net interest accruing is
recorded in the Statement of Profit and Loss over the period of the
instrument. Changes in fair values of other derivative instruments that
do not qualify for hedge accounting are recognised in the Statement of
Profit and Loss as they arise.
1.11 Foreign Currency Transactions
Transactions in foreign currencies are initially translated to the
reporting currency based on the exchange rate prevailing on the date of
the transaction. Exchange differences arising on settlement thereof
during the year are recognised as income or expense in the Profit and
Loss Account. Cash and bank balances, receivables and liabilities
(monetary items) in foreign currencies, outstanding as at the year-end,
are valued at closing-date rates, and unrealised translation
differences are included in the statement of Profit & Loss.
1.12 Current and deferred tax
Tax expense for the period, comprising current tax and deferred tax,
are included in the determination of the net profit or loss for the
period.
Current tax is measured at the amount of tax payable on the taxable
income for the year determined in accordance with the provisions of the
Income Tax Act, 1961.
Deferred tax is recognised for all the timing differences, being the
differences between the taxable income and the accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the Balance Sheet date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised and carried forward only to
the extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. At each Balance Sheet date, the Company reassesses
unrecognised deferred tax assets, if any.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognised amounts and there
is an intention to settle the asset and the liability on a net basis.
Deferred tax assets and deferred tax liabilities are offset when there
is a legally enforceable right to set off assets against liabilities
representing current tax and where the deferred tax assets and the
deferred tax liabilities relate to taxes on income levied by the same
governing taxation laws.
Current and deferred taxes relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
Loss.
1.13 Provisions and contingent liabilities
Provisions: Provisions are recognised when there is a present
obligation 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 there is a reliable estimate of the amount of
the obligation. Provisions are measured at the best estimate of the
expenditure required to settle the present obligation at the Balance
sheet date and are not discounted to its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there
is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the
Company 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 the amount cannot be made, is termed
as a contingent liability.
1.14 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
1.15 Cash flow Statement
Cash flows are reported using the Indirect method, as explained in the
Accounting Standard (AS) 3 on Cash Flow Statements whereby, profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
1.16 Earnings per share
Basic earnings per share is 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 period.
Earnings considered in ascertaining the Company''s earnings per share is
the net profit for the year. The weighted average number of equity
shares outstanding during the period and for all periods presented is
adjusted for events, such as bonus shares (other than the conversion of
potential equity shares) that have changed the number of equity shares
outstanding, without a corresponding change in resources.
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 is
adjusted for the effects of all dilutive potential equity shares.
Potential equity shares are deemed dilutive only if their conversion
into equity shares would decrease the net per share from continuing
ordinary operations. Potential equity shares are deemed to be converted
as at the beginning of the period, unless they have been issued at a
later date. The dilutive potential equity shares are adjusted for the
proceeds receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares).
1.17 Employee benefits
i) Short term
Short term employee benefits include salaries and performance
incentives. A liability is recognised for the amount expected to be
paid under short-term cash bonus or profit sharing plans if the Company
has a present legal or informal obligation to pay this amount as a
result of past service provided by the employee, and the obligation can
be estimated reliably. These costs are recognised as an expense in the
Statement of Profit and Loss at the undiscounted amount expected to be
paid over the period of services rendered by the employees to the
Company.
ii) Long term
The Company offers its employees long term benefits by way of
defined-contribution and defined- benefit plans, of which some have
assets in special funds or securities. The plans are financed by the
Company and in the case of some defined contribution plans by the
Company along with its employees.
Defined-contribution plans
These are plans in which the Company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the employees''
provident fund, family pension fund and superannuation fund. The
Company''s payments to the defined-contribution plans are reported as
expenses during the period in which the employees perform the services
that the payment covers.
Defined-benefit plans
Expenses for defined-benefit gratuity plan are calculated as at the
balance sheet date by an independent actuary in a manner that
distributes expenses over the employee''s working life. These
commitments are valued at the present value of the expected future
payments, with consideration for calculated future salary increases,
using a discount rate corresponding to the interest rate estimated by
the actuary having regard to the interest rate on government bonds with
a remaining term that is almost equivalent to the average balance
working period of employees. The fair values of the plan assets are
deducted in determining the net liability. When the fair value of plan
assets exceeds the commitments computed as aforesaid, the recognised
asset is limited to the net total of any cumulative past service costs
and the present value of any economic benefits available in the form of
reductions in future contributions to the plan.
Actuarial losses or gains are recognised in the Statement of Profit and
Loss in the year in which they arise.
iii) Other employee benefits
The Company has a scheme for compensated absences for employees, the
liability for which is determined on the basis of an acturial
valuation, carried out at the Balance Sheet date.
Where there are restrictions on availment of such accrued benefit or
where the availment is otherwise not expected to wholly occur in the
next twelve months, the liability on account of the benefit is
actuarially determined using the projected unit credit method.
1.18 Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
1.19 Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
Dec 31, 2011
(a) Basis of Accounting
The financial statements are prepared as per historical cost convention
and in accordance with the accounting principles generally accepted in
India, the provisions of the Companies Act, 1956, and the applicable
Accounting Standards, referred to in section 211(3C) of Companies Act,
1956. All income and expenditure having material bearing on the
financial statements are recognised on accrual basis.
(b) Use of Estimates
The presentation of the financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported amount of
assets and liabilities, revenues and expenses and disclosure of
contingent liabilities. Such estimates and assumptions are based on
management's evaluation of relevant facts and circumstances as on the
date of financial statements. The actual outcome may diverge from these
estimates.
(c) Fixed Assets and Depreciation / Amortisation
(i) Tangible fixed assets and depreciation
Tangible fixed assets acquired by the Company are reported at
acquisition cost, with deductions for accumulated depreciation and
impairment losses, if any. The acquisition cost includes the purchase
price (excluding refundable taxes) and expenses directly attributable
to the asset to bring it to the site and in the working condition for
its intended use. Examples of directly attributable expenses included
in the acquisition cost are delivery and handling costs, installation,
legal services and consultancy services. Where the construction or
development of any such asset requiring a substantial period of time to
set up for its intended use, is funded by borrowings, the corresponding
borrowing costs are capitalised upto the date when the asset is ready
for its intended use.
Depreciation is provided on a straight line basis at rates and in the
manner specified in Schedule XIV to the Companies Act, 1956 unless the
use of a higher rate or an accelerated charge is justified through
technical estimates. Assets costing less than Rs. 5,000 are fully
depreciated in the year of purchase. Freehold land is not depreciated
since it is deemed to have an indefinite economic life.
(ii) Intangible assets and amortisation
Intangible assets other than goodwill are valued at cost less
amortisation. These generally comprise of costs incurred to acquire
computer software licenses and implement the software for internal use
(including software recording, installation and testing). Intangible
assets are reported at acquisition value with deductions for
accumulated amortisation and any impairment losses. Amortisation takes
place on a straight line basis over the asset's anticipated useful
life. The useful life is determined based on the period of the
underlying contract and the period of time over which the intangible
asset is expected to be used and generally does not exceed 10 years.
(d) Impairment of assets
The carrying values of assets of the Company's cash-generating unit
is reviewed for impairment annually or more often if there is an
indication of decline in value. If any indication of such impairment
exists, the recoverable amounts of those assets are estimated and
impairment loss is recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash flows to their
present value based on appropriate discount factor.
(e) Investments
Long term investments are stated at cost, less other than temporary
diminution, in value, if any. Current investments are stated at the
lower of cost and fair value.
(f) Inventory
Finished goods and process stock are valued at the lower of the cost
and the net realisable value. Cost of finished goods and process stock
are determined using the absorption costing principles. Costs include
the cost of materials consumed, labour and a systematic allocation of
variable and fixed production overheads. Excise duties at the
applicable rates are also included in the cost of finished goods. Net
realisable value is estimated at the expected selling price less
estimated completion and selling costs.
Raw material and packing material are valued at the lower of cost and
net realisable value. Stores and spare parts and fuel are carried at
cost. Necessary provision is made and charged to the Profit and Loss
Account in the case of identified obsolete and non - moving items. In
the case of raw materials, packing materials, stores and spare parts
and fuels, cost determined on the basis of the corresponding weighted
average. Costs include the purchase price, non-refundable taxes and
delivery and handling costs.
(g) Revenue Recognition
Sales of goods are net off trade discounts and exclude sales tax, state
value added tax.
Revenue is recognised when practically all risks and rights connected
with ownership have been transferred to the buyer. This usually occurs
upon dispatch, after the price has been determined and collection of
the receivable is reasonably certain.
(h) Financial Income and Borrowing Cost
Financial income and borrowing cost include interest income on bank
deposits and interest expense on loans.
Borrowing costs are recognised in the period to which they relate,
regardless of how the funds have been utilised, except where it relates
to financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Interest is capitalised upto the date when the asset is ready for its
intended use. The amount of interest capitalised (gross of tax) for the
period is determined by applying the interest rate applicable to
appropriate borrowings outstanding during the period to the average
amount of accumulated expenditure for the assets during the period.
Interest on bank deposits is recognised evenly over the period of the
instrument. Income from dividend is recognised when the right to
receive dividend is established.
Borrowing costs are adjusted for the net interest accruing on the cross
currency interest rate swap instruments used to hedge foreign currency
floating rate loans.
(i) Derivative instruments
The Company has entetered cross currency interest rate swap contracts
with a view to hedge the risks of foreign currency and interest rate
fluctuations on foreign currency borrowings. The notional amounts of
instruments outstanding as at the year-end, are restated at
closing-date rates and unrealised translation differences are included
in the Profit and Loss Account. The net interest accruing is recorded
in the Profit and Loss Account over the period of the instrument.
Changes in fair values of other derivative instruments that do not
qualify for hedge accounting are recognised in the Profit and Loss
Account as they arise.
(j) Foreign Currency Transactions
Transactions in foreign currencies are initially translated to the
reporting currency based on the exchange rate prevailing on the date of
the transaction. Exchange differences arising on settlement thereof
during the year are recognised as income or expense in the Profit and
Loss Account. Cash and bank balances, receivables and liabilities
(monetary items) in foreign currencies, outstanding as at the year-end,
are valued at closing-date rates, and unrealised translation
differences are included in the Profit and Loss Account.
The premium (or discount) on forward exchange contracts is amortised
and recognised in the Profit and Loss Account over the period of the
contract. Forward exchange contracts outstanding as at the balance
sheet date are stated at their fair values and gains or losses are
recognised in the Profit and Loss Account as exchange differences.
(k) Taxes on Income
The Company's income taxes include taxes on the Company's taxable
profits, minimum alternate tax (MAT), adjustment attributable to
earlier periods and changes in deferred taxes. Valuation of all tax
liabilities/receivables is conducted at nominal amounts and in
accordance with enacted tax regulations and tax rates or in the case of
deferred taxes, those that have been substantially enacted.
Deferred tax is calculated to correspond to the tax effect arising when
final tax is determined. Deferred tax corresponds to the net effect of
tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they were recognised in the financial statements.
Deferred tax assets are recognised with regard to all deductible timing
differences to the extent that it is probable that taxable profit will
be available against which deductible timing differences can be
utilised. When the Company carries forward unused tax losses and
unabsorbed depreciation, deferred tax assets are recognised only to the
extent there is virtual certainty backed by convincing evidence that
sufficient future taxable income will be available against which
deferred tax assets can be realised.
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced by the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or a part of
the aggregate deferred tax asset to be utilised.
(l) Provisions and Contingencies
A provision is recognised when the Company has a present legal
obligation as a result of past events and it is probable that an
outflow of resources will be required to settle the obligation, in
respect of which a reliable estimate can be made. Provisions (excluding
retirement benefits) are not discounted to their present value, and are
determined based on best estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates. Contingent
liabilities are not recognised but are disclosed in the notes to the
financial statement. A contingent asset is neither recognised nor
disclosed.
(m) Cash Flow Statements
Cash-flow statements are prepared in accordance with 'Indirect
Method" as explained in the Accounting Standard (AS-3) on Cash Flow
Statements.
(n) Cash and Cash Equivalents
Cash and bank balances and current investments that have insignificant
risk of change in value and which have original contractual maturity of
up to three months, are included in the Company's cash and cash
equivalents in the Cash Flow Statement.
(o) Earnings per Share
Basic Earnings per Share (before dilution) is calculated by dividing
the net profit after tax for the year attributable to equity
shareholders of the Company by the weighted average number of equity
shares in issue during the period.
Diluted earnings per share is calculated by adjusting the net profit
after tax for the year attributable to equity shareholders and the
weight age average number of equity shares outstanding during the year
for the effects of all dilutive potential equity shares.
(p) Employee Benefits
(i) Short Term Benefits
Short term employee benefits are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the Company.
(ii) Long Term Benefits
The Company has both defined-contribution and defined-benefit plans, of
which some have assets in special funds or similar securities. The
plans are financed by the Company and in the case of some defined
contribution plans by the Company along with its employees.
Defined-contribution plans
These are plans in which the Company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the
employees' provident fund, family pension fund and superannuation
fund. The Company's payments to the defined-contribution plans are
reported as expenses during the period in which the employees perform
the services that the payment covers.
Defined-benefit plans
Expenses for defined-benefit gratuity plan is calculated as at the
balance sheet date by independent actuaries in a manner that
distributes expenses over the employee's working life. These
commitments are valued at the present value of expected future
payments, with consideration for calculated future salary increases,
utilising a discount rate corresponding to the interest rate estimated
by the actuary having regard to the interest rate on government bonds
with a remaining term that is almost equivalent to the average balance
working period of employees.
(iii) Other Employee Benefits
Compensated absences which accrue to employees and which can be carried
to future periods but are expected to be encashed or availed in twelve
months immediately following the year end are reported as expenses
during the year in which employee perform the services that the benefit
covers and liabilities are recorded at the undiscounted amount of the
benefits after deducting amounts already paid. Where there are
restrictions on availment of encashment of such accrued benefits or
where the availment or encashment is otherwise not expected to wholly
occur in next twelve months, the liability on account of the benefit is
actuarially determined using the projected unit credit method.
Dec 31, 2010
(a) Basis of Accounting
The financial statements are prepared as per historical cost convention
and in accordance with the generally accepted accounting principles in
India, the provisions of the Companies Act, 1956, and the applicable
Accounting Standards, referred in section 211(3C) of Companies Act,
1956. All income and expenditure having material bearing on the
financial statements are recognised on accrual basis.
(b) Use of Estimates
The presentation of the financial statements in conformity with the
generally accepted accounting or prindoles requires the management to
make estimates and assumptions that affect the reported amount of
assets and liabilities, revenues and expenses and disclosure of
contingent liabilities. Such estimates and assumptions are based on
managements evaluation of relevant facts and circumstances as on the
date of financial statements. The actual outcome may diverge from these
estimates.
(c) Fixed Assets and Depreciation / Amortisation
(i) Tangible fixed assets and depreciation
Tangible fixed assets acquired by the Company are reported at
acquisition value, with deductions for accumulated depreciation and
impairment losses, if any. The acquisition value includes the purchase
price (excluding refundable taxes) and expenses directly attributable
to the asset to bring it to the site and in the working condition for
its intended use. Examples of directly attributable expenses included
in the acquisition value are delivery and handling costs, installation,
legal services and consultancy services. Where the construction or
development of any such asset requiring a substantial period of time to
set up for its intended use, is funded by borrowings, the corresponding
borrowing costs are capitalised upto the date when the asset is ready
for its intended use.
Depreciation is provided on a straight line basis at rates and in the
manner specified in Schedule XIV to the Companies Act, 1956 unless
the,use of a higher rate or an accelerated charge is justified through
technical estimates. Assets costing less than Rs. 5,000 are fully
depreciated in the year of purchase. Freehold land is not depreciated
since it is deemed to have an indefinite economic life.
(ii) Intangible assets and amortisation
Intangible assets other than goodwill are valued at cost less
amortisation. These generally comprise of costs incurred to acquire
computer software licenses and implement the software for internal use
(including software recording, installation and testing). Intangible
assets are reported at acquisition value with deductions for
accumulated amortisation and any impairment losses. Amortisation takes
place on a straight line basis over the assets anticipated useful
life. The useful life is determined based on the period of the
underlying contract and the period of time over which the intangible
asset is expected to be used and generally does not exceed 10 years.
(d) Impairment of assets
The carrying values of assets of the Companys cash-generating unit is
reviewed for impairment annually or more often if there is an
indication of decline in value. If any indication of such impairment
exists, the recoverable amounts of those assets are estimated and
impairment loss is recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash flows to their
present value based on appropriate discount factor.
(e) Investments
Long term investments are stated at cost, less other than temporary
diminution, in value, if any. Current investments are stated at the
lower of cost and fair value.
(f) Inventory
Finished goods and process stock are valued at the lower of the cost
and the net realisable value. Cost of finished goods and process stock
are determined using the absorption costing principles. Costs include
the cost of materials consumed, labour and a systematic allocation of
variable and fixed production overheads. Excise duties at the
applicable rates are also included in the cost of finished goods. Net
realisable value is estimated at the expected selling price less
estimated completion and selling costs.
Raw material and packing material are value at the lower of cost and
net realisable value. Stores and spare parts and fuel are carried at
cost. Necessary provision is made and charged to revenue in the case of
identified obsolete and non - moving items. In the case of raw
materials, packing materials and fuels, cost is determined on the basis
of weighted average. In the case of stores and spare parts, cost is
determined on a weighted average basis. Costs include the purchase
price, non-refundable taxes and delivery and handling costs.
(g) Revenue Recognition
Sales of goods are net off trade discounts and exclude sales tax, state
value added tax.
Revenue is recognised when practically all risks and rights connected
with ownership have been transferred to the buyer. This usually occurs
upon dispatch, after the price has been determined and collection of
the receivable is reasonably certain.
(h) Financial Income and Borrowing Cost
Financial income and borrowing cost include interest income on bank
deposits and interest expense on loans.
Borrowing costs are recognised in the period to which they relate,
regardless of how the funds have been utilised, except where it relates
to financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Interest is capitalised upto the date when the asset is ready for its
intended use. The amount of interest capitalised (gross of tax) for the
period is determined by applying the interest rate applicable to
appropriate borrowings outstanding during the period to the average
amount of accumulated expenditure for the assets during the period.
Interest on bank deposits is recognised evenly over the period of the
instrument. Income from dividend is recognised when the right to
receive dividend is established.
(i) Foreign Currency Transactions
Transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange differences arising on settlement thereof during the year are
recognised as income or expense in the Profit and Loss Account.
Cash and bank balances, receivables and liabilities (monetary items) in
foreign currencies as at the year end are valued at closing-date rates,
and unrealised translation differences are included in the Profit and
Loss Account.
The premium arising on entering into forward exchange contract is
amortised over the life of such contracts and exchange differences
arising on such contracts are recognised in the Profit and Loss
Account.
(j) Taxes on Income
The Companys income taxes include taxes on the Companys taxable
profits, Minimum alternate tax (MAT), adjustment attributable to
earlier periods and changes in deferred taxes. Valuation of all tax
liabilities/receivables is conducted at nominal amounts and in
accordance with enacted tax regulations and tax rates or in the case of
deferred taxes, those that have been substantially enacted.
Deferred tax is calculated to correspond to the tax effect arising when
final tax is determined. Deferred tax corresponds to the net effect of
tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they were recognised in the financial statements.
Deferred tax assets are recognised with regard to all deductible timing
differences to the extent that it is probable that taxable profit will
be available against which deductible timing differences can be
utilised. When the Company carries forward unused tax losses and
unabsorbed depreciation, deferred tax assets are recognised only to the
extent there is virtual certainty backed by convincing evidence that
sufficient future taxable income will be available against which
deferred tax assets can be realised.
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced by the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or a part of
the aggregate deferred tax asset to be utilised.
(k) Provisions and Contingencies
A provision is recognised when the Company has a present legal or
constructive obligation as a result of past event and it is probable
that an outflow of resources will be required to settle the obligation,
in respect of which reliable estimate can be made. Provisions
(excluding retirement benefits) are not discounted to their present
value, and are determined based on
best estimate required to settle the obligation at the balance sheet
date. These are reviewed at each balance sheet date and adjusted to
reflect the current best estimates. Contingent liabilities are not
recognised but are disclosed in the notes to the financial statement. A
contingent asset is neither recognised nor disclosed.
(I) Cash Flow Statements
Cash-flow statements are prepared in accordance with "Indirect Method"
as explained in the Accounting Standard (AS-3) on Cash Flow Statements.
(m) Cash and Cash Equivalents
Cash and bank balances and current investments that have insignificant
risk of change in value and which have original contractual maturity of
up to three months, are included in the Companys cash and cash
equivalents in the Cash Flow Statement.
(n) Earnings per Share
Basic Earnings per Share (before dilution) is calculated by dividing
the net profit after tax for the year attributable to equity
shareholders of the Company by the weighted average number of equity
shares in issue during the period.
Diluted earnings per share is calculated by adjusting the net profit
after tax for the year attributable to equity shareholders and the
weightage average number of equity shares outstanding during the year
for the effects of all dilutive potential equity shares.
(o) Employee Benefits
(I) Short Term Benefits
Short term employee benefits are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the Company.
(II) Long Term Benefits
The Company has both defined-contribution and defined-benefit plans, of
which some have assets in special funds or similar securities. The
plans are financed by the Company and in the case of some defined
contribution plans by the Company along with its employees.
Defined-contribution plans
These are plans in which the Company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the employees
provident fund, family pension fund and superannuation fund. The
Companys payments to the defined-contribution plans are reported as
expenses during the period in which the employees perform the services
that the payment covers.
Defined-benefit plans
Expenses for defined-benefit gratuity plan is calculated as at the
balance sheet date by independent actuaries in a manner that
distributes expenses over the employees working life. These
commitments are valued at the present value of expected future
payments, with consideration for calculated future salary increases,
utilising a discount rate corresponding to the interest rate estimated
by the actuary having regard to the interest rate on government bonds
with a remaining term that is almost equivalent to the average balance
working period of employees.
(III) Other Employee Benefits
Compensated absences which accrue to employees and which can be carried
to future periods but are expected to be encashed or availed in twelve
months immediately following the year end are reported as expenses
during the year in which employee perform the services that the benefit
covers and liabilities are recorded at the undiscounted amount of the
benefits after deducting amounts already paid. Where there are
restrictions on availment of encashment of such accrued benefits or
where the availment or encashment is otherwise not expected to wholly
occur in next twelve months, the liability on account of the benefit is
acturially determined using the projected unit credit method.
(p) Segment Reporting
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. The Company is engaged mainly
in the business of manufacture of cement. This, in the context of
Accounting Standard 17 on Segment Reporting are considered to
constitute a single primary segment. Further, the sales of the Company
are made primarily in a domestic market and a small proportion Is
exported. The geographical segments Identified on this basis have been
reported as the secondary segment.
Dec 31, 2009
(a) Basis of Accounting
The financial statements are prepared as per historical cost convention
and in accordance with the generally accepted accounting principles in
India, the provisions of the Companies Act, 1956, and the applicable
Accounting Standards.
(b) Use of Estimates
The presentation of the financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported amount of
assets and liabilities, revenues and expenses and disclosure of
contingent liabilities. Such estimates and assumptions are based on
managements evaluation of relevant facts and circumstances as on the
date of financial statements. The actual outcome may diverge from these
estimates.
(c) Fixed Assets and Depreciation / Amortisation
(i) Tangible fixed assets and depreciation
Tangible fixed assets acquired by the Company are reported at
acquisition value, with deductions for accumulated depreciation and
impairment losses, if any. The acquisition value includes the purchase
price (excluding refundable taxes) and expenses directly attributable
to the asset to bring it to the site and in the working condition for
its intended use. Examples of directly attributable expenses included
in the acquisition value are à delivery and handling costs,
installation, legal services and consultancy services. Where the
construction or development of any such asset requiring a substantial
period of time to set up for its intended use, is funded by borrowings,
the corresponding borrowing costs are capitalised upto the date when
the asset is ready for its intended use.
Depreciation is provided on a straight line basis at rates and in the
manner specified in Schedule XIV to the Companies Act, 1956 unless the
use of a higher rate or an accelerated charge is justified through
technical estimates. Assets costing less than Rs. 5,000 are fully
depreciated in the year of purchase. Freehold land is not depreciated
since it is deemed to have an indefinite economic life.
(ii) Intangible assets and amortisation
Intangible assets other than goodwill are valued at cost less
amortisation. These generally comprise of costs incurred to acquire
computer software licences and implement the software for internal use
(including software recording, installation and testing). Intangible
assets are reported at acquisition value with deductions for
accumulated amortisation and any impairment losses. Amortisation takes
place on a straight line basis over the assets anticipated useful
life. The useful life is determined based on the period of the
underlying contract and the period of time over which the intangible
asset is expected to be used and generally does not exceed 10 years.
(d) Impairment of assets
The carrying values of assets of the Companys cash-generating unit is
reviewed for impairment annually or more often if there is an
indication of decline in value. If any indication of such impairment
exists, the recoverable amounts of those assets are estimated and
impairment loss is recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash flows to their
present value based on appropriate discount factor.
(e) Investments
Long term investments are stated at cost, less other than temporary
diminution in value, if any. Current investments are stated at the
lower of cost and fair value.
(f) Inventory
Finished goods and process stock are valued at the lower of the cost
and the net realisable value. Cost of finished goods and process stock
are determined using the absorption costing principles. Costs include
the cost of materials consumed, labour and a systematic allocation of
variable and fixed production overheads. Excise duties at the
applicable rates are also included in the cost of finished goods Net
realisable value is estimated at the expected selling price less
estimated completion and selling costs.
Raw material and packing material are valued at the lower of cost and
net realisable value. Stores and spare parts and fuel are carried at
cost. Necessary provision is made and charged to revenue in the case of
identified obsolete and non - moving items. In the case of raw
materials, packing materials and fuels, cost is determined on the basis
of quarterly weighted average. In the case of stores and spare parts,
cost is determined on a continuous weighted average basis. Costs
include the purchase price, non-refundable taxes and delivery and
handling costs.
(g) Revenue Recognition
Sales of goods are net off trade discounts and exclude sales tax, state
value added tax.
Revenue is recognised when practically all risks and rights connected
with ownership have been transferred to the buyer. This usually occurs
upon dispatch, after the price has been determined and collection of
the receivable is reasonably certain.
(h) Financial Income and Borrowing Costs
Financial income and borrowing costs include interest income on bank
deposits and interest expense on loans
Borrowing costs are recognised in the period to which they relate,
regardless of how the funds have been utilised, except where it relates
to financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Interest is capitalised upto the date when the asset is ready for its
intended use. The amount of interest capitalised (gross of tax) for the
period is determined by applying the interest rate applicable to
appropriate borrowings outstanding during the period to the average
amount of accumulated expenditure for the assets during the period.
Interest on bank deposits is recognised evenly over the period of the
instrument. Income from dividend is recognised when the right to
receive dividend is established.
(i) Foreign Currency Transactions
Transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange differences arising on settlement thereof during the year are
recognised as income or expense in the Profit and Loss Account.
Cash and bank balances, receivables and liabilities (monetary items) in
foreign currencies as at the year end are valued at closing-date rates,
and unrealised translation differences are included in the Profit and
Loss Account.
The premium arising on entering into forward exchange contract is
amortised over the life of such contracts and exchange differences
arising on such contracts are recognised in the Profit and Loss
Account.
(j) Taxes on Income
The Companys income taxes include taxes on the Companys taxable
profits, Minimum alternate tax (MAT), adjustment attributable to
earlier periods and changes in deferred taxes. Valuation of all tax
liabilities/receivables is conducted at nominal amounts and in
accordance with enacted tax regulations and tax rates or in the case of
deferred taxes, those that have been substantially enacted.
Deferred tax is calculated to correspond to the tax effect arising when
final tax is determined. Deferred tax corresponds to the net effect of
tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they were recognised in the financial statements.
Deferred tax assets are recognised with regard to all deductible timing
differences to the extent that it is probable that taxable profit will
be available against which deductible timing differences can be
utilised. When the Company carries forward unused tax losses and
unabsorbed depreciation, deferred tax assets are recognised only to the
extent there is virtual certainty backed by convincing evidence that
sufficient future taxable income will be available against which
deferred tax assets can be realised.
The carrying amount of deferred tax assets is reviewed at aach balance
sheet date and reduced by the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or a part of
the aggregate deferred tax asset to be utilised.
(k) Provisions and Contingencies
A provision is recognised when the Company has a present legal or
constructive obligation as a result of past event and it is probable
that an outflow of resources will be required to settle the obligation,
in respect of which reliable estimate can be made. Provisions
(excluding retirement benefits) are not discounted to their present
value, and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
Contingent liabilities are not recognised but are disclosed in the
notes to the financial statement. A contingent asset is neither
recognised nor disclosed.
(l) Cash Flow Statements
Cash-flow statements are prepared in accordance with indirect Method"
as explained in the Accounting Standard (AS)-3 on Cash Flow Statements.
(m) Cash and Cash Equivalents
Cash and bank balances and current investments that have insignificant
risk of change in value and which have original contractual maturity of
up to three months, are included in the Companys cash and cash
equivalents in the Cash Flow Statement.
(n) Earnings per Share
Basic Earnings per Share (before dilution) is calculated by dividing
the net profit after tax for the year attributable to equity
shareholders of the Company by the weighted average number of equity
shares in issue during the period.
Diluted earnings per share is calculated by adjusting the net profit
after tax for the year attributable to equity shareholders and the
weightage average number of equity shares outstanding during the year
for the effects of all dilutive potential equity shares.
(o) Employee Benefits
(i) Short Term Benefits
Short term employee benefits are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the Company.
(ii) Long Term Benefits
The Company has both defined-contribution and defined-benefit plans, of
which some have assets in special funds or similar securities. The
plans are financed by the Company and in the case of some defined
contribution plans by the Company along with its employees.
Defined-contribution plans
These are plans in which the Company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to the employees
provident fund, family pension fund and superannuation fund. The
Companys payments to the defined-contribution plans are reported as
expenses during the period in which the employees perform the services
that the payment covers.
Defined-benefit plans
Expenses for defined-benefit gratuity plan is calculated as at the
balance sheet date by independent actuaries in a manner that
distributes expenses over the employees working life. These
commitments are valued at the present value of expected future
payments, with consideration for calculated future salary increases,
utilising a discount rate corresponding tc the interest rate estimated
by the actuary having regard to the interest rate on government bonds
with a remaining term that is almost equivalent to the average balance
working period of employees.
(iii) Other Long term employee benefits
The Company has a scheme for compensated absences for employees, the
liability for which is determined on the basis of an actuarial
valuation carried out at the end of the year.