Mar 31, 2023
(1) Corporate Information
Symphony Limited ("the Company"), a premier air cooling company was established in the year 1988. The Company is in the field of residential, commercial and industrial air cooling and other appliances both in the domestic and international markets. The addresses of its registered office and principal place of business are disclosed under corporate information in the annual report.
(2-A) Significant Accounting Policiesi) Statement of compliance
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") notified under section 133 of the Companies Act 2013, read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
ii) Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating 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. Fair value for measurement and disclosure purposes in these financial statements is determined on such a basis, except for measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
a) Revenue from contracts with customer
Revenue from contract with customers is recognised when the Company satisfies performance obligation by transferring promised goods and services to the customer. Performance obligations are satisfied at the point of time when the customer obtains controls of the asset. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods
sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract.
b) Dividend and interest income
Dividend income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
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 principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Effective from April 01, 2019, the Company adopted ''Ind AS 116 - Leases'' and applied the Standard to all lease contracts existing as on April 01,2019 using the modified retrospective method on the date of initial application i.e. April 01,2019.
At inception of a contract, the Company 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 consideration.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the lease payments associated with these leases are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Lease term is a non-cancellable period together with periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
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 underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments to be paid over the lease term at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. Subsequently, the lease liability is measured at amortised cost using the effective interest method.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in the statement of profit or loss in the period in which they arise.
Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the Company can no longer withdraw the offer of the termination benefit and when the Company recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Income tax expense represents the sum of the current tax payable and deferred tax.
Current tax
The current tax payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never 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.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
viii) Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses.
Freehold land is not depreciated.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
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 the statement of profit or loss.
Useful lives of tangible assets
Estimated useful lives of the Property, plant and equipment are as per Schedule II of Companies Act, 2013 which are as follows:
Buildings |
30-60 years |
Plant & Machinery |
10-15 years |
Furniture & Fixtures |
10 years |
Vehicles |
8 years |
Office Equipments |
5 years |
Computers |
3-6 years |
Capital work in progress is stated at cost less accumulated |
impairment loss, if any. |
ix) Intangible Fixed Assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Internally-generated intangible assets - research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:
⢠the technical feasibility of completing the intangible asset so that it will be available for use or sale;
⢠the intention to complete the intangible asset and use or sell it;
⢠the ability to use or sell the intangible asset;
⢠how the intangible asset will generate probable future economic benefits;
⢠the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
⢠the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the statement of profit or loss when the asset is derecognised.
Useful lives of intangible assets
Estimated useful lives of the intangible assets are as per Schedule II of Companies Act, 2013 which are as follows:
Software |
6 years |
Trademarks |
5 years |
Designs |
5 years |
x) Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of profit or loss.
Raw materials and traded goods are valued at lower of cost or net realizable value. The costs of these items of inventory comprises of cost of purchase and other incidental costs incurred to bring the inventories to their present location and condition. However, raw materials are written down below cost only when
the finished product to which they belong are written down below cost and the replacement cost of that raw material is lower than cost. Cost of raw materials and traded goods are determined on "Moving Average" basis.
Work-in-process and Finished goods are valued at lower of cost or net realizable value. The cost includes direct materials and labour. Cost is determined on "Moving Average" basis.
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the management''s best estimate of the expenditure required to settle the Company''s obligation.
All borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Interest on Borrowing is calculated using Effective Interest Rate (EIR) method and is recognised in profit or loss
Operating segments are reported in a manner consistent with the internal reporting provided to the Core Management Committee which includes the Managing Director who is the Chief Operating Decision Maker. The Core Management Committee examines performance both from a product as well as from a geographical perspective and has identified two operative reportable segments from which significant risks and rewards are derived viz. "Air Cooling and Other Appliances" and "Corporate Funds"
Financial assets and financial liabilities are recognised when a Company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
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 (FVTPL), 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.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company intends to hold its investment in open ended target maturity funds (i.e. exchange traded funds/ETF and index funds) till maturity. It may be noted that these funds have a pre-determined maturity date. These funds follow a passive buy and hold strategy; in which the existing underlying investment bonds are expected to be held till maturity unless sold for meeting redemptions or rebalancing requirements as stated in the scheme document. In our view, such strategy mitigates intermittent price volatility in open ended target maturity funds'' underlying investments; and investors who remain invested until maturity are expected to mitigate the market/volatility risk to a large extent. These funds can invest only in plain vanilla INR bonds with fixed coupon and maturity; and cannot invest in floating rate bonds. Based on this, the Company believes that the investments in open ended target maturity funds meet the requirements of SPPI test as per the requirements of Ind AS 109.
For the impairment policy on financial assets measured at amortised cost, refer paragraph on Impairment of financial assets.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (FVTOCI):
⢠the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income is recognised in profit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income and accumulated under the heading of ''Reserve for debt instruments through other comprehensive income''. When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to statement of profit or loss.
For the impairment policy on debt instruments at FVTOCI, refer paragraph on Impairment of financial assets.
All other financial assets are subsequently measured at fair value through profit and loss (FVTPL). Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the "Other income" line item.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL.
Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by a Company entity are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
⢠the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
⢠the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 115.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
xix) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Basic earnings per share are calculated by dividing the profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Statement of Cash flows is reported using the indirect method, whereby profit for the year 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.
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
(2-B) Significant accounting judgements, estimates and assumptions
The preparation of the Company''s Ind AS Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Impairment of financial assets
The impairment provisions for Financial Assets are based on assumptions about risk of default and expected cash loss. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The underlying bonds are further reviewed for quality. The mortality rate is based on publicly available mortality tables for the specific country. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the industry practice considering promotion and demand & supply of the employees. Further details about gratuity obligations are given in note 38.
In measuring the fair value of certain assets and liabilities for financial reporting purpose, the Company uses market observable data to the extent available. Where such Level 1 inputs are not available, the Company establish appropriate valuation techniques and inputs to the model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer note 44 for further disclosures.
The Company has a loyalty points programme, reward Points, which allows customers to accumulate points that can be redeemed for free products. The loyalty points give rise to a separate performance obligation as they provide a material right to the customer.
A portion of the transaction price is allocated to the loyalty points awarded to customers based on relative standalone selling price and recognised as a contract liability until the points are redeemed. Revenue is recognised upon redemption of products by the customer.
When estimating the standalone selling price of the loyalty points, the Company considers the likelihood that the customer will redeem the points. The Company updates its estimates of the points that will be redeemed on a annual basis and any adjustments to the contract liability balance are charged against revenue.
Depreciation/ amortisation and useful lives of property plant and equipment/ intangible assets
Property, plant and equipment/ intangible assets are depreciated/ amortised over their estimated useful lives, after taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortisation for future periods is revised if there are significant changes from previous estimates.
(2-C) Recent accounting pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
Notes forming part of the Financial Statements
Ind AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 01, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the standalone financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 01, 2023. The Company has evaluated the amendment and there is no impact on its standalone financial statements.
Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1,2023. The Company has evaluated the amendment and there is no impact on its standalone financial statements.
212 l Symphony Limited
Mar 31, 2022
(1) Corporate Information
Symphony Limited ("the Company"), a premier air cooling company was established in the year 1988. The Company is in the field of residential, commercial and industrial air cooling and other appliances both in the domestic and international markets. The addresses of its registered office and principal place of business are disclosed under corporate information in the annual report.
(2-A) Significant Accounting Policies
i) Statement of compliance
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") notified under section 133 of the Companies Act 2013, read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating 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. Fair value for measurement and disclosure purposes in these financial statements is determined on such a basis, except for measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
a) Revenue from contracts with customer
Revenue from contract with customers is recognised when the Company satisfies performance obligation by transferring promised goods and services to the customer. Performance obligations are satisfied at the point of time when the customer obtains controls of the asset. Revenue is measured based on transaction price, which is the fair value of the consideration received or receivable, stated net of discounts, returns and goods & service tax. Transaction price is recognised based on the price specified in the contract, net of the estimated sales incentives/ discounts if any.
The Company has a loyalty points programme, reward Points, which allows customers to accumulate points that can be redeemed for free products. The loyalty points give rise to a separate performance obligation as they provide a material right to the customer.
A portion of the transaction price is allocated to the loyalty points awarded to customers based on relative standalone selling price and recognised as a contract liability until the points are redeemed. Revenue is recognised upon redemption of products by the customer.
When estimating the standalone selling price of the loyalty points, the Company considers the likelihood that the customer will redeem the points. The Company updates its estimates of the points that will be redeemed on a annual basis and any adjustments to the contract liability balance are charged against revenue.
Dividend income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
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 principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
iv) Leases
Effective from April 01, 2019, the Company adopted ''Ind AS 116 - Leases'' and applied the Standard to all lease contracts existing as on April 01, 2019 using the modified retrospective method on the date of initial application i.e. April 01,2019.
At inception of a contract, the Company 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 consideration.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the lease payments associated with these leases are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Lease term is a non-cancellable period together with periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
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 underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments to be paid over the lease term at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. Subsequently, the lease liability is measured at amortised cost using the effective interest method.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in the statement of profit or loss in the period in which they arise.
vi) Employee Benefits
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the Company can no longer withdraw the offer of the termination benefit and when the Company recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Income tax expense represents the sum of the current tax payable and deferred tax.
The current tax payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never 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.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
viii) Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses.
Freehold land is not depreciated.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is recognised so as to write off the cost of assets (other than freehold land) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
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 the statement of profit or loss.
Useful lives of tangible assets Estimated useful lives of the Plant Property Equipment are as follows: |
|
Buildings |
30-60 years |
Plant & Machinery |
10-15 years |
Furniture & Fixtures |
10 years |
Vehicles |
8 years |
Office Equipments |
5 years |
Computers |
3-6 years |
Capital work in progress is stated at cost less accumulated impairment loss, if any. |
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Internally-generated intangible assets - research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:
⢠the technical feasibility of completing the intangible asset so that it will be available for use or sale;
⢠the intention to complete the intangible asset and use or sell it;
⢠the ability to use or sell the intangible asset;
⢠how the intangible asset will generate probable future economic benefits;
⢠the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
⢠the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the statement of profit or loss when the asset is derecognised.
Useful lives of intangible assets
Estimated useful lives of the intangible assets are as follows: Software 6 years Trademarks 5 years Designs 5 years |
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of profit or loss.
Raw materials and traded goods are valued at lower of cost or net realizable value. The costs of these items of inventory comprises of cost of purchase and other incidental costs incurred to bring the inventories to their present location and condition. However, raw materials are written down below cost only when the finished product to which they belong are written down below cost and the replacement cost of that raw material is lower than cost. Cost of raw materials and traded goods are determined on "Moving Average" basis.
Work-in-process and Finished goods are valued at lower of cost or net realizable value. The cost includes direct materials and labour. Cost is determined on "Moving Average" basis.
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the management''s best estimate of the expenditure required to settle the Company''s obligation.
Financial assets and financial liabilities are recognised when a Company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For the impairment policy on financial assets measured at amortised cost, refer paragraph on Impairment of financial assets.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (FVTOCI):
⢠the asset is held within a business model whose objective is achieved both by collecting contractual cashflows and selling financial assets; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income is recognised in profit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income and accumulated under the heading of ''Reserve for debt instruments through other comprehensive income''. When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to statement of profit or loss.
For the impairment policy on debt instruments at FVTOCI, refer paragraph on Impairment of financial assets.
All other financial assets are subsequently measured at fair value through profit and loss (FVTPL).
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the "Other income" line item.
Investments in equity instruments are classified as at FVTPL.
Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forwardlooking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet.
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by a Company entity are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
⢠the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
⢠the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 115.
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Basic earnings per share are calculated by dividing the profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Statement of Cash flows is reported using the indirect method, whereby profit for the year 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.
xxv) Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
(2-B) Significant accounting judgements, estimates and assumptions
The preparation of the Company''s Ind AS Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
The impairment provisions for Financial Assets are based on assumptions about risk of default and expected cash loss. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The underlying bonds are further reviewed for quality. The mortality rate is based on publicly available mortality tables for the specific country. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the industry practice considering promotion and demand & supply of the employees. Further details about gratuity obligations are given in note 39.
In measuring the fair value of certain assets and liabilities for financial reporting purpose, the Company uses market observable data to the extent available. Where such Level 1 inputs are not available, the Company establish appropriate valuation techniques and inputs to the model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer note 45 for further disclosures.
Depreciation/ amortisation and useful lives of property plant and equipment/ intangible assets
Property, plant and equipment/ intangible assets are depreciated/ amortised over their estimated useful lives, after taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortisation for future periods is revised if there are significant changes from previous estimates.
Mar 31, 2019
Notes forming part of the Financial Statements
(1) Corporate Information
Symphony Limited (âThe Company"), a premier air cooling Company was established in the year 1988. The Company is in the field of residential, commercial and industrial air cooling and other appliances both in the domestic and international markets. The addresses of its registered office and principal place of business are disclosed under corporate information in the annual report.
(2) Significant Accounting Policies
i) Statement of compliance
The financial statements have been prepared in accordance with the Indian Accounting Standards (âInd AS") notified under section 133 of the Companies Act 2013, read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
ii) Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating 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. Fair value for measurement and disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
iii) Revenue Recognition
a) Revenue from contracts with customer
Revenue from contract with customers is recognized when the Company satisfies performance obligation by transferring promised goods and services to the customer Performance obligations are satisfied at the point of time when the customer obtains controls of the asset. Revenue is measured based on transaction price, which is the fair value of the consideration received or receivable, stated net of discounts, returns and goods & service tax. Transaction price is recognized based on the price specified in the contract, net of the estimated sales incentives/ discounts if any.
b) Dividend and interest income
Dividend income from investments is recognized when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognized 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 principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
iv) Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company as lessee
Rental expense from operating leases is generally recognized on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases, such increases are recognized in the year in which such benefits accrue. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
v) Foreign currencies
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.
vi) Employee Benefits
Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognized in respect of long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
vii) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never 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.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
viii) Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses.
Freehold land is not depreciated.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognized so as to write off the cost of assets (other than freehold land) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property plant and equipment is derecognized 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 recognized in profit or loss.
ix) Intangible Fixed Assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Internally-generated intangible assets - research and development expenditure
Expenditure on research activities is recognized as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:
- the technical feasibility of completing the intangible asset so that it will be available for use or sale;
- the intention to complete the intangible asset and use or sell it;
- the ability to use or sell the intangible asset;
- how the intangible asset will generate probable future economic benefits;
- the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
- the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Derecognition of intangible assets
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.
x) Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Company of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
xi) Inventories
Raw materials and traded goods are valued at lower of cost or net realizable value. The costs of these items of inventory comprises of cost of purchase and other incidental costs incurred to bring the inventories to their present location and condition. However raw materials are written down below cost only when the finished product to which they belong are written down below cost and the replacement cost of that raw material is lower than cost. Cost of raw materials and traded goods are determined on âMoving Average" basis.
Work-in-process and Finished goods are valued at lower of cost or net realizable value. The cost includes direct materials and labour. Cost is determined on âMoving Average" basis.
xii) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
xiii) Warranties
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognized at the date of sale of the relevant products, at the management''s best estimate of the expenditure required to settle the Company''s obligation.
xiv) Financial instruments
Financial assets and financial liabilities are recognized when a Company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
xv) Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost:
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For the impairment policy on financial assets measured at amortized cost, refer para of Impairment of financial assets.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income:
- the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income is recognized in profit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortized cost. Thus, the exchange differences on the amortized cost are recognized in profit or loss and other changes in the fair value of FVTOCI financial assets are recognized in other comprehensive income and accumulated under the heading of ''Reserve for debt instruments through other comprehensive income''. When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to profit or loss.
For the impairment policy on debt instruments at FVTOCI, refer para of Impairment of financial assets.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognized in profit or loss and is included in the âOther income" line item.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL.
Debt instruments that do not meet the amortized cost criteria or FVTOCI criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortized cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognized when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, debt instruments at FVTOCI, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognized in other comprehensive income and is not reduced from the carrying amount in the balance sheet.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.
xvi) Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities subsequently measured at amortized cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' line item.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by a Company entity are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 18.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
xvii) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax 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.
xviii) Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
xix) Recent accounting pronouncements
Ind AS 116, Leases: The Ministry of Corporate Affairs has notified the Ind AS 116, Leases which will be effective from April 01, 2019. Ind AS 116 would replace the existing leases standard Ind AS 17. The standard sets out the principles for the recognition, measurement, presentation and disclosures for both parties to a contract, i.e. the lessee and the
less or Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of profit and loss. The Company is currently evaluating the requirements of Ind AS 116 on the financial statements. The Company believes that the definition of lease under Ind AS 116 would not significantly change the scope of contracts that meet the definition of a lease.
Amendment to Ind AS 12 ''Income Taxes'': On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 12 ''Income Taxes''. The amendments require an entity to recognize the income tax consequences of dividends as defined in Ind AS 109 when it recognizes a liability to pay a dividend. The income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners.
Therefore, an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events. The amendment will come into force for accounting periods beginning on or after April 01, 2019. The Company is evaluating the effect of the above in the financial statements.
Appendix C to Ind AS 12, Uncertainty over Income Tax Treatments: On March 30, 2019, Ministry of Corporate Affairs (âMCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2019 containing Appendix C to Ind AS 12, Uncertainty over Income Tax Treatments which clarifies the application and measurement requirements in Ind AS 12 when there is uncertainty over income tax treatments. The current and deferred tax asset or liability shall be recognized and measured by applying the requirements in Ind AS 12 based on the taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined by applying this appendix. The amendment is effective for annual periods beginning on or after April 01, 2019. The Company is evaluating the effect of the above in the financial statements.
Amendment to Ind AS 19 ''Employee Benefits'': On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 19 ''Employee Benefits'' in connection with accounting for plan amendments, curtailments and settlements. The amendments require an entity to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement and to recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognized because of the impact of the asset ceiling. The amendment will come into force for accounting periods beginning on or after April 01, 2019. The Company is evaluating the effect of the above in the financial statements.
The Company has only one class of shares referred to as equity shares having a par value of RS,2/-, rank pari passu in all respects including voting rights and entitlement to dividend.
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company remaining after settlement of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholder
The Company has allotted 349,78,500 bonus equity shares of RS,2/- each fully paid up on September 17,2016 in the proportion of one (1) bonus equity share for every fully Paid up equity share (1:1). As a result of the bonus issue the Paid up capital of the Company stands increased to C 13.99 Crores from C7.00 Crores.
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.
This reserve represents the cumulative gains and losses arising on the revaluation of debt instruments measured at fair value through other comprehensive income that have been recognized in other comprehensive income, net of amounts reclassified to profit or loss when those assets have been disposed of or impairment losses on such instruments.
The Board of Directors has recommended, subject to approval of shareholders, a final dividend of RS,1.50/- per equity share of RS,2/- each for the year ended March 31, 2019. Further, three interim dividends aggregating RS,3.00/- per equity share were paid during the year. Total Dividend proposed/paid is RS,4.50/- per equity share (225%) (previous year RS,4.50/- per equity share (225%)). The total dividend appropriation for the year ended March 31, 2019 amounts to RS,37.95 Crores including dividend distribution tax of C6.47 Crores.
(i) The deferred revenue arises in respect of the Company''s Point Credits Scheme recognized in accordance with Ind AS 115 Customer Loyalty Programmes.
(i) The provision for employee benefits includes gratuity provision. The increase in the carrying amount of the net provision for the current year results from lower payment of contribution to fund in the current year. For other disclosures, refer note no. 36.
(32) Segment Reporting
(a) Primary Segment :
As per recognition criteria mentioned in Ind AS - 108, Operating Segment, the Company has identified only one operating segment i.e. Air Cooling and Other Appliances Business. However substantial portion of Corporate Funds remained invested in various financial instruments. The Company has considered Corporate Funds as a separate segment so as to provide better understanding of performance of Air Cooling and Other Appliances Business.
Secondary Segment Capital Employed :
Fixed assets used in the Company''s business and liabilities contracted have not been identified with any of the reportable segments, as the fixed assets and services are used interchangeably between segments. The Company believes that it is not practical to provide secondary segment disclosures relating to Capital employed.
Policy on dealing with Related party transactions:
The Company has made a list of related parties after considering the requirements and based on the annual declaration received from individuals like Directors and Key Managerial Personnel (KMP). All related party transactions are reported and referred for approval to the Audit Committee as per section 177 of the Companies Act, 2013. The Audit committee may grant general approval for repetitive related party transactions. Such general approval will be valid for a period of one year and a fresh approval shall be taken for every financial year. As per section 188 of the Companies Act, 2013, the consent of the Board/Shareholders'' approval is required, by a special resolution in a general meeting, for entering into the specified transactions with a related party if they are not in ordinary course of business of the Company or at arm''s length and exceeds the threshold limits as specified in the Act.
35.1 Leasing Arrangement
The Company does not have any Non-cancellable lease.
Operating lease is related to
i) Lease of Land of Surat SEZ with lease term period up to July, 2085 and the lease is to be renewed on expiry of every 15 years starting from 2011. The cost of leasehold land is charged to Statement of Profit & Loss account over a period of 15 years.
ii) Lease of Land at Kandla SEZ for 48 months from Sept,16.
iii) Lease of CFA premises at various location of India with a lease period of one year
Mar 31, 2018
i) Statement of compliance
The financial statements have been prepared in accordance with Ind ASs notified under the Companies (Indian Accounting Standards) Rules, 2015.
Upto the year ended March 31, 2017, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Companyâs first Ind AS financial statements. The date of transition to Ind AS is April 1, 2016. Refer Note 2.xix) for the details of first-time adoption exemptions availed by the Company.
ii) Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating 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. Fair value for measurement and disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
iii) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
a) 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;
- it 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.
Sales of goods that result in point credits for customers, are accounted for as multiple element revenue transactions and the fair value of the consideration received or receivable is allocated between the goods supplied and the point credits granted. The consideration allocated to the point credits is measured by reference to the treatment as prescribed in Appendix B to the Ind AS - 18 âRevenueâ Such consideration is not recognised as revenue at the time of the initial sale transaction - but is deferred and recognised as revenue when the point credits are redeemed and the Companyâs obligations have been fulfilled.
b) Dividend and interest income
Dividend income from investments is recognised when the shareholderâs right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
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 principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
iv) Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company as lessee
Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
v) Foreign currencies
In preparing the financial statements of each individual Company entity, transactions in currencies other than the entityâs functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.
vi) Employee Benefits
Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expenseâ. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
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 any related restructuring costs. Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
vii) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never 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.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
viii) Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses.
Freehold land is not depreciated.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
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 profit or loss. For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Useful lives of tangible assets
Estimated useful lives of the tangible assets are as follows:
ix) Intangible Fixed Assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Internally-generated intangible assets - research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:
- the technical feasibility of completing the intangible asset so that it will be available for use or sale;
- the intention to complete the intangible asset and use or sell it;
- the ability to use or sell the intangible asset;
- how the intangible asset will generate probable future economic benefits;
- the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
- the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
Deemed cost on transition to Ind AS
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
x) Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Company of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
xi) Inventories
Raw materials and traded goods are valued at lower of cost or net realizable value. The costs of these items of inventory comprises of cost of purchase and other incidental costs incurred to bring the inventories to their present location and condition. However, raw materials are written down below cost only when the finished product to which they belong are written down below cost and the replacement cost of that raw material is lower than cost. Cost of raw materials and traded goods are determined on âMoving Averageâ basis.
Work-in-process and Finished goods are valued at lower of cost or net realizable value. The cost includes direct materials and labour. Cost is determined on âMoving Averageâ basis.
xii) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
xiii) Warranties
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the managementâs best estimate of the expenditure required to settle the Companyâs obligation.
xiv) Financial instruments
Financial assets and financial liabilities are recognised when a Company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
xv) Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For the impairment policy on financial assets measured at amortised cost, refer para of Impairment of financial assets.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income:
- the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income is recognised in profit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income and accumulated under the heading of âReserve for debt instruments through other comprehensive income. When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to profit or loss.
For the impairment policy on debt instruments at FVTOCI, refer para of Impairment of financial assets. All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther incomeâ line item.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL.
Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âOther incomeâ line item. Dividend on financial assets at FVTPL is recognised when the Companyâs right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
xvi) Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the âFinance costsâ line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by a Company entity are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the âOther incomeâ line item.
xvii) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax 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.
xviii) Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and noncurrent.
xix) First-time adoption - mandatory exceptions, optional exemptions Overall principle
The Company has prepared the opening consolidated balance sheet as per Ind AS as of April 1, 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as detailed below.
Derecognition of financial assets and financial liabilities
The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 1, 2016 (the transition date).
Classification of debt instruments
The Company has determined the classification of debt instruments in terms of whether they meet the amortised cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.
Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
Deemed cost for property, plant and equipment, and intangible assets
The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Mar 31, 2017
i) Basis of Accounting and Preparation of Financial Statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 133 of the Companies Act, 2013, The financial statements have been prepared or accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
ii) 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 the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.
iii) Revenue Recognition
Revenue is recognised when consideration can be measured reliably and there exists reasonable certainty of its recovery.
a) Sales
Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales is net of VAT and Central Sales Tax, wherever applicable and after making adjustments towards price variations, discounts etc.
b) Interest
Interest on investments is booked on a time proportion basis taking into account the amounts invested and the rate of interest.
c) Export Benefits
Export Incentives are estimated and accounted for in the year of export.
d) Dividend Income
Dividend income on investments is accounted for when the right to receive the payment is established.
iv) Tangible Fixed Assets
Tangible Fixed Assets are stated at cost of acquisition / construction less accumulated depreciation, amortization and impairment loss (if any). Cost comprises of purchase price, import duties and other non-refundable taxes or levies and any directly attributable cost to bring the assets ready for their intended use. Direct expenses, as well as pro rata identifiable indirect expenses on projects during the year of construction are capitalized. Only expenditures that increase the future economic benefits from the existing asset beyond its previously assessed standard of performance is included in the gross book value, e.g., an increase in capacity. The cost of an addition or extension to an existing asset which is of a capital nature and which becomes an integral part of the existing asset is added to its gross book value. Any addition or extension, which has a separate identity and is capable of being used after the existing asset is disposed off, is accounted for separately. The fixed assets retired from active use are stated at net book value or net realisable value, whichever is lower. The loss arising due to write-down is recognised in the statement of profit and loss. An item of fixed asset is eliminated from the financial statements on disposal. Gains or losses arising on disposal are recognised in the statement of profit and loss.
v) Intangible Fixed Assets
Intangible Fixed assets are stated at cost less accumulated amortization and accumulated impairment. Cost comprises of purchase price and any directly attributable cost to bring the assets ready for their intended use. An expenditure is regarded as an intangible asset if such expenditure give rise to an identifiable non-monetary resource without physical substance controlled by the Company as a result of past events which is expected to result in future economic benefits in the form of either of higher cash inflows or lower cash outflows over the useful life of the resource and such resource is held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use and subsequent disposal. Gain or losses arising from disposals are determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised as income or expense in the Statement of Profit and Loss.
vi) Depreciation / Amortization
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on all tangible fixed assets is provided on Straight Line Method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Any addition or extension to an existing asset which is of a capital nature and which becomes an integral part of the existing asset is depreciated at the rate which is applied to the existing asset. Depreciation on sale of assets is provided till the date of sale. Depreciation on tangible assets is ceased when a fixed asset is retired from active use and held for disposal or is disposed off.
Intangible fixed assets in the nature of software are amortized over a period of 6 years and Intellectual Property Rights (IPR) are amortized over a period of 5 years from the date of addition. Amortization of an intangible asset commences when the asset is available for use and ceases when the asset is retired from active use or is disposed off. Residual value for the purpose of amortization is taken as zero. At each balance sheet date, the Company reviews the amortization period and amortization method and the amortisation period is revised to reflect the changed pattern, if any. Based on the internal assessment carried out by the management, the salvage value and the useful lives as given above best represents the period over which management expects to use these assets.
vii) Investments
Investments which are intended for sale / maturing within twelve months are classified as Current Investments. Others are classified as Long Term Investments.
Cost of Investments comprises of the purchase price and any directly attributable expenses incurred.
Current Investments are carried at the lower of cost and fair value computed individually. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made, only if, in the opinion of the management, such a decline is regarded as being other than temporary.
viii) Inventories
Raw materials and traded goods are valued at lower of cost or net realizable value. The costs of these items of inventory comprises of cost of purchase and other incidental costs incurred to bring the inventories to their present location and condition. However, raw materials are written down below cost only when the finished product to which they belong are written down below cost and the replacement cost of that raw material is lower than cost. Cost of raw materials and traded goods are determined on âMoving Averageâ basis.
Work-in-process and Finished goods are valued at lower of cost or net realizable value. The cost includes direct materials and labour. Cost is determined on âMoving Averageâ basis.
ix) Research and Development
Research costs incurred for new / existing products / process including manpower cost are recognised in Statement of Profit and Loss as incurred. Development costs relating to the design and testing of new or improved materials, products or processes are recognized as intangible assets to the extent that it is expected that such assets will generate future economic benefits. Research and development expenditure of capital nature is added to fixed assets.
The carrying value of development costs is reviewed for impairment annually when the asset is not available for use, and other wise when events and change in circumstances indicate that the carrying value may not be recoverable.
x) Foreign currency transactions and translations Initial Recognition and Measurement:
Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
Measurement at the Balance Sheet date
Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.
Treatment of exchange difference on restatement / settlement
Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.
xi) Employee Benefits
a) Short term Employee Benefits
Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.
b) Post Employment Benefits
i) Defined Contribution Plan :- The Companyâs contribution paid / payable during the year to Provident Fund are considered as defined contribution plans. The Contribution paid / payable under these plans are recognized during the period in which the employee render services.
ii) Defined Benefit Plan :- Employee benefits in the nature of Gratuity are recognized as an expense in the Statement of Profit and Loss for the period in which the employee has rendered services. Estimated liability on account of Gratuity is discounted to the current value, using the yield on government bonds, as on the date of balance sheet, at the discounting rate. Actuarial gains and losses in respect of post employment and other benefits are charged to the Statement of Profit and Loss.
xii) Leases
All leases are classified into Operating and Financial Lease at the inception of the lease. Leases that transfer substantially all risks and reward from lessor to lessee are classified as Finance Lease and others being classified as Operating Lease.
Rent Expense and Rent Income represent operating leases which are recognized as an expense or Income respectively in the Statement of Profit and Loss on a Straight Line basis over the lease terms.
xiii) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax 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.
xiv) Taxes on Income
Tax expenses for a year comprise of current tax and deferred tax.
Provision for current tax is determined based on taxable profits of the Company as determined under the Income Tax Act,1961.
Provision for deferred tax is determined based on the effect of timing difference between the taxable profits under the Income Tax Act and the profits as per the Statement of Profit and Loss and it is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets.
xv) Impairment of Fixed Assets
The carrying amount of tangible and intangible fixed assets are reviewed at each balance sheet date to determine whether there is any indication of impairment.
If any such indication exist, the assets recoverable amount is estimated. An impairment loss is recognized in the Statement of Profit and Loss whenever the carrying amount of assets exceeds its recoverable amount. An impairment loss can be reversed if there are changes in estimates to determine the recoverable amount in future period. An impairment loss is reversed only to the extent that the carrying amount of the assets does not exceed the net book value that would have been determined, if no impairment loss has been recognized.
The value of assets that are not available for use are reviewed at each balance sheet date to assess the probability of continuing future benefits. If there is any indication that the value of such assets is impaired, the resulting impairment loss is recognized in the financial statement.
xvi) Warranty
Provision for the estimated liability in respect of warranty on Domestic sale of products is made in the year in which the revenues are recognised, based on historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures.
xvii) Provisions and Contingencies
A provision is recognised when the Company has a present 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 its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements but are disclosed in the notes.
A contingent asset is neither recognised nor disclosed in the financial statement.
xviii) Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2016
(1) Significant Accounting Policies
The significant accounting policies have been predominantly presented
below in the order of the Accounting Standards (AS) specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014.
i) Basis of Accounting and Preparation of Financial Statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956
Act"), as applicable. The financial statements have been prepared on
accrual basis under the historical cost convention. The accounting
policies adopted in the preparation of the financial statements are
consistent with those followed in the previous year.
ii) 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 the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialised.
iii) Revenue Recognition
Revenue is recognised when consideration can be measured reliably and
there exists reasonable certainty of its recovery.
a) Sales
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales is
net of VAT and Central Sales Tax, wherever applicable and after making
adjustments towards price variations, discounts etc.
b) Interest
Interest on investments is booked on a time proportion basis taking
into account the amounts invested and the rate of interest.
c) Export Benefits
Export Incentives are estimated and accounted for in the year of
export.
d) Dividend Income
Dividend income on investments is accounted for when the right to
receive the payment is established.
iv) Tangible Fixed Assets
Tangible Fixed Assets are stated at cost of acquisition / construction
less accumulated depreciation, amortization and impairment loss (if
any). Cost comprises of purchase price, import duties and other
non-refundable taxes or levies and any directly attributable cost to
bring the assets ready for their intended use. Direct expenses, as well
as pro rata identifiable indirect expenses on projects during the year
of construction are capitalized. Only expenditures that increase the
future economic benefits from the existing asset beyond its previously
assessed standard of performance are included in the gross book value,
e.g., an increase in capacity. The cost of an addition or extension to
an existing asset which is of a capital nature and which becomes an
integral part of the existing asset is added to its gross book value.
Any addition or extension, which has a separate identity and is capable
of being used after the existing asset is disposed of, is accounted for
separately. The fixed assets retired from active use are stated at net
book value or net realisable value, whichever is lower. The loss
arising due to write-down is recognised in the statement of profit and
loss. An item of fixed asset is eliminated from the financial
statements on disposal. Gains or losses arising on disposal are
recognised in the statement of profit and loss.
v) Intangible Fixed Assets
Intangible Fixed assets are stated at cost less accumulated
amortization and accumulated impairment. Cost comprises of purchase
price and any directly attributable cost to bring the assets ready for
their intended use. An expenditure is regarded as an intangible asset
if such expenditure gives rise to an identifiable non-monetary resource
without physical substance controlled by the company as a result of
past events which are expected to result in future economic benefits in
the form of either of higher cash inflows or lower cash outflows over
the useful life of the resource and such resource is held for use in
the production or supply of goods or services, for rental to others, or
for administrative purposes. An intangible asset is derecognised on
disposal or when no future economic benefits are expected from its use
and subsequent disposal. Gains or losses arising from disposals are
determined as the difference between the net disposal proceeds and the
carrying amount of the asset and is recognised as income or expense in
the Statement of Profit and Loss.
vi) Depreciation / Amortization
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value.
Depreciation on all tangible fixed assets is provided on Straight Line
Method as per the useful life prescribed in Schedule II to the
Companies Act, 2013. Any addition or extension to an existing asset
which is of a capital nature and which becomes an integral part of the
existing asset is depreciated at the rate which is applied to the
existing asset. Depreciation on sale of assets is provided till the
date of sale. Depreciation on tangible assets is ceased when a fxed
asset is retired from active use and held for disposal or is disposed
of.
Intangible fixed assets in the nature of software are amortized over a
period of 6 years and Intellectual Property Rights (IPR) are amortized
over a period of 5 years from the date of addition. Amortization of an
intangible asset commences when the asset is available for use and
ceases when the asset is retired from active use or is disposed of.
Residual value for the purpose of amortization is taken as zero. At
each balance sheet date, the company reviews the amortization period
and amortization method and the amortisation period is revised to
reflect the changed pattern, if any.
vii) Investments
Investments which are intended for sale / maturing within twelve months
are classified as Current Investments. Others are classified as Long
Term Investments.
Cost of Investments comprises of the purchase price and any directly
attributable expenses incurred.
Current Investments are carried at the lower of cost and fair value
computed individually. Long term investments are stated at cost.
Provision for diminution in the value of long term investments is made,
only if, in the opinion of the management, such a decline is regarded
as being other than temporary.
viii) Inventories
Raw materials and traded goods are valued at lower of cost or net
realizable value. The costs of these items of inventory comprises of
cost of purchase and other incidental costs incurred to bring the
inventories to their present location and condition. However, raw
materials are written down below cost only when the finished product to
which they belong are written down below cost and the replacement cost
of that raw material is lower than cost. Cost of raw materials and
traded goods are determined on "First in First out" basis.
Work-in-process and Finished goods are valued at lower of cost or net
realizable value. The cost includes direct materials and labour and a
proportion of manufacturing overheads based on normal operating
capacity. Cost is determined on "First in First out" basis.
ix) Research and Development
Research costs incurred for new / existing products / processes
including manpower cost are recognised in Statement of Profit and Loss
as incurred. Development costs relating to the design and testing of
new or improved materials, products or processes are recognized as
intangible assets to the extent that it is expected that such assets
will generate future economic benefits. Research and development
expenditure of capital nature is added to fixed assets.
The carrying value of development costs is reviewed for impairment
annually when the asset is not available for use, and otherwise when
events and change in circumstances indicate that the carrying value may
not be recoverable.
x) Foreign currency transactions and translations Initial Recognition
and Measurement:
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date
of the transaction.
Measurement at the Balance Sheet date
Foreign currency monetary items (other than derivative contracts) of
the Company, outstanding at the balance sheet date are restated at the
year-end rates. Non-monetary items of the Company are carried at
historical cost.
Treatment of exchange difference on restatement / settlement
Exchange differences arising on settlement / restatement of foreign
currency monetary assets and liabilities of the Company are recognised
as income or expense in the Statement of Profit and Loss.
xi) Employee Benefits
a) Short term Employee Benefits
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the related service is rendered.
b) Post Employment Benefits
i) Defined Contribution Plan :- The Company''s contribution paid /
payable during the year to Provident Fund are considered as defend
contribution plans. The Contribution paid / payable under these plans
are recognized during the period in which the employees render
services.
ii) Defined Benefit Plan :- Employee benefits in the nature of Gratuity
are recognized as an expense in the Statement of Profit and Loss for
the period in which the employee has rendered services. Estimated
liability on account of Gratuity is discounted to the current value,
using the yield on government bonds, as on the date of balance sheet,
at the discounting rate.
Actuarial gains and losses in respect of post employment and other
benefits are charged to the Statement of Profit and Loss.
xii) Leases
All leases are classified into Operating and Financial Lease at the
inception of the lease. Leases that transfer substantially all risks
and reward from lessor to lessee are classified as Finance Lease and
others are classified as Operating Lease.
Rent Expense and Rent Income represent operating leases which are
recognized as an expense or Income respectively in the Statement of
Profit and Loss on a Straight Line basis over the lease terms.
xiii) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax and tax are 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.
xiv) Taxes on Income
Tax expenses for a year comprise of current tax and deferred tax.
Provision for current tax is determined based on taxable profits of the
company as determined under the Income Tax Act,1961. Provision for
deferred tax is determined based on the effect of timing difference
between the taxable profits under the Income Tax Act and the profits as
per the Statement of Profit and Loss and it is accounted for using the
tax rates and laws that are enacted or substantively enacted as on the
balance sheet date. In the event of unabsorbed depreciation and carry
forward of losses, deferred tax assets are recognised only to the
extent that there is virtual certainty that sufficient future taxable
income will be available to realise such assets. In other situations,
deferred tax assets are recognised only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available to realise these assets.
xv) Impairment of Fixed Assets
The carrying amount of tangible and intangible fixed assets are
reviewed at each balance sheet date to determine whether there is any
indication of impairment.
If any such indication exists, the asset''s recoverable amount is
estimated. An impairment loss is recognized in the Statement of Profit
and Loss whenever the carrying amount of assets exceeds its recoverable
amount. An impairment loss can be reversed if there are changes in
estimates to determine the recoverable amount in future period. An
impairment loss is reversed only to the extent that the carrying amount
of the assets does not exceed the net book value that would have been
determined, if no impairment loss has been recognized.
The value of assets that are not available for use are reviewed at each
balance sheet date to assess the probability of continuing future
benefits. If there is any indication that the value of such assets is
impaired, the resulting impairment loss is recognized in the financial
statement.
xvi) Warranty
Provision for the estimated liability in respect of warranty on
Domestic sale of products is made in the year in which the revenues are
recognised, based on historical information on the nature, frequency
and average cost of warranty claims and management estimates regarding
possible future incidence based on corrective actions on product
failures.
xvii) Provisions and Contingencies
A provision is recognised when the Company has a present 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
in the financial statements but are disclosed in the notes.
A contingent asset is neither recognised nor disclosed in the financial
statement.
xviii) Operating Cycle
Based on the nature of products / activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as current and non-current.
Jun 30, 2014
The financial statements are prepared to comply with all material
aspects with the accounting principles generally accepted in India and
in consonance with the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006 to the extent applicable
and the relevant provisions of the Companies Act,1956.
i) Basis of Accounting
The Financial Statements are prepared under the historical cost
convention on an accrual basis.
All assets and liabilities have been classified as Current or
Non-Current as per the criteria set out in the Revised Schedule VI to
the Companies Act, 1956
ii) Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent liabilities at the date of
financial statement and the result of operation during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
iii) Revenue Recognition
Revenue is recognised when consideration can be measured reliably and
there exists reasonable certainty of its recovery.
a) Sales
Sales is inclusive of VAT and Central Sales Tax, wherever applicable
and after making adjustments towards price variations, discounts etc.
Revenue is recognised on transfer of significant risks and rewards to
the customer which normally occurs.
In case of Domestic Sales - On dispatch of products to customers.
In case of Export Sales - On Shipment/ Air lift of products
b) Interest
Interest on investments is booked on a time proportion basis taking
into account the amounts nvested and the rate of interest.
c) Export Benefits
Export Incentives are estimated and accounted for in the year of
export.
d) Dividend Income
Dividend income on investments is accounted for when the right to
receive the payment is established
iv) Tangible Fixed Assets
Tangible Fixed Assets are stated at cost of acquisition / construction
less accumulated depreciation, amortization and impairment loss (if
any). Cost comprises of purchase price, import duties and other
non-refundable taxes or levies and any directly attributable cost to
bring the assets ready for their ntended use. Direct expenses, as well
as pro rata identifiable indirect expenses on projects during the year
of construction are capitalized. Only expenditures that increase the
future economic benefits from the existing asset beyond its previously
assessed standard of performance is included in the gross book value,
e.g., an increase in capacity. The cost of an addition or extension to
an existing asset which is of a capital nature and which becomes an
integral part of the existing asset is added to its gross book value.
Any addition or extension, which has a separate identity and is capable
of being used after the existing asset is disposed off, is accounted
for separately. The fixed assets retired from active use are stated at
net book value or net realisable value, whichever is lower. The loss
arising due to write- down is recognised in the statement of profit and
loss. An item of fixed asset is eliminated from the financial
statements on disposal. Gains or losses arising on disposal are
recognised in the statement of profit and loss.
v) Intangible Fixed Assets
ntangible Fixed assets are stated at cost less accumulated amortization
and accumulated impairment. Cost comprises of purchase price and any
directly attributable cost to bring the assets ready for their ntended
use. An expenditure is regarded as an intangible asset if such
expenditure give rise to an identifiable non-monetary resource without
physical substance controlled by the Company as a result of past events
which is expected to result in future economic benefits in the form of
either of higher cash inflows or lower cash outflows over the useful
life of the resource and such resource is held for use in the
production or supply of goods or services, for rental to others, or for
administrative purposes. An intangible asset is derecognised on
disposal or when no future economic benefits are expected from its use
and subsequent disposal. Gain or losses arising from disposals are
determined as the difference between the net disposal proceeds and the
carrying amount of the asset and is recognised as income or expense in
the Statement of Profit and Loss.
vi) Depreciation / Amortization
Depreciation on all tangible fixed assets is provided on Straight Line
Method at the rates prescribed in Schedule-XIV of the Companies Act,
1956, which are in line with the useful life of the assets estimated by
management, on pro-rata basis from the date the asset is ready for use.
Assets costing up to Rs.5000/- are fully depreciated in the year in which
they are ready for use. Any addition or extension to an existing asset
which is of a capital nature and which becomes an integral part of the
existing asset is depreciated atthe rate which is applied to the
existing asset. Depreciation on sale of assets is provided till the
date of sale. Depreciation on tangible assets is ceased when a fixed
asset is retired from active use and held for disposal or is disposed
off.
Intangible fixed assets in the nature of software are amortized over a
period of 6 years and Intellectual Property Rights (IPR) are amortized
over a period of 5 years from the date of addition. Amortization of an
intangible asset commences when the asset is available for use and
ceases when the asset is retired from active use or is disposed off.
Residual value for the purpose of amortization is taken as zero. At
each balance sheet date, the Company reviews the amortization period
and amortization method
vii) Investments
Investments which are intended for sale/ maturing within twelve months
are classified as Current nvestments. Others are classified as Long
Term Investments.
Cost of Investments comprises of the purchase price and any directly
attributable expenses incurred
Current Investments are carried at the lower of cost and fair value
computed individually. Long term nvestments are stated at cost.
Provision for diminution in the value of long term investments is made,
only if, in the opinion of the management, such a decline is regarded
as being other than temporary.
viii) Inventories
Raw materials and traded goods are valued at lower of cost or net
realizable value. The costs of these items of inventory comprises of
cost of purchase and other incidental costs incurred to bring the
nventories to their present location and condition. However, raw
materials are written down below cost only when the finished product to
which they belong are written down below cost and the replacement cost
of that raw material is lower than cost. Cost of raw materials and
traded goods are determined on "First in First out" basis.
Work-in-process and Finished goods are valued at lower of cost or net
realizable value. The cost ncludes direct materials and labour and a
proportion of manufacturing overheads based on norma operating
capacity. Cost is determined on "First in First out" basis
Excise duty in respect of finished goods lying at the factory premises
have been provided for and ncluded in valuation of inventory where the
excise duty is payable.
ix) Research and Development
Research costs incurred for new/existing products/ process including
manpower cost are recognised in Statement of Profit and Loss as
incurred. Development costs relating to the design and testing of new
or improved materials, products or processes are recognized as
intangible assets to the extent that it is expected that such assets
will generate future economic benefits. Research and development
expenditure of capital nature is added to fixed assets
The carrying value of development costs is reviewed for impairment
annually when the asset is not available for use, and other wise when
events and change in circumstances indicate that the carrying value may
not be recoverable
x) Foreign currency transactions
Initial Recognition and Measurement:
Foreign currency transaction is recorded, on initial recognition in the
reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction
Subsequent Measurement:
Foreign currency receivables and payables are subsequently measured as
stated below:
a) At each balance sheet date
i) Foreign currency monetary items are reported using the closing rate.
i) Non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rate that existed when the values were determined
b) Treatment of exchange differences arising on settlement of monetary
items or on reporting monetary items at rates different from those at
which they were initially recorded during the period
i) Exchange differences arising on a monetary item that is receivable
from, or payable to, a non- integral foreign operation, the settlement
of which is neither planned nor likely to occur in the foreseeable
future are accumulated in Foreign Currency Translation Reserve (FCTR).
The exchange differences so accumulated in FCTRare reclassified to the
Statement of Profit and Loss as and when settlement occurs
i) Exchange differences arising on reporting of long-term foreign
currency monetary items, in so far as they relate to the acquisition of
a depreciable capital asset, are added to or deducted from the cost of
the asset
iii) Exchange differences arising on reporting of long-term foreign
currency monetary items other than those related to depreciable capital
assets are parked in a separate account titled "Foreign" currency
monetary item translation difference account". This account is
amortised on a systematic basis to reflect the amortisation of the
corresponding long term foreign currency monetary item
iv) All other exchange differences are recognised as income or as
expenses in the period in which they arise in the Statement of Profit
and Loss
c) The premium or discount a rising at the inception of a forward
contract entered into to hedge the foreign currency risk of existing
assets and / or liabilities is amortised as expense or income over the
life of the contract. Exchange differences on such a contract is
recognised in the Statement of Profit and Loss in the reporting period
in which the exchange rates change. Any profit or loss arising on
cancellation or renewal of such a forward exchange contract is
recognised as income or as expense for the period
xi) Employee Benefits
a) Short term Employee Benefits
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the related service is rendered
b) Post Employment Benefits
i) Defined Contribution Plan:- The Company''s contribution paid /
payable during the year to Provident Fund are considered as defined
contribution plans. The Contribution paid / payable under these plans
are recognized during the period in which the employee render services.
i) Defined Benefit Plan:- Employee benefits in the nature of Gratuity
are recognized as an expense in the Statement of Profit and Loss for
the period in which the employee has rendered services. Estimated
liability on account of Gratuity is discounted to the current value,
using the yield on government bonds, as on the date of balance sheet,
at the discounting rate Actuarial gains and losses in respect of post
employment and other benefits are charged to the Statement of Profit
and Loss.
xii) Leases
All leases are classified into Operating and Financial Lease at the
inception of the lease. Leases that transfer substantially all risks
and reward from lessor to lessee are classified as Finance Lease and
others being classified as Operating Lease
Rent Expense and Rent Income represent operating leases which are
recognized as an expense or ncome respectively in the Statement of
Profit and Loss on a Straight Line basis over the lease terms
xiii) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantia period of time to get ready for its intended use. All other
borrowing costs are charged to Statement of Profit and loss.
xiv) Provision for tax
Tax expenses for a year comprise of current taxand deferred tax.
Provision for current tax is determined based on taxable profits of the
Company as determined under the Income Tax Act,1961.
Provision for deferred tax is determined based on the effect of timing
difference between the taxable profits under the Income Tax Act and the
profits as per the Statement of Profit and Loss and it is accounted for
using the tax rates and laws that are enacted or substantively enacted
as on the balance sheet date.
In the event of unabsorbed depreciation and carryforward of losses,
deferred tax assets are recognised only to the extent that there is
virtual certainty that sufficient future taxable income will be
available to realise such assets. In other situations, deferred tax
assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available to
realise these assets
Provision for Wealth Tax is calculated on taxable wealth at the rate
specified under the Wealth Tax Act, 1957.
xv) Impairment of Fixed Assets
The carrying amount of tangible and intangible fixed assets are
reviewed at each balance sheet date to determine whether there is any
indication of impairment.
If any such indication exist, the assets recoverable amount is
estimated. An impairment loss is recognized in the Statement of Profit
and Loss whenever the carrying amount of assets exceeds its recoverable
amount. An impairment loss can be reversed if there are changes in
estimates to determine the recoverable amount in future period. An
impairment loss is reversed only to the extent that the carrying amount
of the assets does not exceed the net book value that would have been
determined, if no impairment loss has been recognized
The value of assets that are not available for use are reviewed at each
balance sheet date to assess the probability of continuing future
benefits. If there is any indication that the value of such assets is
mpaired, the resulting impairment loss is recognized in the financial
statement
xvi) Warranty
Provision for the estimated liability in respect of warranty on
Domestic sale of products is made in the year in which the revenues are
recognised, based on technical evaluation and past experience.
xvii) Provisions and Contingent Liabilities
A provision is recognised when the Company has a present 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 its present value and are determined based on best
estimate required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to reflect
the current best estimates. Contingent liabilities are not recognised
in the financial statements.
A contingent asset is neither recognised nor disclosed in the financial
statement.
The Company has only one class of shares referred to as equity shares
having a parvalue of Rs.2/-, rank pari passu in all respects including
voting rights and entitlement to dividend
The Company declares and pays dividends in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting
During the year ended June 30, 2014, the amount of per share dividend
recognized as distributions to equity shareholders was Rs.13/- (Previous
year Rs.6.50), including interim dividend of Rs.2/- per equity share paid
during the year. The total dividend appropriation for the year ended
June 30, 2014 amounted to Rs.5,320/- Lac including dividend distribution
tax of Rs.773 Lac.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive assets of the Company remaining
after settlement of all liabilities. The distribution will be in
proportion to the number of equity shares held by the shareholders.
Jun 30, 2013
The financial statements are prepared to comply with all material
aspects with the accounting principles generally accepted in India and
in consonance with the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006 to the extent applicable
and the relevant provisions of the Companies Act,1956.
i) Basis of Accounting
The Financial Statements are prepared under the historical cost
convention on an accrual basis.
All assets and liabilities have been classified as Current or
Non-Current as per the criteria set out in the Revised Schedule VI to
the Companies Act, 1956.
ii) Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent liabilities at the date of
financial statement and the result of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
iii) Revenue Recognition
Revenue is recognised when consideration can be reasonably measured and
there exists reasonable certainty of its recovery.
a) Sales
Sales is inclusive of VAT and Central Sales Tax, wherever applicable
and after making adjustments towards price variations, discounts etc.
Revenue is recognised on transfer of significant risks and rewards to
the customer which normally occurs.
In case of Domestic Sales - On dispatch of products to customers.
In case of Export Sales - On Shipment / Air lift of products.
b) Interest
Interest on investments is booked on a time proportion basis taking
into account the amounts invested and the rate of interest.
c) Export Benefits
Export Incentives are estimated and accounted for in the year of
export.
d) Dividend Income
Dividend income on investments is accounted for when the right to
receive the payment is established.
iv) Tangible Fixed Assets
Fixed Assets are stated at cost of acquisition / construction less
accumulated depreciation, amortization and impairment loss (if any).
Cost comprises of purchase price, import duties and other
non-refundable taxes or levies and any directly attributable cost to
bring the assets ready for their intended use. Direct expenses, as well
as pro rata identifiable indirect expenses on projects during the year
of construction are capitalized. Only expenditures that increase the
future economic benefits from the existing asset beyond its previously
assessed standard of performance is included in the gross book value,
e.g., an increase in capacity. The cost of an addition or extension to
an existing asset which is of a capital nature and which becomes an
integral part of the existing asset is added to its gross book value.
Any addition or extension, which has a separate identity and is capable
of being used after the existing asset is disposed of, is accounted for
separately. The fixed assets retired from active use are stated at net
book value or net realisable value, whichever is lower. The loss
arising due to write-down is recognised in the Statement of Profit and
Loss. An item of fixed asset is eliminated from the financial
statements on disposal. Gains or losses arising on disposal are
recognised in the Statement of Profit and Loss.
v) Intangible Fixed Assets
Intangible Fixed assets are stated at cost less accumulated
amortization and accumulated impairment. Cost comprises of purchase
price and any directly attributable cost to bring the assets ready for
their intended use. An expenditure is regarded as an intangible asset
if such expenditure give rise to an identifiable non-monetary resource
without physical substance controlled by the company as a result of
past events which is expected to result in future economic benefits in
the form of either of higher cash inflows or lower cash outflows over
the useful life of the resource and such resource is held for use in
the production or supply of goods or services, for rental to others, or
for administrative purposes. An intangible asset is derecognised on
disposal or when no future economic benefits are expected from its use
and subsequent disposal. Gain or losses arising from disposals are
determined as the difference between the net disposal proceeds and the
carrying amount of the asset and is recognised as income or expense in
the Statement of Profit and Loss.
vi) Depreciation / Amortization
Depreciation on all tangible fixed assets is provided on Straight Line
Method at the rates prescribed in Schedule- XIV of the Companies
Act,1956, which are in line with the useful life of the assets
estimated by management, on pro-rata basis from the date the asset is
ready for use. Assets costing up to Rs.5,000/- are fully depreciated in
the year in which they are ready for use. Any addition or extension to
an existing asset which is of a capital nature and which becomes an
integral part of the existing asset is depreciated at the rate which is
applied to the existing asset. Depreciation on sale of assets is
provided till the date of sale. Depreciation on tangible assets is
ceased when a fixed asset is retired from active use and held for
disposal or is disposed off.
Intangible fixed assets in the nature of software are amortized at the
rate prescribed for Computers under schedule XIV of the Companies
Act,1956 on straight line method which are in line with the useful life
of the assets estimated by management. Amortisation of an intangible
asset commences when the asset is available for use and ceases when the
asset is retired from active use or is disposed off. Residual value for
the purpose of amortisation is taken as zero. At each balance sheet
date, the company reviews the amortisation period and amortisation
method.
vii) Investments
Investments which are intended for sale within twelve months are
classified as Current Investments. Others are classified as Long Term
Investments.
Cost of Investments comprises of the purchase price and any directly
attributable expenses incurred.
Current Investments are carried at the lower of cost and fair value
computed individually. Long term investments are stated at cost.
Provision for diminution in the value of long term investments is made,
only if, in the opinion of the management, such a decline is regarded
as being other than temporary.
viii) Inventories
Raw materials and traded goods are valued at lower of cost or net
realizable value. The costs of these items of inventory comprises of
cost of purchase and other incidental costs incurred to bring the
inventories to their present location and condition. However, raw
materials are written down below cost only when the finished product to
which they belong are written down below cost and the replacement cost
of that raw material is lower than cost.
Work-in-process is valued at cost including proportionate related
overheads or net realizable value, whichever is lower.
Finished goods are valued at lower of cost or net realizable value. The
cost of finished goods includes cost of conversion and other costs
incurred to bring the inventories to their present location and
condition.
Cost of raw materials and traded goods are determined on "First in
First out" basis.
Excise duty in respect of finished goods lying at the factory premises
have been provided for and included in valuation of inventory where the
excise duty is payable.
ix) Research and Development
Research costs incurred for new / existing products / process including
manpower cost are recognised in Statement of Profit and Loss as
incurred. Development costs relating to the design and testing of new
or improved materials, products or processes are recognized as
intangible assets to the extent that it is expected that such assets
will generate future economic benefits. Research and development
expenditure of capital nature is added to fixed assets.
The carrying value of development costs is reviewed for impairment
annually when the asset is not available for use, and other wise when
events and change in circumstances indicate that the carrying value may
not be recoverable.
x) Foreign currency transactions
Initial Recognition and Measurement:
Foreign currency transaction is recorded, on initial recognition in the
reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
Subsequent Measurement:
Foreign currency receivables, payables are subsequently measured as
stated below:
a) At each balance sheet date
i) Foreign currency monetary items are reported using the closing rate.
ii) Non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rate that existed when the values were determined.
b) Treatment of exchange differences arising on settlement of monetary
items or on reporting monetary items at rates different from those at
which they were initially recorded during the period:
i) Exchange differences arising on a monetary item that is receivable
from, or payable to, a non- integral foreign operation, the settlement
of which is neither planned nor likely to occur in the foreseeable
future are accumulated in Foreign Currency Translation Reserve (FCTR).
The exchange differences so accumulated in FCTR are reclassified to the
Statement of Profit and Loss as and when settlement occurs.
ii) Exchange differences arising on reporting of long-term foreign
currency monetary items, in so far as they relate to the acquisition of
a depreciable capital asset, are added to or deducted from the cost of
the asset.
iii) Exchange differences arising on reporting of long-term foreign
currency monetary items other than those related to depreciable capital
assets are parked in a separate account titled "Foreign currency
monetary item translation difference account". This account is
amortised on a systematic basis to reflect the amortisation of the
corresponding long term foreign currency monetary item.
iv) All other exchange differences are recognised as income or as
expenses in the period in which they arise in the Statement of Profit
and Loss.
c) The premium or discount arising at the inception of a forward
contract entered into to hedge the foreign currency risk of existing
assets and / or liabilities is amortised as expense or income over the
life of the contract. Exchange differences on such a contract is
recognised in the Statement of Profit and Loss in the reporting period
in which the exchange rates change. Any profit or loss arising on
cancellation or renewal of such a forward exchange contract is
recognised as income or as expense for the period.
xi) Derivatives
Derivative transactions are entered into only for the hedging and not
with speculative motive. Premium or discount arising at the inception
of derivative contract is amortised as expenses or income over the life
of the contract. Exchange difference on derivative contract is
recognised in the Statement of Profit and Loss in the year in which the
exchange rates change. Any Profit or Loss arising on cancellation or
renewal of derivative contract is recognized as income or expense in
the Statement of Profit and Loss.
xii) Employee Benefits
a) Short term Employee Benefits
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the related service is rendered.
b) Post Employment Benefits
i) Defined Contribution Plan:- The Company''s contribution paid /
payable during the year to Provident Fund are considered as defined
contribution plans. The Contribution paid / payable under these plans
are recognized during the period in which the employee render services.
ii) Defined Benefit Plan :- Employee benefits in the nature of Gratuity
are recognized as an expense in the Statement of Profit and Loss for
the period in which the employee has rendered services. Estimated
liability on account of Gratuity is discounted to the current value,
using the yield on government bonds, as on the date of balance sheet,
at the discounting rate.
Actuarial gains and losses in respect of post employment and other
benefits are charged to the Statement of Profit and Loss.
xiii) Leases
All leases are classified into Operating and Financial Lease at the
inception of the lease. Leases that transfer substantially all risks
and reward from lessor to lessee are classified as Finance Lease and
others being classified as Operating Lease.
Rent Expense and Rent Income represent operating leases which are
recognized as an expense and Income respectively in the Statement of
Profit and Loss on a Straight Line basis over the lease terms.
xiv) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to Statement of Profit and loss.
xv) Provision for tax
Tax expenses for a year comprise of current tax and deferred tax.
Provision for current tax is determined based on taxable profits of the
company as determined under the Income Tax Act,1961.
Provision for deferred tax is determined based on the effect of timing
difference between the taxable profits under the Income Tax Act and the
profits as per the Statement of Profit and Loss is accounted for using
the tax rates and laws that are enacted or substantively enacted as on
the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses,
deferred tax assets are recognised only to the extent that there is
virtual certainty that sufficient future taxable income will be
available to realise such assets. In other situations, deferred tax
assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available to
realise these assets.
Provision for Wealth Tax is calculated on taxable wealth at the rate
specified under the Wealth Tax Act, 1957.
xvi) Impairment of Fixed Assets
The carrying amount of tangible and intangible fixed assets are
reviewed at each balance sheet date to determine whether there is any
indication of impairment. If any such indication exist, the assets
recoverable amount is estimated. An impairment loss is recognized in
the Statement of Profit and Loss whenever the carrying amount of assets
exceeds its recoverable amount. An impairment loss can be reversed if
there are changes in estimates to determine the recoverable amount in
future period. An impairment loss is reversed only to the extent that
the carrying amount of the assets does not exceed the net book value
that would have been determined, if no impairment loss has been
recognized.
The value of assets that are not available for use are reviewed at each
balance sheet date to assess the probability of continuing future
benefits. If there is any indication that the value of such assets is
impaired, the resulting impairment loss is recognized in the financial
statement.
xvii) Provisions and Contingent Liabilities
A provision is recognised when the Company has a present 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 its present value and are determined based on best
estimate required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to reflect
the current best estimates. Contingent liabilities are not recognised
in the financial statements.
A contingent asset is neither recognised nor disclosed in the financial
statement.
Jun 30, 2012
The financial statements are prepared to comply with all material
aspects with the accounting principles generally accepted in India and
in consonance with the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006 to the extent applicable
and the relevant provisions of the Companies Act, 1956
i) Basis of Accounting
The Financial Statements are prepared under the historical cost
convention on an accrual basis.
All assets and liabilities have been classified as Current or
Non-Current as per the criteria set out in the Revised Schedule VI to
the Companies Act, 1956.
ii) Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent liabilities at the date of
financial statement and the result of operations during the reporting
period end. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
iii) Revenue Recognition
Revenue is recognised when consideration can be reasonably measured and
there exists reasonable certainty of its recovery.
a) Sales
Sales are inclusive of VAT and Central Sales Tax, wherever applicable
and after making adjustments towards price variations, discounts, etc.
Revenue is recognised on transfer of significant risks and rewards to
the customer which normally occurs:
In case of Domestic Sales - On dispatch of products to customers;
In case of Export Sales - On Shipment / Air lift of products.
b) Interest
Interest on investments is booked on a time proportion basis taking
into account the amounts invested and the rate of interest.
c) Export Benefits
Export Incentives are estimated and accounted for in the year of
export.
d) Dividend Income
Dividend income on investments is accounted for when the right to
receive the payment is established.
iv) Tangible Fixed Assets
Fixed Assets are stated at cost of acquisition / construction less
accumulated depreciation, Amortisation and impairment loss (if any).
Cost comprises of purchase price, import duties and other
non-refundable taxes or levies and any directly attributable cost to
bring the assets ready for their intended use. Direct expenses, as well
as pro rata identifiable indirect expenses on projects during the year
of construction are capitalised. The fixed assets retired from active
use are stated at the lower of cost or net realisable value.
v) Intangible Fixed Assets
Intangible assets are stated at cost of acquisition / cost incurred
less accumulated amortisation.
vi) Depreciation / Amortisation
Depreciation on all tangible fixed assets is provided on Straight Line
Method at the rates prescribed in Schedule- XIV of the Companies Act,
1956, on pro-rata basis from the date the asset is ready for use.
Assets costing up to Rs. 5000/- are fully depreciated in the year in
which they are ready for use. Depreciation on sale of assets is
provided till the date of sale.
Intangible fixed assets in the nature of software are amortised at the
rates prescribed for Computers under schedule XIV of the Companies
Act,1956 on straight line method.
vii) Investments
Current Investments are carried at the lower of cost and fair value
computed individually. Long term investments are stated at cost.
Provision for diminution in the value of long term investments is made,
only if, in the opinion of the management, such a decline is regarded
as being other than temporary.
viii) Inventories
Raw materials are valued at lower of cost or net realisable value. The
costs of these items of inventory comprises of cost of purchase and
other incidental costs incurred to bring the inventories to their
present location and condition. However, raw materials are written down
below cost only when the finished product to which they belong are
written down below cost and the replacement cost of that raw material
is lower than cost.
Finished goods are valued at lower of cost or net realisable value. The
cost of finished goods includes cost of conversion and other costs
incurred to bring the inventories to their present location and
condition. Cost of inventories is determined on "First in First out"
basis.
Excise duty in respect of finished goods lying at the factory premises
have been provided for and include in valuation of inventory where the
excise duty is payable
ix) Research and Development
Research and Development costs incurred for development of products
including manpower cost are charged to revenue as incurred, except for
development costs relating to the design and testing of new or improved
materials, products or processes which are recognised as intangible
assets to the extent that it is expected that such assets will generate
future economic benefits. Research and development expenditure of a
capital nature is added to fixed assets.
The carrying value of development costs is reviewed for impairment
annually when the asset is not yet it use, and otherwise when events
and change in circumstances indicate that the carrying value may not be
recoverable.
x) Foreign currency transactions Initial Recognition and Measurement;
Foreign currency transaction is recorded, on initial recognition in the
reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
Subsequent Measurement;
Foreign currency receivables, payables are subsequently measured as
stated below
a) At each balance sheet date
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction
Non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rate that existed when the values were determined.
b) Treatment of exchange differences arising on settlement of monetary
items or on reporting monetary items at rates different from those at
which they were initially recorded during the period:
Exchange differences arising on a monetary item that is receivable
from, or payable to, a non-integral foreign operation, the settlement
of which is neither planned nor likely to occur in the foreseeable
future are accumulated in Foreign Currency Translation Reserve (FCTR).
The exchange differences so accumulated in FCTR are reclassified to the
Statement of Profit and Loss as and when settlement occurs.
Exchange differences arising on reporting of long-term foreign currency
monetary items, in so far as they relate to the acquisition of a
depreciable capital asset, are added to or deducted from the cost of
the asset.
All other exchange differences are recognised as income or as expenses
in the period in which they arise in the Statement of Profit and Loss.
The premium or discount arising at the inception of a forward contract
entered into to hedge the foreign currency risk of existing assets and
liabilities is amortised as expense or income over the life of the
contract. Exchange differences on such a contract is recognised in the
Statement of Profit and Loss in the reporting period in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such a forward exchange contract is recognised as income or
as expense for the period.
xi) Derivatives
Derivative transactions are entered into only for the hedging and not
with speculative motive. Premium or discount arising at the inception
of derivative contract is amortised as expenses or income over the life
of the contract. Exchange difference on derivative contract is
recognised in the Statement of Profit and Loss in the year in which the
exchange rates change. Any Profit or Loss arising on cancellation or
renewal of derivative contract is recognised as income or expense in
the Statement of Profit and Loss.
xii) Employees Benefits
a) Short term Employees Benefits
Short-term employees benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the related service is rendered.
b) Post Employment Benefits
Defined Contribution Plan :- The Company's contribution paid / payable
during the year to Provident Fund are considered as defined
contribution plans. The Contribution paid / payable under these plans
are recognised during the period in which the employees render
services.
c) Defined Benefit Plan
Other long-term employees benefits are recognised as an expense in the
Statement of Profit and Loss for the period in which the employees have
rendered services. Estimated liability on account of long- term
benefits is discounted to the current value, using the yield on
government bonds, as on the date of balance sheet, at the discounting
rate.
Actuarial gains and losses in respect of post employment and other
long-term benefits are charged to the profit and loss account.
xiii) Leases
All leases are classified into Operating and Financial Leases at the
inception of the leases. Leases that transfer substantially all risks
and reward from lessor to lessee are classified as Finance Lease,
others being classified as Operation Leases.
Rent Expense and Rent Income represent operating Leases which are
recognised as expense and Income respectively in the Statement of
Profit and Loss on a Straight Line basis over the lease terms.
xiv) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to Statement of Profit and loss.
xv) Provision for tax
Tax expenses for a year comprise of current tax and deferred tax.
Provision for current tax is determined, based on assessable profits of
the company as determined under the Income Tax Act, 1961.
Provision for deferred tax is determined based on the effect of timing
difference between the assessable profits under the Income Tax Act and
the profits as per the Statement of Profit and Loss is accounted for
using the tax rates and laws that are enacted or substantively enacted
as on the balance sheet date. Deferred tax asset is recognised and
carried forward only to the extent that there is a virtual certainty
that the asset will be realised in future
Provision for Wealth Tax is calculated at the rate specified under the
Wealth Tax Act, 1957.
xvi) Impairment of Fixed Assets
The carrying amount of fixed assets including those assets that are not
available for use, are reviewed at each balance sheet date to determine
whether there is any indication of impairment.
If any such indication exist, the asset's recoverable amount is
estimated. An impairment loss is recognised in the Statement of Profit
and Loss whenever the carrying amount of asset exceeds its recoverable
amount. An impairment loss can be reversed if there are changes in
estimates to determine the recoverable amount in future period. An
impairment loss is reversed only to the extent that the carrying amount
of the asset does not exceed the net book value that would have been
determined, if no impairment loss had beer recognised.
The value of intangible assets is reviewed at each balance sheet date
to assess the probability of continuing future benefits. If there is
any indication that the value of such assets is impaired, the resulting
impairment loss is recognised in the financial statement.
xvii) Provisions and Contingent Liabilities
Provisions are recognised for when the Company has at present, legal or
contractual obligation as a result of past events, only if it is
probable that an outflow of resources embodying economic outgo or loss
will be required and if the amount involved can be measured reliably.
Contingent liabilities being a possible obligation as a result of past
events, the existence of which will be confirmed only by the occurrence
or non occurrence of one or more future events not wholly in the
control of the Company are not recognised in the accounts. The nature
of such liabilities and an estimate of its financial effect are
disclosed in Notes to the Financial Statements.
Contingent assets are neither recognised nor disclosed in the financial
statements.