Mar 31, 2018
COMPANY BACKGROUND
Tirupati Foam Limited (the ''Company'') is a public limited Company incorporated under the Companies Act 1956. The Company is engaged in the business of manufacturing of Polyurethane Foam and their articles (Like mattress, cushions, Pillow, sofa N bed, etc.)
1. SIGNIFICANT ACCOUNTING POLICIES: 1.1. Basis of preparation of financial statements
(i) Compliance with Ind AS
These financial statements have been prepared in accordance with Indian Accounting Standards (here in after referred to as the âInd AS'') as notified under Section 133 of the Companies Act, 2013 ("Act) read with the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.
For all periods up to and including the year ended 31 st March, 2017, the Company had prepared its financial statements in accordance with Accounting Standards notified under the Section 133 of the Companies Act, 2013. read together with Rule 7 of the Companies (Accounts) Rules, 2014 (âPrevious GAAP'').
These financial statements are the first financial statements prepared under Ind AS. The date of transition to ind AS is 1st April, 2016. Refer Note 44 for an explanation of how the transition from Indian GAAP (IGAAP) to Ind AS has affected the Company''s financial position, financial performance and cash flows.
These financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting except for certain financial assets and financial liabilities that are measured at fair values(Refer note No. 34) and Defined benefit planned assets measured at fair value (Refer note no. 39)at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.
(ii) Use of estimated and judgments
The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Differences between actual results and estimates are recognized in the period in which the results are known/ materialized.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
(iii) Current / Non- Current Classification
All assets and liabilities have been classified as current or noncurrent as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013.
1.2. Property, Plant and Equipment:
The Company has applied for the one time transition exemption of considering the previous GAAP carrying value of all its Property Plant and Equipment as on the transition date i.e. April 1, 2016 use that carrying value as deemed cost of property plant and equipment under IND AS. Hence regarded thereafter as historical cost.
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at cost less depreciation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
The Company identifies and determines cost of each part of an item of property, plant and equipment separately, if the part has a cost which is significant to the total cost of that item of property, plant and equipment and has useful life that is materially different from that of the remaining item.
The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other nonrefundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for its intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discounts and rebates are deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment if the recognition criteria are met. Expenses directly attributable to new manufacturing facility during its construction period are capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant heads of property, plant and equipment if the recognition criteria are met.
Capital work in progress and Capital advances:
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets.
Depreciation:
Depreciation on each part of an item of property, plant and equipment is provided using the written down value Method based on the useful life of the asset as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The estimate of the useful life of the assets is determined as prescribed in Schedule II of Companies Act, 2013.
The residual values are not more than 5% of the original cost of the asset. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Derecognition:
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the Derecognition of an item of property, plant and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the item and is recognized in the Statement of Profit and Loss when the item is derecognized.
1.3. Intangible Assets
Intangible assets are initially recognized at cost. Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably.
Amortization
Intangible Assets with finite lives are amortized on a Straight Line basis over the estimated useful economic life. The amortization expense on intangible assets with finite lives is recognized in the Statement of Profit and Loss. The estimated useful life of intangible assets is mentioned below:
ERP Software 5 Year
The amortization period and the amortization method for an intangible asset with finite useful life is reviewed at the end of each financial year. If any of these expectations differ from previous estimates, such change is accounted for as a change in an accounting estimate.
Derecognition
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the Derecognition of an intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the intangible asset and is recognized in the Statement of Profit and Loss when the asset is derecognized.
1.4. Investment Property
Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by the company, are classified as Investment Property. These are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. Subsequent expenditure related to investment properties are added to its book value only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Investment properties are depreciated using the Written down Method on the useful life of the asset as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The estimate of the useful life of the assets is determined as prescribed in Schedule II of Companies Act, 2013.
1.5 Impairment
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested for impairment annually and whenever there is an indication that the asset may be impaired.
Assets that are subject to depreciation are reviewed for impairment, whenever events or changes in circumstances indicate that carrying amount may not be recoverable. Such circumstances include, though are not limited to, significant or sustained decline in revenues or earnings and material adverse changes in the economic environment.
An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit (CGU) exceeds its recoverable amount. The recoverable amount of an asset is the greater of its fair value less cost to sell and value in use. To calculate value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market rates and the risk specific to the asset. For an asset that does not generate largely independent cash in flows, the recoverable amount is determined for the CGU to which the asset belongs. Fair value less cost to sell is the best estimate of the amount obtainable from the sale of an asset in an arm''s length transaction between knowledgeable, willing parties, less the cost of disposal.
Impairment losses, if any, are recognized in the Statement of Profit and Loss and included in depreciation and amortization expense. Impairment losses are reversed in the Statement of Profit and Loss only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had previously been recognized.
1.6 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
A financial asset is recognized in the balance sheet when the Company becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value through statement of profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a. Financial assets measured at amortized cost;
b. Financial assets measured at fair value through other comprehensive income (FVTOCI);
c. Financial assets measured at fair value through statement of profit and loss (FVTPL)
The Company classifies its financial assets in the above mentioned categories based on:
a. The Companyâs business model for managing the financial assets; b The contractual cash flows characteristics of the financial asset.
A) Financial assets measured at amortized cost
This category generally applies to trade and other receivables.
A financial asset is measured at amortized cost if both of the following conditions are met:
a. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows;
b. The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss.
B) Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
a. The financial asset is held within a business model whose objective is achieved by both collecting the contractual cash flows and selling financial assets;
b. The asset''s contractual cash flows represent SPPI.
C) Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets amortized costor FVTOCI criteria, as at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognized as other incomeâ in the Statement of Profit and Loss.
Equity Instruments
All the equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL.
If the company decides to classify an equity instrument as at FVTOCI, then all the fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the company may transfer the cumulative gain or loss within equity. Equity instruments included within FVTPL category are measured at fair value with all the changes recognized in statement of profit and loss.
Derecognition
A financial asset {or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized (i.e. removed from the Company''s balance sheet) when:
a. The contractual rights to the cash flows from the financial asset have expired, or
b. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either:
a. The Company has transferred substantially all the risks and rewards of the asset, or
b. The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
impairment of financial assets
In accordance with Ind AS 109, the Company assesses impairment based on expected credit loss( E C L ) model to the following:
a. Financial assets measured at amortized cost;
b. Financial assets measured at fair value through other comprehensive income Expected credit losses are measured through a loss allowance at an amount equal to:
a. The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
b. Full time expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
The Company follows simplified approach for recognition of impairment loss allowance on trade receivables. Under the simplified approach; the Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable which is adjusted for managementâs estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of profit and loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables and short term borrowings.
Subsequent measurement
a. Financial liabilities measured at amortized cost;
b. Financial liabilities subsequently measured at fair value through statement of profit and loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognized in the statement of profit and loss.
Financial liabilities designated upon initial recognition at fair value through statement of profit and loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
-Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
-Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
-Level3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
1.7. Inventories
Raw materials, work-in-progress, finished goods, packing materials, stores, spares, components, consumables and stock-in-trade are carried at the lower of cost and net realizable value after providing for obsolescence, if any. The comparison of cost and net realizable value is made on an item-by item basis.
In determining the cost of raw materials, packing materials, stock-in-trade, stores, spares, components and consumables, First-in-First-Out (FIFO) method is used. Cost of inventory comprises of all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.
In the case of manufactured inventories and work-in-progress, Cost includes direct material, labour cost and a proportion of manufacturing overheads. Excise duty is included in the value of Finished Products.
Materials in transit are valued at cost-to-date.
1.8 Revenue Recognition
Revenue from sale of goods is recognized on transfer of all significant risks and rewards of ownership to the buyer Revenue includes only the gross inflows of economic benefits, including excise duty, received and receivable by the Company, on its own account. The amount recognized as sale is exclusive of sales tax. Value Added Tax, Goods and Service Tax and is net of returns & discounts. The excise duty related to the difference between the closing stock and opening stock is recognized separately as part of changes in inventories of finished goods.
Rent Income is recognized on the accrual basis.
Interest income
Interest income is recognized using effective interest method.
1.9 Borrowing Costs
Interest and other borrowing costs attributable to qualifying assets are capitalized. Other interest and borrowing costs are charged to Statement of Profit and Loss.
1.10 Earnings per Share Basic earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity Shares outstanding during the year.
Diluted earnings per share
Diluted earnings per are calculated by dividing the profit for the year attributable to the equity holders of the Company by weighted average number of Equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential Equity shares in to Equity shares.
1.11 Foreign Currency Translation Functional and presentation currency
The financial statements are presented in Indian rupee (INR), which is Company''s functional and presentation currency.
Initial Recognition:
On initial recognition, transactions in foreign currencies entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss.
Transactions and balances:
Transactions in foreign currencies are recognized at the prevailing exchange rates on the transaction dates. Realized gains and losses on settlement of foreign currency transactions are recognized in the Statement of Profit and Loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognized in the Statement of Profit and Loss.
1.12 Income Taxes
Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.
Current tax:
Current tax is the amount of income taxes payable in respect of taxable profit for a period. 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 under the Income Tax Act, 1961.
Current tax is measured using tax rates that have been enacted by the end of reporting period for the amounts expected to be recovered from or paid to the taxation authorities.
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 under Income Tax Act, 1961.
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized. Also, for temporary differences if any that may arise from initial recognition of goodwill, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary difference can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.
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 the benefits of part or all of such deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Minimum Alternate Tax credit is recognized as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss, except when they relate to items that are recognized in Other Comprehensive Income, in which case, the current and deferred tax income/ expense are recognized in Other Comprehensive Income.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
1.13 Provisions and Contingent Liabilities
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated.
If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
1.14. Employee Benefits
Short Term Employee Benefits:
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus, short term compensated absences, ex-gratia, etc. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognized as an expense as the related service is rendered by employees.
Post-Employment Benefits:
(i) Defined Contribution plans:
Defined contribution plans are employee state insurance scheme and Government administered provident fund scheme for all applicable employees.
Recognition and measurement of defined contribution plans:
The Company recognizes contribution payable to a defined contribution plan as an expense in the Statement of Profit and Loss when the employees render services to the Company during the reporting period. If the contributions payable for services received from employees before the reporting date exceed the contributions already paid, the deficit payable is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the reporting date, the excess is recognized as an asset to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund.
(ii) Defined Benefit plans:
Provident Fund scheme:
Defined Contribution Plans such as Provident Fund etc., are charged to the Statement of Profit and Loss as incurred. The contributions are made to a government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions.
Recognition and measurement of Defined Benefit plans:
The cost of providing defined benefits is determined using the Projected Unit Credit method with actuarial valuations being carried out at each reporting date. The defined benefit obligations recognized in the Balance Sheet represent the present value of the defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognized representing the present value of available refunds and reductions in future contributions to the plan.
All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability / (asset) are recognized in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability / (asset) comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net interest on the net defined benefit liability/asset), are recognized in Other Comprehensive Income. Such remeasurements are not reclassified to the Statement of Profit and Loss in the subsequent periods.
1.15 Recent accounting pronouncements
Standards issued but not yet effective
In March, 2018, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115, Revenue from Contract with Customers, Appendix B to Ind AS 21, Foreign Currency Transactions and advance consideration and amendments to certain other standards. These amendments are in line with recent amendments made by International Accounting Standards Board (IASB). These amendments are applicable to the Company from 1st April, 2018. The Company will be adopting the amendments from their effective date.
a) Ind AS 115, Revenue from Contract with Customers:
Ind AS 115supersedes Ind AS 11, Construction Contracts and Ind AS 18, Revenue, Ind AS 115 requires an entity to report information regarding nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with customers. The Principle of Ind AS 115 is that an entity should recognize revenue that demonstrates the transfer of promised goods and services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard can be applied either retrospectively to each prior reporting period presented or can be applied retrospectively with recognition of cumulative effect of contracts that are not completed contracts at the date of initial application of the standard.
Based on the preliminary assessment performed by the Company, the impact of application of the standard is not expected to be material.
b) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
The Appendix clarifies that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the asset, expenses or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration towards such asset, expenses or income. If there are multiple payments or receipts in advance, then an entity must determine transaction date for each payment or receipts of advance consideration.
The impact of the Appendix on the financial statements, as assessed by the Company, is expected to be not material.
1.16 Key accounting estimates and judgments
The preparation of the Companyâs financial statements requires the management to make judgments, 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.
Critical accounting estimates and assumptions
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:
Income taxes
The Companyâs tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (Refer Note 33).
Property, Plant and Equipment
Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Companyâs assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.
Defined Benefit Obligation
The costs of providing gratuity and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 âEmployee benefitsâ over the period during which benefit is derived from the employees'' services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 39,''Employee benefits''.
Fair value measurement of Financial Instruments
When the fair values of financials assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques, including the discounted cash flow model, which involve various judgments and assumptions.
Note :
i) Investment property has been carried at the cost less accumulated depreciation as at 1 April 2016, as the cost and depreciation determined under the previous GAAP, in case of the Company, is in line with the principles of Ind AS 40.
ii) Contractual obligations
There are no contractual obligations to purchase, construct or develop investment property.
iii) Fair valuation of the Investment Property as at March 31, 2018 is FIs.169.32 lacs based on Jantri rate published by the Government of Gujarat. There is no material change in the fair value as compared to the previous year.
Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each Equity Shareholder is entitled to one vote per share. In the event of liquidation of the Company, the equity shareholders will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. 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.
Notes:
15.1 Term Loan from banks balance outstanding amounting to Rs 124.86 Lacs (31st March 2017 Rs 249.71 Lacs ; 1st April 2016 Rs.374.57 Lacs) is secured by way of Equitable Mortgage to Land & Building of Factory & Office situated at industrial plot No.4 in Ecotech-1 extension, Dist .Goutambudha nagar,Greater Noida. Repayable in 84 Monthly installments commencing from April,2012. Last installment due in March,2019. Rate of interest 11.00% p.a. as at year end. (31st March 201711.20%; 1st April 2016 12.75% p.a.)
15.2 Term Loan form banks balance outstanding amounting to Rs.106.57 Lacs (31st March 2017 Rs 213.14 Lacs ; 1st April 2016 Rs. 319.71 Lacs) is against hypothecation of plant & machineries of the company installed at unit-II.Noida .Repayable in 84 Monthly installments commencing from April,2012. Last installment due in March,2019. Rate of interest 11.00 % p.a. as at year end. (31st March 2017 11.20% ; 1st April 2016 12.75% p.a.)
15.3 Term Loan from banks balance outstanding amounting to Rs 51.07 Lacs (31st March 2017 Rs 74.64 Lacs ; 1st April 2016 Rs. 98.21 Lacs) is secured by way of Equitable Mortgage of Land & Building of Factory & Office situated at industrial plot No.4 in Ecotech-1 extension,Dist.Goutambudha nagar,Greater noida and hypothecation of plant & machineries of the company installed at unit-ll,Noida. Repayable in 84 Monthly installments commencing from June,2013. Last installment due in May, 2020. Rate of interest 11.00 % p.a. as at year end. (31st March 2017 11.20% ; 1st April 2016 12.75% p.a.)
15.4 Term Loan from banks balance outstanding amounting to Rs 29.51 Lacs (31st March 2017 Rs 42.51 Lacs ; 1st April 2016 Rs.18.06 Lacs) is against hypothecation of plant & machineries of the company installed at unit-l,Khatraj. Repayable in 60 Monthly installments commencing from August.2016. Last installment due in July, 2021. Rate of interest 11.00 % p.a. as at year end. (31st March 2017 11.20% ; 1st April 2016 12.75% p.a.)
15.5 Term Loans mentioned above are further collaterally secured by equitable mortgage of Immovable property and Hyp. Of Plant and machinery situated at Khatraj Unit owned by the company. It is further secured by personal guarantees of all directors.
15.6 Vehicle Loan, balance outstanding amounting to Rs. 8.05 Lacs (31st March 2017 Rs 9.64 Lacs ; 1st April 2016 Rs.Nil) is secured by Hire Purchase agreement for vehicles and repayable in 60 monthly installments. Last installment due in March,2022
15.7 Vehicle Loan, balance outstanding amounting to Rs. 8.05 Lacs (31st March 2017 Rs 9.64 Lacs ; 1st April 2016 Rs.Nil) is secured by Hire Purchase agreement for vehicles and repayable in 60 monthly installments. Last installment due in March,2022
15.8 Vehicle Loan, balance outstanding amounting to Rs. 4.49 Lacs (31st March 2017 Rs 5.37 Lacs; 1st April 2016 Rs.Nil) is secured by Hire Purchase agreement for vehicles and repayable in 60 monthly installments. Last installment due in March,2022
15.9 Vehicle Loan, balance outstanding amounting to Rs. 13.40 Lacs (31st March 2017 Rs Nil; 1st April 2016 Rs.Nil) is secured by Hire Purchase agreement for vehicles and repayable in 60 monthly installments. Last installment due in October,2022
15.10 Installments falling due in respect of all the above Loans upto 31/03/2019 have been grouped under âCurrent maturities of long-term debt".
15.11 The Company has not defaulted in the repayment of loans & interest in current and previous year.
Types of inputs for determining fair value are as under:
Level 1: This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares, and mutual fund investments. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
i) Transfers between Levels 1 and 2
There have been no transfers between Level 1 and Level 2 during the reporting periods.
ii) Transfer out of Level 3
There were no movement in level 3 in either directions during the financial year ending on 31 March 2018 and 31 March 2017.
B. Financial risk management
The Companyâs financial liabilities comprise mainly of borrowings, trade payables and other payables. The Companyâs financial assets comprise mainly of cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.
The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors (âBoardâ) oversee the management of these financial risks through its Risk Management Committee. The Risk Management Policy of the Company formulated by the Board, states the Company''s approach to address uncertainties in its endeavor to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Companyâs management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Company''s financial performance.
The following disclosures summarize the Companyâs exposure to financial risks. Quantitative sensitivity analysis have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.
Mar 31, 2015
1.1 Basis of Preparation of Financial Statements
a) Basis of Accounting
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under historical cost
convention on accrual basis. Pursuant to Section 133 of the Companies
Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014,
till the standards of accounting or any addendum thereto are prescribed
by Central Government in consultation and recommendation of the
National Financial Reporting Authority, the existing Accounting
Standards notified under the Companies Act, 1956 shall continue to
apply. Consequently, these financial statements have been prepared to
comply in all material aspects with the accounting standards notified
under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as
amended] of the Companies Act, 1956 and the other relevant provisions
of the Companies Act, 2013.
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. The estimates and assumptions used in the accompanying
financial statements are based upon management evaluation of the
relevant facts and circumstances as on the date of the financial
statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.
Any revisions to accounting estimates are recognised prospectively in
current and future periods.
c) Current / Non Current Classification
All assets and liabilities have been classified as current and
non-current as per the Company's normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013. Based
on the nature of products and services and the time between acquisition
of assets for processing and their realization in cash and cash
equivalents, The Company has ascertained its operating cycle as 12
months for the purpose of current and non-current classification of
asset and liabilities.
1.2 Fixed Assets and Depreciation / Amortization
a) Tangible Fixed Assets
Tangible Assets are stated at cost net of recoverable taxes, trade
discounts and rebates, less accumulated depreciation and impairment
loss, if any. The cost of Tangible Assets comprises its purchase price,
borrowing cost and any cost directly attributable to bringing the asset
to its working condition for its intended use.
Subsequent expenditures related to an item of Tangible Asset are added
to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.
Depreciation on Tangible fixed assets of the company is provided using
Written Down Value Method on pro-rata basis at rates and in manner
specified in Schedule II of the Companies Act, 2013.
b) Impairment
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on intornal/external
factors. An asset is impaired when the carrying amount of the asset
exceeds the recoverable amount. An impairment loss is charged to the
statement of Profit and Loss in the year in which an asset is
identified as impaired. An impairment loss recognised in prior
accounting periods is reversed if there has been change in the estimate
of the recoverable amount.
1.3 Investments
Investments are classified into current and non-current investments,
investments that are readily realizable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as non-current
investments.
Current investments are carried at the lower of cost or fair value. The
comparison of cost and fair value is done separately in respect of each
category of investments.
Non-current investments are stated at cost. A provision for diminution
in the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is recognised in the Statement of
Profit and Loss.
1.4 Inventories
(a) Raw materials, work-in-progress, finished goods, packing materials,
stores, spares, components, consumables and stock-in-trade are carried
at the lower of cost and net realisable value after providing for
obsolescence, if any. The comparison of cost and net realisable value
is made on an item-by item basis.
(b) In determining the cost of raw materials, packing materials,
stock-in-trade, stores, spares, components and consumables,
First-in-First-Out (FiFO) method is used. Cost of inventory comprises
all costs of purchase, duties, taxes (other than those subsequently
recoverable from tax authorities) and all other costs incurred in
bringing the inventory to their present location and condition.
(c) In the case of manufactured inventories and work-in-progress, Cost
includes direct material, labour cost and a proportion of manufacturing
overheads. Excise duty is included in the value of Finished Products.
(d) Materials in transit'are valued at cost-to-date.
1.5 Transactions in Foreign Currency;
a) Initial recognition:
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction. Exchange differences arising on foreign exchange
transactions settled during the year are recognized in the statement of
profit and loss.
b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non-monetary items are recorded at the exchange
rate prevailing on the date of the transaction. Exchange differences
arising out of these translations are recognized in the Statement of
Profit and Loss.
c) Forward exchange contracts:
The Company enters into forward exchange contracts to hedge against its
foreign currency exposures relating to the underlying transactions and
firm commitments. The Company does not enter into any derivative
instruments for trading or speculative purposes.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/income over the life
of the contract. Exchange differences on such contracts are recognized
in the Statement of Profit and Loss in the period in which the exchange
rates change. Any Profit or Loss arising on cancellation or renewal of
such forward exchange contract is also recognized as income or expense
for the period.
1.6 Revenue Recognition
Revenue from sale of goods is recognised on transfer of all significant
risks and rewards of ownership to the buyer. The amount recognised as
sale is exclusive of sales tax/VAT and is net of returns & discounts.
Sales are stated gross of excise duty as well as net of excise duty;
excise duty being the amount included in the amount of gross turnover.
The excise duty related to the difference between the closing stock and
opening stock is recognised separately as part of changes in
inventories of finished goods.
Interest income is recognised on the time proportion basis.
Rent Income is recognized on the accrual basis.
1.7 Employee Benefits
a) Short Term Employees Benefit
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits. These
benefits include salaries and wages, bonus, short term compensated
absences, ex-gratia, etc. The undiscounted amount of short-term
employee benefits to be paid in exchange for employee services is
recognised as an expense as the related service is rendered by
employees.
b) Post Employment Benefit Defined Contribution Plans:
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The Company makes
specified monthly contributions towards employee provident fund to
Government administered provident fund scheme and Employees' State
Insurance Corporation (ESIC) which are a defined contribution plan. The
Company's contribution is recognised as an expense in the Statement of
Profit and Loss during the period in which the employee renders the
related service.
Defined Benefit Plans:
Gratuities to employees are recognized in the Statement of Profit and
Loss as and when paid to employees.
Termination Benefits:
Termination Benefits are charged to the Statement of Profit and Loss in
the year of accrual.
Compensated Absences:
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
1.8 Borrowing Cost
Borrowing costs attributable to the acquisition, construction or
production of qualifying assets, are added to the cost of those assets,
upto the date when the assets are ready for their intended use. All
other borrowing costs are expensed in the period they occur.
1.9 Provisions and Contingencies
A provision is recognised if, as a result of a past event, the Company
has a present obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are recognised at the best estimate
of the expenditure required to settle the present obligation at the
balance sheet date. The provisions are measured on an undiscounted
basis.
A contingent liability exists when there is a possible but not probable
obligation or a present obligation that may, but probably will not,
require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant
provisions, but are disclosed unless the possibility of outflow of
resources is remote. Contingent assets are neither recognised nor
disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are
recognised in the period in which the change occurs.
1.10 Taxes on Income
Income tax expenses comprise current and deferred taxes. Current tax is
determined on income for the year chargeable to tax in accordance with
the applicable tax rates and the provisions of the Income Tax Act, 1961
and other applicable tax laws and after considering credit for Minimum
Alternate Tax (MAT) available under the said Act. MAT paid in
accordance with the tax laws which gives future economic benefits in
the form of adjustments to future tax liability, is considered as an
asset if there is convincing evidence that the future economic benefit
associated with it will flow to the Company resulting in payment of
normal income tax.
Deferred tax is recognised on timing differences; being the difference
between taxable income and accounting income that originate in one
period and are capable of reversing in one or more subsequent periods.
Deferred tax is measured using the tax rates and the tax laws enacted
or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that there is a reasonable certainty that there will be sufficient
future taxable income will be available against which these can be
realised. However if there are unabsorbed depreciation and carry
forward of losses and items relating to capital losses, deferred tax
assets are recognised only if there is virtual certainty supported by
convincing evidence that there will be sufficient future taxable income
available to realise the assets. Deferred tax assets and liabilities
are offset if such items relate to taxes on income levied by the same
governing tax laws and the Company has a legally enforceable right for
such set off. Deferred tax assets are reviewed at each balance sheet
date for their realisability.
1.11 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders after deducting
preference dividends and attributable taxes by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares, if
any.
1.12 Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which
are readily convertible into known amount of cash that are subject to
an insignificant risk of change in value and having original maturities
of three months or less from the date of purchase, to be cash
equivalents.
1.13 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
Mar 31, 2013
(A) Accounting Conventions
(i) Basis Of Accounting
The financial statements of the Company are prepared under the
historical cost convention on accrual basis of accounting in all
material respects in accordance with the notified Accounting Standards
by Companies (Accounting Standards) Rules 2006 (as amended) and the
relevant Provisions of the Companies Act,1956. The accounting policies
have been consistently applied by the Company during the year.
The presentation of the accounts is based on the revised Schedule VI of
the Companies Act, 1956. All assets and liabilities are classified in
to current and non-current generally based on criteria of realization /
settlement within twelve months period from the balance sheet date.
(ii) Use Of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
(B) Fixed Assets
Tangible Assets
Tangible Fixed Assets are stated at cost of acquisition / construction
(Less:accumulated Depreciation, impairment loss, CENVAT Credit and
Value Added Tax). Cost of acquisition includes non refundable taxes,
duties, freight and other costs that are directly attributable to
bringing assets to their working condition for its intended use. All
costs, including financing costs till commencement of commercial
production and adjustments arising from exchange rate variations
attributable to the fixed assets are capitalized.
(C) Depreciation
Tangible Assets
Depreciation on Tangible Fixed Assets is provided by Straight Line
Method on Pro-rata basis at rates and in manner specified in Schedule
XIV of the Companies Act, 1956.
(D) Capital Work-in-Progress
Projects under commissioning and other Capital Work-in-less are
carried at cost, comprising direct cost, related incidental expenses
and attributable interest.
(E) Impairment
At each balance sheet date, the management reviews the carrying amounts
of each cash generating unit to determine whether there is any
indication that those assets were impaired. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the
higher of an asset''s net selling price and value in use. In assessing
value in use, the estimated future cash flows expected from the
continuing use of the assets and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset. Cash flows used to determine the value in use
are derived from the annual budgets and strategic plans of the cash
generating units. For certain cash generating units, variable growth
has been considered even beyond five years, given the maturity of the
business and scope for geographical expansion.
Reversal of impairment loss is recognized as income in the statement of
profit and loss.
(F) Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
(G) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. Current
Investments are valued at cost or Net Realizable Value, whichever is
lower. All other investments are classified as long term investments.
Long term investments are stated at cost of acquisition. Provision for
diminution in value of long term investments is made, only if such
decline is other than temporary.
(H). Inventories
Inventories of Raw materials, Packing Materials, Consumables, Stores &
Spares and Finished goods (including for Trade) are stated at cost or
net realizable value whichever is lower. Cost is computed on FIFO
basis, in case of Raw Materials, Packing Materials, Consumables and
Stores & Spares. Finished goods (including the consignment stock)
include cost pi conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost is computed
by Standard Cost Method in case of finished goods.
(I) Revenue Recognition
The company recognizes sale of goods when the significant risks and
rewards of ownership are transferred to the buyer, which is usually
when the goods are dispatched to customers.
Rent income is recognized on Accrual basis.
(J) Foreign Currency Transactions :
(i) All Transactions in foreign currency are recorded at the rates of
exchange prevailing as at the date of the transaction.
(ii) Monetary assets and liabilities in foreign currency, outstanding
at the close of the year, are converted in Indian currency at the
appropriate rates of exchange prevailing at ti-~ Lot, of the year. Any
income or expense on account of exchange difference either on
settlement or on translation is recognized in the Profit and Loss
account except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
(iii) In respect of forward exchange contracts entered into towards
hedge of foreign currency risks, the difference between the forward
rate and the exchange rate at the inception of the contract is
recognized as income or expenditure over the life of the contract.
Further, the exchange difference arising on such contracts are
recognized as income or expenditure along with the exchange differences
on the underlying assets/liabilities except in case where they relate
to the acquisition or construction of fixed assets, in which case, they
are adjusted to the carrying cost of fixed assets. Profit or Loss on
cancellations/renewals of forward contracts is accounted for during the
year.
(iv) Premium or discount on forward contract, that are not intended for
trading or speculation purposes, are amortized over the life of
contract and it is recognized as an expense or income.
(K) Employee Benefits
a. Short Term Employees Benefit
Short Term Benefits are recognized as expenditure at the undiscounted
value in the Statement of Profit & Loss of the year in which the
related services are rendered.
b. Post Employment Benefit
(i) Defined Contribution Plans:-
Monthly contributions to the Provident Fund which are defined
contribution schemes are charged to the Statement of Profit & Loss and
deposited with the Provident Fund Authorities on monthly basis.
(ii) Defined Benefit Plans:-
Gratuity to Employees are recognized in the Statement of Profit and
Loss as when paid to Employees.
c. Termination Benefits
Termination Benefits are charged to the Statement of Profit & Loss
Account in the year of accrual.
(L) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are, recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized h" are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(M) Taxes On Income
Tax expense for a year comprises of current tax and deferred tax.
Current tax are measured at the amount expected to be paid to the tax
authorities, after taking into consideration, the applicable deductions
and exemptions admissible under the provisions of the Income tax Act,
1961.
Deferred tax reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing difference of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognized only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. If there is unabsorbed depreciation or carry forward
of losses under tax laws, deferred tax assets are recognized only to
the extent that there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay income tax higher than that computed under MAT, during the
period that MAT is permitted to be set off under the Income Tax Act,
1961.
(N) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year is
adjusted for events such as bonus shares, other than the conversion of
potential equity shares that have changed the number of equity shares
outstanding without a corresponding change in resources
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(O) Cash And Cash Equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short- term highly liquid investments with original
maturities of three months or less.
(P) Operating Cycle
Based on the nature of product and the time between the acquisition of
assets for processing and the realization in Cash and Cash equivalent,
the company has ascertained its operating cycle to be less than twelve
months.
Mar 31, 2012
(i) Basis Of Accounting
The financial statements of the Company are prepared under the
historical cost convention on accrual basis of accounting in all
material respects in accordance with the notified Accounting Standards
by Companies (Accounting Standards) Rules 2006 (as amended) and the
relevant Provisions of the Companies Act, 1956. The accounting policies
have been consistently applied by the Company during the year.
(ii) Presentation And Disclosure Of Financial Statements
During the year ended 31 st March, 2012, the revised Schedule-VI
notified under Companies Act 1956, has become applicable to the
company, for preparation and presentation of its Financial statements.
The adoption of Revised Schedule-VI does not impact recognition and
measurement principles followed for preparation of Financial
Statements. However, it has significant impact on presentation and
disclosure made in financial statements. The company has also restated
the previous year figures in accordance with the requirements
applicable for the current year.
(iii) Use Of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
(B) Fixed Assets Tangible Assets
Tangible Fixed Assets are stated at cost of acquisition / construction
(Less: accumulated Depreciation, impairment loss, CENVAT Credit and
Value Added Tax). Cost of acquisition includes non refundable taxes,
duties, freight and other costs that are directly attributable to
bringing assets to their working condition for its intended use. All
costs, including financing costs till commencement of commercial
production and adjustments arising from exchange rate variations
attributable to the fixed assets are capitalized.
(C) Depreciation Tangible Assets
Depreciation on Tangible Fixed Assets is provided by Straight Line
Method on Pro-rata basis at rates and in manner specified in Schedule
XIV of the Companies Act, 1956.
(D) Capital Work-ln-Progress
Projects under commissioning and other Capital Work-in-Progress are
carried at cost, comprising direct cost, related incidental expenses
and attributable interest.
(E) Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
(F) Inventories
Inventories of Raw materials, Packing Materials, Consumables, Stores &
Spares and Finished goods (including for Trade) are stated at cost or
net realizable value whichever is lower. Cost is computed on FIFO
basis, in case of Raw Materials, Packing Materials, Consumables and
Stores & Spares. Finished goods (including the consignment stock)
include cost of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost is computed
by Standard Cost Method in case of finished goods.
(G) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. Current
Investments are valued at cost or Net Realizable Value, whichever is
lower. All other investments are classified as long term investments.
Long term investments are stated at cost of acquisition. Provision for
diminution in value of long term investments is made, only if such
decline is other than temporary.
(H) Revenue Recognition
The company recognizes sale of goods when the significant risks and
rewards of ownership are transferred to the buyer, which is usually
when the goods are dispatched to customers.
Rent income is recognized on Accrual basis.
(I) Foreign Currency Transactions :
(i) All Transactions in foreign currency are recorded at the rates of
exchange prevailing as at the date of the transaction.
(ii) Monetary assets and liabilities in foreign currency, outstanding
at the close of the year, are converted in Indian currency at the
appropriate rates of exchange prevailing at the close of the year. Any
income or expense on account of exchange difference either on
settlement or on translation is recognized in the Profit and Loss
account except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
(iii) In respect of forward exchange contracts entered into towards
hedge of foreign currency risks, the difference between the forward
rate and the exchange rate at the inception of the contract is
recognized as income or expenditure over the life of the contract.
Further, the exchange difference arising on such contracts are
recognized as income or expenditure along with the exchange differences
on the underlying assets/liabilities except in case where they relate
to the acquisition or construction of fixed assets, in which case, they
are adjusted to the carrying cost of fixed assets. Profit or Loss on
cancellations/renewals of forward contracts is accounted for during the
year.
(iv) Premium or discount on forward contract, that are not intended for
trading or speculation purposes, are amortized over the life of
contract and it is recognized as an expense or income.
(J) Provisions, Contingent Liabilities And Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(K) Employee Benefits
a. Short Term Employees Benefit
Short Term Benefits are recognized as expenditure at the undiscounted
value in the Statement of Profit & Loss of the year in which the
related services are rendered.
b. Post Employment Benefit
(i) Defined Contribution Plans:-
Monthly contributions to the Provident Fund which are defined
contribution schemes are charged to the Statement of Profit & Loss and
deposited with the Provident Fund Authorities on monthly basis.
(ii) Defined Benefit Plans:- Gratuity to Employees are recognised in
the Statement of Profit and Loss as when paid to Employees.
c. Termination Benefits
Termination Benefits are charged to the Statement of Profit & Loss
Account in the year of accrual.
(L) Taxes On Income
Tax expense for a year comprises of current tax and deferred tax.
Current tax are measured at the amount expected to be paid to the tax
authorities, after taking into consideration, the applicable deductions
and exemptions admissible under the provisions of the Income tax Act,
1961.
Deferred tax reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing difference of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognized only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. If there is unabsorbed depreciation or carry forward
of losses under tax laws, deferred tax assets are recognized only to
the extent that there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay income tax higher than that computed under MAT, during the
period that MAT is permitted to be set off under the Income Tax Act,
1961 (specified period).
(M) Impairment of Assets
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is impaired when the carrying amount of the asset
exceeds the recoverable amount. An impairment loss is charged to the
Statement of Profit and Loss in the year in which an asset is
identified as impaired. An impairment loss recognized in prior
accounting periods is reversed if there has been change in the estimate
of the recoverable amount.
(N) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year
are adjusted for events such as bonus shares, other than the conversion
of potential equity shares, that have changed the number of equity
shares outstanding without a corresponding change in resources
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(O) Cash And Cash Equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short- term highly liquid investments with original
maturities of three months or less.
(P) Operating Cycle
Based on the nature of product and the time between the acquisition of
assets for processing and the realization in Cash and Cash equivalent,
the company has ascertained its operating cycle to be less than twelve
months.
Mar 31, 2009
(I) Basis of Preparation of Financial Statements
The financial statments of the Company are prepared under the
historical cost convention on accrual basis of accounting in all
material respects in accordance with the notified Accounting Standards
by Companies (Accounting Standards) Rules 2006 (as amended) and the
relevant Provisions of the Companies Act, 1956. The accounting policies
have been consistently applied by the Company during the year.
(II) Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
FIXED ASSETS
Fixed Assets are stated at cost of acquisition/construction (Less
Accumulated Depreciation and MODVAT Credit) Cost comprises of the
purchase price and other attributable cost. Assets under installation
or under construction as at the Balance Sheet date are shown as Capital
Work-in- Progress. Revenue Expenditure relating to new projects is
charged to Capital Work-in-Progress.
DEPRECIATION
Depreciation on Fixed Assets is provided on written down value on
Pro-rata basis at rates and in manner specified in Schedule XIV of the
Companies Act, 1956.
INVESTMENT
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investment. Long term
investments are stated at cost of acquisition. Provision for diminution
in value of long term investments is made, only if such decline is
other than temporary.
INVENTORIES
Finished goods, Work-in-Process, Raw materials, Stores, Spares are
valued at cost or net realizable value whichever is lower. Cost
comprises all cost of purchase, cost of conversion and other costs
incurred in bringing the invetories to their present location and
condition including excise duty payable on goods produced. The cost
formulae used for determination of cost is First in First Out".
FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transactions. Foreign currency
denominated Current assets and Liabilities are translated into rupees
at the rate of exchange prevailing on the date of balance sheet. All
such exchange differences are dealt with in the statement of profit and
loss.
Premium or discount on forward exchange contracts are amortized and
recognized in the profit and loss account over the period of the
contract. Forward exchange contract outstanding at the balance sheet
date are stated at fair values and any gains or loss are recognized in
the profit and loss account.
PROVISION AND CONTINGENT LIABILITIES
The company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and reliable estimate can be made of the amount of the
obligation. Provisions are not discounted to present value and are
determined based on best estimate required to settle the obligation at
the Balance Sheet date. A disclosure for contingent liabilities is made
when there is a possible obligation or a present obligation that may,
but probably will not, require an outflow of resources. Where there is
a possible obligation or a present obligation that the likelihood of
outflow of resources is remote no, p ovision or disclosure is made.
REVENUE RECOGNITION
The company recognizes sale of goods when the significant risks and
rewards of ownership are transferred to the buyer, which is usually
when the goods are dispatched to customers.
Rent income is reconginzed on accrual basis.
RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure in respect of Research & Development is charged to
the Profit & Loss Account and Capital Expenditure is added to the cost
of Fixed Assets in the year in which it is incurred.
RETIREMENT BENEFITS
1) Short Term Employees Benefit
Short Term Benefits are recognized as expenditure at the undiscounted
value in the Profit and Loss Account of the year in which the related
services as rendered.
2) Post Employment Benefit
a. Defined Contribution Plans:- Monthly contributions to the Provident
Fund which is defined contribution schemes are charged to Profit and
Loss Account and deposited with the Provident Fund Authorities on
monthly basis.
b. Defined Benefit Plans:- Gratuity to Employees are recognised in
Profit and Loss Account as when paid to Employees.
3) Termination Benefit
Termination Benefits are charged to Profit and Loss Account in the year
of accrual.
TAXES ON INCOME
Tax expense comprises of both current and deferred taxes and fringe
benefit tax. Provision for current income taxes is made on the taxable
income at the tax rate applicable to the relevant assessment year.
Fringe benefit tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act. Deferred
income taxes are recognized for the future tax consequence attributable
to timing differences between the financial statement determination of
income and their recognition for tax purposes. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in
income using the tax rate and tax laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax assets are recognized and carried forward only to the
extent that there is reasonable certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realised
BORROWING COST
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 intended use. All other
borrowing costs are charged to revenue.
IMPAIRMENT OF ASSETS
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the assets belong is less then its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the profit and loss account. If at the balance sheet date
there is an indication that if previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the assets is
reflected at the recoverable amount.
GOVERNMENT GRANTS/SUBSIDY
Government Grants is recongized when there is a reasonable assurance
that the company will comply with the conditions attached to them and
grants will be received.
Government Grants/Subsidy related to specific fixed assets are
disclosed as deduction from the value of the concerned assets.
Government Grants which is in the nature of promoters contribution are
credited to Capital Reserve.
When the grant or subsidy relates to an expense item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.