Accounting Policies of Triveni Engineering & Industries Ltd. Company
Mar 31, 2023
CORPORATE INFORMATION
Triveni Engineering & Industries Limited ("the Companyâ) is a company limited by shares, incorporated and domiciled in India. The Companyâs equity shares are listed at two recognised stock exchanges in India (BSE and NSE). The registered office of the Company is located at A-44, Hosiery Complex, Phase-II extension, Noida, Uttar Pradesh - 201305. The Company is engaged in diversified businesses, mainly categorised into two segments - Sugar & allied businesses and Engineering business. Sugar & allied businesses primarily comprises manufacture of sugar and distillation of alcohol. Engineering business primarily comprises manufacture of high speed gears, gearboxes and providing water/waste-water treatment solutions.
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation and presentation
(i) Compliance with Ind AS
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015 (as amended)] and other relevant provisions of the Act.
(ii) Historical cost convention
The financial statements have been prepared on an accrual basis under historical cost convention except for certain assets and liabilities that are measured at fair values at the end of each reporting period, as explained in the respective accounting policies described in subsequent paragraphs.
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/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 116 Leases (see note 1(d)), and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 Inventories (see note 1(l)) or value in use in Ind AS 36 Impairment of Assets (see note 1(f)).
(iii) Classification of assets and liabilities into current/non-current
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in Schedule III to the Act. The operating cycle of the Company is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.
(iv) Joint and consortium arrangements
When the Company enters into an agreement with other parties to jointly execute a particular project, whereby both parties are responsible for carrying out their respective share of activities, without requiring unanimous consent for such assigned activities, and are entitled to profits arising from their respective share of activities, then such an arrangement is considered as an extension of the Companyâs activities and the assets, liabilities, revenue and expenses relating to its interest in the joint operation, are accounted for in its financial statements.
Revenue from contracts with customers is recongnised
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those goods or services. Transaction price at which revenue is recognised is net of goods & services tax and amounts collected on behalf of third parties, if any and includes effect of variable consideration (viz. returns, rebates, trade allowances, credits, penalties etc.). Variable consideration is estimated using the expected value method or most likely amount as appropriate in a given circumstance and is included in the transaction price only to the extent it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Recognising revenue from major business activities
(i) Sale of goods
Revenue from the sale of goods is recognised at the point in time when control of the goods are transferred to the customer (i.e. satisfaction of performance obligation), generally on dispatch of the goods. The Company, in its engineering business, generally provides warranties to its customers in the nature of assurance, which is considered as an obligation and provided for under Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets (refer note 1(n)).
The Company provides engineering services that are either sold separately or bundled together with the sale of goods to a customer.
Contracts for bundled sales of goods and engineering services are comprised of two performance obligations because the promises to transfer goods and provide engineering services are distinct and capable of being separately identifiable. Accordingly, the Company allocates the transaction price based on relative stand-alone selling prices of such goods and engineering services.
The Company recognises revenue from engineering services over time, using an input method to measure progress towards complete
satisfaction of the service, because the customer simultaneously receives and consumes the benefits provided by the Company. The progress towards complete satisfaction of the service is determined as follows:
⢠erection & commissioning/servicing revenue - based on technical estimate of completion of physical proportion of the contract work;
⢠operation & maintenance revenue - as the proportion of the total period of services contract that has elapsed at the end of the reporting period
(iii) Long-duration construction & supply contracts
Long-duration construction & supply contracts are analysed to determine combination of contracts and identification of performance obligations and accordingly transaction price is allocated amongst performance obligations based on stand-alone selling prices. Performance obligations, in long-duration construction & supply contracts, generally includes turnkey related activities towards design/ engineering/supply of equipment/construction/ commissioning and operation & maintenance related activities which are satisfied over time with the customer receiving benefits from the activities being performed by the Company.
When the progress towards complete satisfaction of performance obligations of a long-duration construction & supply contract can be estimated reliably, revenue is recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, because the customer simultaneously receives and consumes the benefits provided by the Company. Contract costs excludes costs that do not depict the Companyâs progress in satisfying the performance obligation.
When the outcome of performance obligations of a long-duration construction & supply contract
cannot be estimated reliably, but the Company expects to recover the costs incurred in satisfying the performance obligation, contract revenue is recognised only to the extent of the contract costs incurred until such time that it can reasonably measure the outcome of the performance obligation. Contract costs are recognised as expenses in the period in which they are incurred.
(IV) DIVIDEND INCOME
Dividend income from investments is recognised when the Companyâs right to receive payment has been established.
(v) Interest income
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.
(c) Government grants
Grants from the government are recognised where there is a reasonable assurance that the Company will comply with all attached conditions and the grant shall be received.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented either within other operating income/other income or net of related costs.
Government grants relating to the purchase of property, plant and equipment are deducted from its gross value and are recognised in profit or loss on a systematic and rational basis over the expected useful lives of the related assets by way of reduced depreciation.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised
in profit or loss in the period in which they become receivable.
The Government grants by way of a benefit of a Government loan at a below market rate of interest is measured as the difference the between proceeds received and the fair value of the loan based on prevailing market interest rates.
See note 42 for disclosures and treatment of government grants in financial statements.
(i) As a lessee
The Companyâs lease assets classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. 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. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset; (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease; and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use ("ROUâ) assets and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. The ROU assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses. ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the
underlying asset (see note 1(i) below) and is also evaluated for impairment (see note 1(f) below). The lease liability is measured at amortised cost at the present value of the future lease payments. The lease term includes (a) the non-cancellable period of the lease; (b) the period covered by an option to extend the lease, if it is reasonably certain that such option shall be exercised; and (c) the period covered by an option to terminate the lease, if it is reasonably certain that such option shall not be exercised. Lease liabilities are remeasured with a corresponding adjustment to the related ROU assets if the Company changes its assessment concerning the right to exercise its option of extending or terminating the lease provided to it under the relevant arrangement.
For short-term and low value leases as mentioned above, the Company recognises the lease payments as an operating expense on a straightline basis over the term of the lease.
(ii) As a lessor
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 has given certain portion of its office/factory premises under operating leases (refer note 43). Lease income from operating leases is recognised as income on a straightline basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straightline basis over the lease term. Respective leased assets are included in the balance sheet based on their nature.
(e) Foreign currency translation
(i) Functional and presentation currency
The financial statements are presented in Indian rupee (''), which is the Companyâs functional and presentation currency unless stated otherwise.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates that approximates the actual rate at the date of respective transactions. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss in the period in which they arise except for:
⢠foreign exchange gains or losses on settlement or translation of foreign currency borrowings that are directly attributable to acquisition, construction or production of a qualifying asset, which are included in cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
⢠foreign exchange gains or losses in respect of certain qualifying cash flow hedges which are deferred in equity.
Foreign exchange gains or losses which are regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. Foreign exchange gains or losses related to certain qualifying cash flow hedges are presented in other comprehensive income on a net basis. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income or other expenses, as the case may be.
(f) Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, so however that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Borrowing costs are not capitalised during extended periods in which active development of qualifying assets is suspended. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
Income tax expense represents the sum of the tax currently payable and deferred 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 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, the carry forward of
unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences, the carry forward of
unused tax credits and unused tax losses can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
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.
(iii) 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. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
(i) Property, plant and equipment
Property, plant and equipment are tangible items that are held for use in the production or supply of goods and services, rental to others or for administrative purposes and are expected to be used during more than one period. The cost of an item of property, plant and equipment is recognised as an asset if and only if 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. Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost comprises purchase price after deducting trade discounts/ rebates, government grants related to assets and including import duties and non-refundable purchase taxes, borrowing costs, any costs that is directly attributable to the bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management and costs of dismantling/removing the item and restoring the site on which it was located under an obligation. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Each part of item of property, plant and equipment, if significant in relation to the total cost of the item, is depreciated separately. Further, parts of plant and equipment that are technically advised to be replaced at prescribed intervals/period of operation, insurance spares and cost of inspection/overhauling are depreciated separately based on their specific useful life provided these are of significant amounts commensurate with the size of the Company and scale of its operations. The carrying amount of any equipment/ inspection/overhauling accounted for as separate asset or if otherwise significant, is derecognised when replaced. All other repairs and maintenance costs are charged to profit or loss during the reporting period in which they are incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives and residual value
Depreciation commences when the assets are available for their intended use. Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives.
The management has estimated the useful lives and residual values of all property, plant and equipment and adopted useful lives as stated in Schedule II along with residual values of 5% except for the following:
⢠On the basis of technical assessment and past
experience:
o the useful lives of mill rollers, instrumentation and control devices installed at sugar plants is considered at ten years as against prescribed life of twenty five years in respect of continuous process plant.
o mobile phones costing '' 5,000/- or more are depreciated over two years.
o patterns, tools, Jigs etc. are depreciated over three years.
o machinery spares are depreciated over a life ranging from five to ten years.
⢠Assets costing less than '' 5,000/- are fully
depreciated in the year of purchase.
Estimated useful lives considered are as follows:
|
Assets |
Estimated useful life |
|
Buildings |
3 - 60 years |
|
Roads |
3 - 10 years |
|
Plant & equipment |
3 - 25 years |
|
Furniture & fixtures |
10 years |
|
Vehicles |
8 - 10 years |
|
Office equipment |
2 - 5 years |
|
Computers |
3 - 6 years |
|
Laboratory equipment |
10 years |
|
Electrical installations and equipment |
10 years |
Fixture and fittings and improvements to leasehold buildings not owned by the Company are amortised over the unexpired lease period or estimated useful life of such fixture, fittings and improvements, whichever is lower.
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.
Property that is held for long-term rental yields or for capital appreciation or both, is classified as investment property. Investment property is stated at cost less accumulated depreciation and accumulated impairment losses, if any. Investment property is measured initially at its cost, including related transaction costs and, where applicable, borrowing costs. Cost comprises purchase price after deducting trade discounts/rebates, government grants related to assets and including duties and taxes, borrowing costs, any costs that is directly attributable to the bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and costs of dismantling/removing the item and restoring the site on which it was located under an obligation. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
Investment property being building is depreciated using the straight-line method over their estimated useful lives as stated in Schedule II at 30 years along with residual values of 5%.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment
properties recognised as at 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Costs comprises purchase price after deducting trade discounts/rebates, government grants related to assets and including import duties and non-refundable purchase taxes, borrowing costs and any directly attributable cost of preparing the asset for its intended use. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Intangible assets comprising computer software and website are amortised using straightline method over estimated useful life of 3 years. 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.
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, is recognised in profit or loss when the asset is derecognised.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognised as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(i) Finished goods and work-in-progress are valued at lower of cost and net realisable value. The cost of finished goods and work-in-progress is computed on weighted average basis and includes raw
material costs, direct cost of conversion and proportionate allocation of indirect costs incurred in bringing the inventories to their present location and condition. Finished goods and work-inprogress are written down if their net realisable value declines below the carrying amount of the inventories and such write downs of inventories are recognised in profit or loss. When reasons for such write downs ceases to exist, the write downs are reversed through profit or loss.
(ii) Inventories of raw materials & components, stores & spares and stock-in-trade are valued at lower of cost and net realisable value. Raw materials and other items held for use in the production of inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost. Write down of such inventories are recognised in profit or loss and when reasons for such write downs ceases to exist, such write downs are reversed through profit or loss. Cost of such inventories comprises of purchase price and other directly attributable costs that have been incurred in bringing the inventories to their present location and condition. By-products used as raw material are valued at transfer price linked with net realisable value. Cost for the purpose of valuation of raw materials & components, stores & spares and stock-in-trade is considered on the following basis :
Raw materials & Components
|
Business Units |
Basis |
|
Sugar Co-generation & Distillery Water Business Group Power Transmission Business |
First in first out Weighted average Specific cost Weighted average and Specific cost |
|
Stores & Spares |
|
|
Business Units |
Basis |
|
Water Business Group |
Specific cost |
|
Other units |
Weighted average |
|
Stock-in-trade |
|
|
Business Units |
Basis |
|
Branded goods trading Weighted average business |
|
|
Diesel/petrol retailing business |
First in first out |
(iii) By-products (excluding those used as raw materials) and scrap are valued at estimated net realisable value.
(m) Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets once classified as held for sale are neither depreciated nor amortised.
(n) Provisions, contingent liabilities and contingent assets
(i) 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 the effect of the time value of money is material, provision is measured at the present value of cash flows estimated to settle the present obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
(ii) A contingent liability is not recognised in the financial statements, however, is disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote. If it becomes probable that an outflow of future economic benefits will be required for an item dealt with as a contingent liability, a provision is recognised in the financial statements of the period (except in the extremely rare circumstances where no reliable estimate can be made).
(iii) A contingent asset is not recognised in the financial statements, however, is disclosed, where an inflow of economic benefits is probable. When the realisation of income is virtually certain, then the asset is no longer a contingent asset, and is recognised as an asset.
(iv) Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
(i) Short-term obligations
Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the undiscounted amounts expected to be paid when the liabilities are settled. The liabilities are presented as current benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
Other long-term employee benefits include earned leaves and sick leaves. The liabilities for earned leaves and sick leaves are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method, with actuarial valuations being carried out at the end
of each annual reporting period. The benefits are discounted using the market yield on government bonds at the end of the reporting period that have maturity term approximating to the estimated term of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as provisions in the balance sheet.
(iii) Post-employment obligations
The Company operates the following postemployment schemes:
⢠defined benefit plans towards payment of gratuity; and
⢠defined contribution plans towards employeesâ provident fund & employee pension scheme, employeesâ state insurance, superannuation scheme and national pension scheme.
The Company provides for gratuity obligations through a defined benefit retirement plan (the âGratuity Planâ) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement/termination of employment or death of an employee, based on the respective employeesâ salary and years of employment with the Company.
The liability or asset recognised in the balance sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value of the defined benefit obligation is determined using projected unit credit method by discounting the estimated future cash outflows with reference to market yield at the end of the reporting period on government bonds that have maturity terms approximating the estimated term of the related obligation, through actuarial valuations carried out at the end of each annual reporting period.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. Such net interest cost along with the current service cost and, if applicable, the past service cost and settlement gain/loss, is included in employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions, comprising actuarial gains/losses and return on plan assets (excluding the amount recognised in net interest on the net defined liability), are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Defined contribution plans are retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company has no further payment obligations once the contributions have been paid. The defined contributions plans are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
⢠Provident Fund Plan & Employee Pension Scheme
The Company makes monthly contributions at prescribed rates towards Employeesâ Provident Fund/ Employeesâ Pension Scheme to a Fund administered and managed by the Government of India.
The Company makes prescribed monthly contributions towards Employeesâ State Insurance Scheme.
The Company contributes towards a fund established to provide superannuation
benefit to certain employees in terms of Group Superannuation Policy entered into by such fund with the Life Insurance Corporation of India.
The Company makes contributions to the National Pension Scheme fund in respect of certain employees of the Company.
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed by the end of the reporting period.
(i) Classification
The Company classifies its financial assets in the following measurement categories:
⢠t hose to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
⢠those measured at amortised cost.
The classification depends on the Companyâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For assets in the nature of debt instruments, this will depend on the business model. For assets in the nature of equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity instrument at fair value through other comprehensive income.
The Company reclassifies debt instruments when and only when its business model for managing those assets changes.
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
⢠Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is recognised using the effective interest rate method.
⢠Fair value through other comprehensive income (FVTOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at FVTOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised
in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.
⢠Fair value through profit or loss (FVTPL):
Assets that do not meet the criteria for amortised cost or FVTOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
The Company subsequently measures all equity investments at fair value, except for equity investments in subsidiaries and associates where the Company has the option to either measure it at cost or fair value. The Company has opted to measure equity investments in subsidiaries and associates at cost hence investments in subsidiaries and associates are carried at cost less impairment, if any. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
(iii) Impairment of financial assets
In accordance with Ind AS 109 Financial Instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss associated with its financial assets carried at amortised cost and FVTOCI debt instruments.
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 115 Revenue from Contracts with Customers, the Company applies simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected life time losses to be recognised after initial recognition of receivables. For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, twelve months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on twelve-months ECL.
ECL represents expected credit loss resulting from all possible defaults and is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive, discounted at the original effective interest rate. While determining cash flows, cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms are also considered.
ECL is determined with reference to historically observed default rates over the expected life of the trade receivables and is adjusted for forward looking estimates. Note 40(i) details how the Company determines expected credit loss.
(iv) Derecognition of financial assets
A financial asset is derecognised only when the Company
⢠has transferred the rights to receive cash flows from the financial asset; or
⢠retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
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, 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.
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 through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
(r) Financial liabilities and equity instruments (i) Classification
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
The Company classifies its financial liabilities in the following measurement categories:
⢠t hose to be measured subsequently at fair value through profit or loss, and
⢠those measured at amortised cost.
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL, other financial liabilities are measured at amortised cost at the end of subsequent accounting periods.
Equity instruments
Equity instruments issued by the Company are recognised at the proceeds received. Transaction cost of equity transactions shall be accounted for as a deduction from equity.
At initial recognition, the Company measures a financial liability at its fair value net of, in the case of a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the issue of the financial liability. Transaction costs of financial liability carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement of financial liabilities depends on the classification of financial liabilities. There are two measurement categories into which the Company classifies its financial liabilities:
⢠Fair value through profit or loss (FVTPL):
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss.
⢠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.
(iii) Derecognition Equity instruments
Repurchase of the Companyâs own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
The Company derecognises financial liabilities when, and only when, the Companyâs 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.
(iv) Effective interest method
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 through the expected life of the financial liability to the gross carrying amount of a financial liability.
(v) Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in âOther incomeâ. The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period.
(s) Derivatives and hedging activities
The Company undertakes transactions involving derivative financial instruments, primarily foreign exchange forward contracts, to manage its exposure to foreign exchange risks.
Derivatives are initially recognised at fair value at the date the relevant contracts are entered into and are subsequently remeasured at their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedge, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company designates certain derivative instruments as cash flow hedges to hedge the foreign exchange risk relating to the cash flows attributable to certain firm commitments / highly probable forecast transactions. At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and strategy. Furthermore, at the inception of the hedge and on an ongoing basis, the Company assesses the effectiveness of the hedging instrument in offsetting changes in expected cash flows of the hedged item attributable to the hedged risk. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under cash flow hedging reserve within equity. The
Mar 31, 2022
CORPORATE INFORMATION
Triveni Engineering & Industries Limited (âthe Companyâ) is a company limited by shares, incorporated and domiciled in India. The Company''s equity shares are listed at two recognised stock exchanges in India (BSE and NSE). The registered office of the Company is located at A-44, Hosiery Complex, Phase-II extension, Noida, Uttar Pradesh - 201305. The Company is engaged in diversified businesses, mainly categorised into two segments - Sugar & allied businesses and Engineering business. Sugar & allied businesses primarily comprises manufacture of sugar and distillation of alcohol. Engineering business primarily comprises manufacture of high speed gears, gearboxes and providing water/waste-water treatment solutions.
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation and presentation
(i) Compliance with Ind AS
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015 (as amended)] and other relevant provisions of the Act.
(ii) Historical cost convention
The financial statements have been prepared on an accrual basis under historical cost convention except for certain assets and liabilities that are measured at fair values at the end of each reporting period, as explained in the respective accounting policies described in subsequent paragraphs.
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/ or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 116 Leases (see note 1(d)), and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 Inventories (see note 1(l)) or value in use in Ind AS 36 Impairment of Assets (see note 1(f)).
(iii) Classification of assets and liabilities into current/non-current
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Act. The operating cycle of the Company is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.
Revenue from contracts with customers is recongised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Transaction price at which revenue is recognised is net of goods & services tax and amounts collected on behalf of third parties, if any and includes effect of variable consideration (viz. returns, rebates, trade allowances, credits, penalties etc.). Variable consideration is estimated using the expected value method or most likely amount as appropriate in a given circumstance and is included in the transaction price only to the extent it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Recognising revenue from major business activities
(i) Sale of goods
Revenue from the sale of goods is recognised at the point in time when control of the goods are transferred to the customer (i.e. satisfaction of performance obligation), generally on dispatch of the goods. The Company, in its engineering business, generally
provides warranties to its customers in the nature of assurance, which is considered as an obligation and provided for under Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets (refer note 1(n)).
The Company provides engineering services that are either sold separately or bundled together with the sale of goods to a customer.
Contracts for bundled sales of goods and engineering services are comprised of two performance obligations because the promises to transfer goods and provide engineering services are distinct and capable of being separately identifiable. Accordingly, the Company allocates the transaction price based on relative stand-alone selling prices of such goods and engineering services.
The Company recognises revenue from engineering services over time, using an input method to measure progress towards complete satisfaction of the service, because the customer simultaneously receives and consumes the benefits provided by the Company. The progress towards complete satisfaction of the service is determined as follows:
⢠erection & commissioning / servicing revenue - based on technical estimate of completion of physical proportion of the contract work;
⢠operation & maintenance revenue - as the proportion of the total period of services contract that has elapsed at the end of the reporting period
(iii) Long-duration construction & supply contracts
Long-duration construction & supply contracts are analysed to determine combination of contracts and identification of performance obligations and accordingly transaction price is allocated amongst performance obligations based on stand-alone selling prices. Performance obligations, in long-duration construction & supply contracts, generally includes turnkey related activities towards design/engineering/ supply of equipment/construction/commissioning and operation & maintenance related activities which are satisfied over time with the customer receiving benefits from the activities being performed by the Company.
When the progress towards complete satisfaction of performance obligations of a long-duration construction & supply contract can be estimated reliably, revenue is recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, because the customer simultaneously receives and consumes the benefits provided by the Company. Contract costs excludes costs that do not depict the Company''s progress in satisfying the performance obligation.
When the outcome of performance obligations of a long-duration construction & supply contract cannot be estimated reliably, but the Company expects to recover the costs incurred in satisfying the performance obligation, contract revenue is recognised only to the extent of the contract costs incurred until such time that it can reasonably measure the outcome of the performance obligation. Contract costs are recognised as expenses in the period in which they are incurred.
Dividend income from investments is recognised when the Company''s right to receive payment has been established.
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.
Grants from the government are recognised where there is a reasonable assurance that the Company will comply with all attached conditions and the grant shall be received.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented either within other operating income/other income or net of related costs.
Government grants relating to the purchase of property, plant and equipment are deducted from its gross value and are recognised in profit or loss on a systematic and rational basis over the expected useful lives of the related assets by way of reduced depreciation.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in profit or loss in the period in which they become receivable.
The Government grants by way of a benefit of a Government loan at a below market rate of interest is measured as the difference the between proceeds received and the fair value of the loan based on prevailing market interest rates.
See note 43 for disclosures and treatment of government grants in financial statements.
(i) As a lessee
The Company''s lease assets classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. 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. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset;
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease; and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use (âROUâ) assets and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. The ROU assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any
lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses. ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset (see note 1(i) below) and is also evaluated for impairment (see note 1(f) below). The lease liability is measured at amortised cost at the present value of the future lease payments. The lease term includes (a) the non-cancellable period of the lease; (b) the period covered by an option to extend the lease, if it is reasonably certain that such option shall be exercised; and (c) the period covered by an option to terminate the lease, if it is reasonably certain that such option shall not be exercised. Lease liabilities are remeasured with a corresponding adjustment to the related ROU assets if the Company changes its assessment concerning the right to exercise its option of extending or terminating the lease provided to it under the relevant arrangement.
For short-term and low value leases as mentioned above, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
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 has given certain portion of its office / factory premises under operating leases (refer note 44). Lease income from operating leases is recognised as income on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straightline basis over the lease term. Respective leased assets are included in the balance sheet based on their nature.
(e) Foreign currency translation
(i) Functional and presentation currency
The financial statements are presented in Indian rupee (''), which is the Company''s functional and presentation currency unless stated otherwise.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates that approximates the actual rate at the date of respective transactions. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss in the period in which they arise except for:
⢠foreign exchange gains or losses on settlement or translation of foreign currency borrowings that are directly attributable to acquisition, construction or production of a qualifying asset, which are included in cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
⢠foreign exchange gains or losses in respect of certain qualifying cash flow hedges which are deferred in equity.
Foreign exchange gains or losses which are regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. Foreign exchange gains or losses related to certain qualifying cash flow hedges are presented in other comprehensive income on a net basis. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income or other expenses, as the case may be.
(f) Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, so however that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Borrowing costs are not capitalised during extended periods in which active development of qualifying assets is suspended. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit 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, the carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
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.
(iii) 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. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
(i) Property, plant and equipment
Property, plant and equipment are tangible items that are held for use in the production or supply of goods and services, rental to others or for administrative purposes and are expected to be used during more than one period. The cost of an item of property, plant and equipment is recognised as an asset if and only if 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. Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost comprises purchase price after deducting trade discounts/rebates, government grants related to assets and including import duties and non-refundable purchase taxes, borrowing costs, any costs that is directly attributable to the bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management and costs of dismantling/removing the item and restoring the site on which it was located under an obligation. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Each part of item of property, plant and equipment, if significant in relation to the total cost of the item, is depreciated separately. Further, parts of plant and equipment that are technically advised to be replaced at prescribed intervals/period of operation, insurance spares and cost of inspection/overhauling are depreciated separately based on their specific useful life provided these are of significant amounts commensurate with the size of the Company and scale of its operations. The carrying amount of any equipment / inspection / overhauling accounted for as separate asset or if otherwise significant, is derecognised when replaced. All other repairs and maintenance costs are charged to profit or loss during the reporting period in which they are incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives and residual value
Depreciation commences when the assets are available for their intended use. Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives.
The management has estimated the useful lives and residual values of all property, plant and equipment and adopted useful lives as stated in Schedule II along with residual values of 5% except for the following:
⢠On the basis of technical assessment and past experience:
o the useful lives of mill rollers, instrumentation and control devices installed at sugar plants is considered at ten years as against prescribed life of twenty five years in respect of continuous process plant.
o mobile phones costing ''5,000/- or more are depreciated over two years.
o patterns, tools, Jigs etc. are depreciated over three years.
o machinery spares are depreciated over a life ranging from five to ten years.
⢠Assets costing less than ''5,000/- are fully depreciated in the year of purchase.
Estimated useful lives considered are as follows:
|
Assets |
Estimated useful life |
|
Buildings |
3 - 60 years |
|
Roads |
3 - 10 years |
|
Plant & equipment |
3 - 25 years |
|
Furniture & fixtures |
10 years |
|
Vehicles |
8 - 10 years |
|
Office equipment |
2 - 5 years |
|
Computers |
3 - 6 years |
|
Laboratory equipment |
10 years |
|
Electrical installations and equipment |
10 years |
Fixture and fittings and improvements to leasehold buildings not owned by the Company are amortised over the unexpired lease period or estimated useful life of such fixture, fittings and improvements, whichever is lower.
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.
Property that is held for long-term rental yields or for capital appreciation or both, is classified as investment property. Investment property is stated at cost less accumulated depreciation and accumulated impairment losses, if any. Investment property is measured initially at its cost, including related transaction costs and, where applicable, borrowing costs. Cost comprises purchase price after deducting trade discounts/rebates, government grants related to assets and including duties and taxes, borrowing costs, any costs that is directly attributable to the bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and costs of dismantling/removing the item and restoring the site on which it was located under an obligation. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
I nvestment property being building is depreciated using the straight-line method over their estimated useful lives as stated in Schedule II at 30 years along with residual values of 5%.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment
properties recognised as at 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
I ntangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Costs comprises purchase price after deducting trade discounts/rebates, government grants related to assets and including import duties and non-refundable purchase taxes, borrowing costs and any directly attributable cost of preparing the asset for its intended use. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Intangible assets comprising being computer software and website are amortised using straight-line method over estimated useful life of 3 years. 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.
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, is recognised in profit or loss when the asset is derecognised.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognised as at 1 April 201 5 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(i) Finished goods and work-in-progress are valued at lower of cost and net realisable value. The cost of finished goods and work-in-progress is computed on weighted average basis and includes raw material costs, direct cost of conversion and proportionate allocation of indirect costs incurred in bringing the inventories to their present location and condition. Finished goods and work-in-progress are written
down if their net realisable value declines below the carrying amount of the inventories and such write downs of inventories are recognised in profit or loss. When reasons for such write downs ceases to exist, the write downs are reversed through profit or loss.
(ii) Inventories of raw materials & components, stores & spares and stock-in-trade are valued at lower of cost and net realisable value. Raw materials and other items held for use in the production of inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost. Write down of such inventories are recognised in profit or loss and when reasons for such write downs ceases to exist, such write downs are reversed through profit or loss. Cost of such inventories comprises of purchase price and other directly attributable costs that have been incurred in bringing the inventories to their present location and condition. By-products used as raw material are valued at transfer price linked with net realisable value. Cost for the purpose of valuation of raw materials & components, stores & spares and stock-in-trade is considered on the following basis :
|
Raw materials & Components |
|
|
Business Units |
Basis |
|
Sugar |
First in first out |
|
Co-generation & |
Weighted average |
|
Distillery Water Business Group |
Specific cost |
|
Power Transmission |
Weighted average and |
|
Business |
Specific cost |
|
Stores & Spares |
|
|
Business Units |
Basis |
|
Water Business Group |
Specific cost |
|
Other units |
Weighted average |
|
Stock-in-trade |
|
|
Business Units |
Basis |
|
Branded goods trading business |
Weighted average |
|
Diesel/petrol retailing business |
First in first out |
(iii) By-products (excluding those used as raw materials) and scrap are valued at estimated net realisable value.
(m) Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets once classified as held for sale are neither depreciated nor amortised.
(n) Provisions, contingent liabilities and contingent assets
(i) 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 the effect of the time value of money is material, provision is measured at the present value of cash flows estimated to settle the present obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
(ii) A contingent liability is not recognised in the financial statements, however, is disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote. If it becomes probable that an outflow of future economic benefits will be required for an item dealt with as a contingent liability, a provision is recognised in the financial statements of the period (except in the extremely rare circumstances where no reliable estimate can be made).
(iii) A contingent asset is not recognised in the financial statements, however, is disclosed, where an inflow of economic benefits is probable. When the realisation of income is virtually certain, then the asset is no longer a contingent asset, and is recognised as an asset.
(iv) Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
(o) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the undiscounted amounts expected to be paid when the liabilities are settled. The liabilities are presented as current benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
Other long-term employee benefits include earned leaves and sick leaves. The liabilities for earned leaves and sick leaves are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The benefits are discounted using the market yield on government bonds at the end of the reporting period that have maturity term approximating to the estimated term of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as provisions in the balance sheet.
(iii) Post-employment obligations
The Company operates the following postemployment schemes:
⢠defined benefit plans towards payment of gratuity; and
⢠defined contribution plans towards employees'' provident fund & employee pension scheme, employees'' state insurance, superannuation scheme and national pension scheme.
Defined benefit plan
The Company provides for gratuity obligations through a defined benefit retirement plan (the âGratuity Plan'') covering all employees. The Gratuity Plan provides a
lump sum payment to vested employees at retirement/ termination of employment or death of an employee, based on the respective employees'' salary and years of employment with the Company.
The liability or asset recognised in the balance sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value of the defined benefit obligation is determined using projected unit credit method by discounting the estimated future cash outflows with reference to market yield at the end of the reporting period on government bonds that have maturity terms approximating the estimated term of the related obligation, through actuarial valuations carried out at the end of each annual reporting period.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. Such net interest cost along with the current service cost and, if applicable, the past service cost and settlement gain/loss, is included in employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions, comprising actuarial gains/losses and return on plan assets (excluding the amount recognised in net interest on the net defined liability), are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Defined contribution plans are retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company has no further payment obligations once the contributions have been paid. The defined contributions plans are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
⢠Provident Fund Plan & Employee Pension Scheme
The Company makes monthly contributions at prescribed rates towards Employees'' Provident Fund/ Employees'' Pension Scheme to a Fund administered and managed by the Government of India.
The Company makes prescribed monthly contributions towards Employees'' State Insurance Scheme.
The Company contributes towards a fund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policy entered into by such fund with the Life Insurance Corporation of India.
⢠National Pension Scheme
The Company makes contributions to the National Pension Scheme fund in respect of certain employees of the Company.
(p) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed by the end of the reporting period.
(q) Financial assets (i) Classification
The Company classifies its financial assets in the following measurement categories:
⢠those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
⢠those measured at amortised cost.
The classification depends on the Companyâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For assets in the nature of debt instruments, this will depend on the business model. For assets in the nature of equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity instrument at fair value through other comprehensive income.
The Company reclassifies debt instruments when and only when its business model for managing those assets changes.
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
⢠Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is recognised using the effective interest rate method.
⢠Fair value through other comprehensive income (FVTOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at FVTOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.
⢠Fair value through profit or loss (FVTPL):
Assets that do not meet the criteria for amortised cost or FVTOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair
value through profit or loss is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
The Company subsequently measures all equity investments at fair value, except for equity investments in subsidiaries and associates where the Company has the option to either measure it at cost or fair value. The Company has opted to measure equity investments in subsidiaries and associates at cost hence investments in subsidiaries and associates are carried at cost less impairment, if any. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.
(iii) Impairment of financial assets
In accordance with Ind AS 109 Financial instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss associated with its financial assets carried at amortised cost and FVTOCI debt instruments.
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 115 Revenue from Contracts with Customers, the Company applies simplified approach permitted by Ind AS 109 Financial instruments, which requires expected life time losses to be recognised after initial recognition of receivables. For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, twelve months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on twelve-months ECL.
ECL represents expected credit loss resulting from all possible defaults and is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive, discounted at the original effective interest rate. While determining cash flows, cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms are also considered.
ECL is determined with reference to historically observed default rates over the expected life of the trade receivables and is adjusted for forward looking estimates. Note 41 (i) details how the Company determines expected credit loss.
(iv) Derecognition of financial assets
A financial asset is derecognised only when the Company
⢠has transferred the rights to receive cash flows from the financial asset; or
⢠retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
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, 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.
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 through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
(r) Financial liabilities and equity instruments (i) Classification
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
The Company classifies its financial liabilities in the following measurement categories:
⢠those to be measured subsequently at fair value through profit or loss, and
⢠those measured at amortised cost.
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL, other financial liabilities are measured at amortised cost at the end of subsequent accounting periods.
Equity instruments
Equity instruments issued by the Company are recognised at the proceeds received. Transaction cost of equity transactions shall be accounted for as a deduction from equity.
At initial recognition, the Company measures a financial liability at its fair value net of, in the case of a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the issue of the financial liability. Transaction costs of financial liability carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement of financial liabilities depends on the classification of financial liabilities. There are two measurement categories into which the Company classifies its financial liabilities:
⢠Fair value through profit or loss (FVTPL):
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss.
⢠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 costs'' line item.
(iii) Derecognition Equity instruments
Repurchase of the Companyâs own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
The Company derecognises financial liabilities when, and only when, the Companyâs 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.
(iv) Effective interest method
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 through the expected life of the financial liability to the gross carrying amount of a financial liability.
(v) Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in âOther incomeâ. The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period.
(s) Derivatives and hedging activities
The Company undertakes transactions involving derivative financial instruments, primarily foreign exchange forward contracts, to manage its exposure to foreign exchange risks.
Derivatives are initially recognised at fair value at the date the relevant contracts are entered into and are subsequently remeasured at their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedge, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company designates certain derivative instruments as cash flow hedges to hedge the foreign exchange risk relating to the cash flows attributable to certain firm commitments / highly probable forecast transactions. At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and strategy. Furthermore, at the inception of the hedge and on an ongoing basis, the Company assesses the effectiveness of the hedging instrument in offsetting changes in expected cash flows of the hedged item attributable to the hedged risk. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under cash flow hedging reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in the statement of profit and loss. In case the Company opts to designate only the changes in the spot element of a foreign currency forward contract as a cash flow hedge, the changes in the forward element of the relevant forward contract, is recognised in other comprehensive income and accumulated under cost of hedging reserve within equity, to the extent such forward element is aligned with the critical terms of the hedged item. The changes in the forward element of the relevant forward contract which is not so aligned, is recognised immediately in the statement of profit and loss.
Amounts previously recognised in other comprehensive income and accumulated in equity relating
Mar 31, 2018
Note 1: Significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated,
(a) Basis of preparation and presentation
(i) Compliance with Ind AS
The standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
(ii) Historical cost convention
The standalone financial statements have been prepared on an accrual basis under historical cost convention except for certain assets and liabilities that are measured at fair values at the end of each reporting period, as explained in the respective accounting policies described in subsequent paragraphs,
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/ or disclosure purposes in these standalone financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17 Leases (see note 1(d)), and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 Inventories (see note 1(l)) or value in use in Ind AS 36 Impairment of Assets (see note 1(f)),
(iii) Classification of assets and liabilities into current/ non-current
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in Schedule III to the Act. The operating cycle of the Company is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents,
(b) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, other similar allowances, value added taxes, service tax, goods & services tax and amounts collected on behalf of third parties, if any.
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Companyâs activities as described below,
Recognising revenue from major business activities
(i) 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; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably,
(ii) Rendering of services
Revenue from a contract to provide services is recognised when the outcome of a transaction involving the rendering of services can be estimated reliably, by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows:
- erection & commissioning / service revenue is recognised by reference to the stage of completion of the erection & commissioning/ service, determined based on technical estimate of completion of physical proportion of the contract work;
- operation & maintenance revenue is recognised by reference to the stage of completion of operations & maintenance work, determined as the proportion of the total period of services contract that has elapsed at the end of the reporting period
(iii) Construction contracts
When the outcome of a construction contract can be estimated reliably, revenue is recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the standalone balance sheet, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the standalone balance sheet under trade receivables.
(iv) Revenue from sale of Certified Emission Reductions (CERs) and Renewable Energy Certificates (RECs)
Income from the sale of CERs and RECs is recognised on the delivery of the CERs/RECs to the customerâs account as evidenced by the receipt of confirmation of execution of delivery instructions.
(v) Rental income
The Companyâs policy for recognition of revenue from operating leases is described in note 1(d) below,
(vi) Dividend income
Dividend income from investments is recognised when the Companyâs right to receive payment has been established.
(vii) Interest income
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.
(c) Government grants
Grants from the government are recognised where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented either within other income or net of related costs.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a systematic and rational basis over the expected useful lives of the related assets and presented within other income.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in profit or loss in the period in which they become receivable.
The benefit of a loan at a below market rate of interest or loan with interest subvention is treated as a government grant, measured as a difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
See note 43 for disclosures and treatment of government grants in standalone financial statements.
(d) Leases
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.
(i) As a lessee
Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the standalone balance sheet as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Companyâs general policy on borrowing costs (see note 1(g) below).
Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease, unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, in which case lease expenses are charged to profit or loss on the basis of actual payments to the lessors.
(ii) As a lessor
Lease income from operating leases where the Company is a lessor is recognised as income on a straight-line basis over the lease term, unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases where such increases are recognised in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. Respective leased assets are included in the standalone balance sheet based on their nature.
(e) Foreign currency translation
(i) Functional and presentation currency
The standalone financial statements are presented in Indian rupee (â), which is Companyâs functional and presentation currency unless stated otherwise.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss in the period in which they arise except for foreign exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the standalone statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the standalone statement of profit and loss on a net basis within other income.
(f) Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, so however that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
(g) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Borrowing costs are not capitalised during extended periods in which active development of qualifying assets is suspended. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
(h) Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
(i) 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 standalone 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.
(ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the standalone 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, the carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
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.
(iii) 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. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
(i) Property, plant and equipment
Property, plant and equipment are tangible items that are held for use in the production or supply for goods and services, rental to others or for administrative purposes and are expected to be used during more than one period. The cost of an item of property, plant and equipment is recognised as an asset if and only if 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. Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost comprises purchase price after deducting trade discounts/rebates, including import duties and non-refundable purchase taxes, borrowing costs, any costs that is directly attributable to the bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and costs of dismantling/removing the item and restoring the site on which it was located under an obligation. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably,
Each part of item of property, plant and equipment, if significant in relation to the total cost of the item, is depreciated separately. Further, parts of plant and equipment that are technically advised to be replaced at prescribed intervals/period of operation, insurance spares and cost of inspection/overhauling are depreciated separately based on their specific useful life provided these are of significant amounts commensurate with the size of the Company and scale of its operations. The carrying amount of any equipment / inspection / overhauling accounted for as separate asset is derecognised when replaced. All other repairs and maintenance costs are charged to profit or loss during the reporting period in which they are incurred,
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives and residual value
Depreciation commences when the assets are available for their intended use. Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives.
The management has estimated the useful lives and residual values of all property, plant and equipment and adopted useful lives as stated in Schedule II along with residual values of 5% except for the following:
- On the basis of technical assessment and past
- the useful lives of mill rollers, instrumentation and control devices installed at sugar plants is considered at ten years as against prescribed life of twenty five years in respect of continuous process plant.
- mobile phones costing Rs. 5000/- or more are depreciated over two years.
- patterns, tools, Jigs, fixtures etc. are depreciated over three years.
- machinery spares are depreciated over a life ranging from five to ten years.
- Assets costing less than Rs. 5000/- are fully depreciated in the year of purchase.
Fixture and fittings and improvements to leasehold buildings not owned by the Company are amortised over the unexpired lease period or estimated useful life of such fixture, fittings and improvements, whichever is lower.
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.
The property, plant and equipment acquired under finance leases is depreciated over the assetâs useful life or over the shorter of the assetâs useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
(j) Investment property
Property that is held for long-term rental yields or for capital appreciation or both, is classified as investment property. Investment property is stated at cost less accumulated depreciation and accumulated impairment losses, if any. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Cost comprises purchase price after deducting trade discounts/rebates, including duties and taxes, borrowing costs, any costs that is directly attributable to the bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and costs of dismantling/removing the item and restoring the site on which it was located under an obligation. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably.
All other repairs and maintenance costs are expensed when incurred.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
Investment property being building is depreciated using the straight-line method over their estimated useful lives as stated in Schedule II at 30 years along with residual values of 5%.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognised as at 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
(k) Intangible assets
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Costs comprises purchase price after deducting trade discounts/rebates, including import duties and non-refundable purchase taxes, borrowing costs and any directly attributable cost of preparing the asset for its intended use. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. 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.
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, is recognised in profit or loss when the asset is derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognised as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(l) Inventories
(i) Finished goods and work-in-progress are valued at lower of cost and net realisable value. The cost of finished goods and work-in-progress is computed on weighted average basis and includes raw material costs, direct cost of conversion and proportionate allocation of indirect costs incurred in bringing the inventories to their present location and condition. Finished goods and work-in-progress are written down if their net realisable value declines below the carrying amount of the inventories and such write downs to inventories are recognised in profit or loss. When reasons for such write downs ceases to exist, such write downs are reversed through profit or loss.
(ii) Inventories of raw materials & components, stores & spares and stock-in-trade are valued at lower of cost and net realisable value. Raw materials and other items held for use in the production of inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost. Write down of such inventories are recognised in profit or loss and when reasons for such write downs ceases to exist, such write downs are reversed through profit or loss. Cost of such inventories comprises of purchase price and other directly attributable costs that have been incurred in bringing the inventories to their present location and condition. By-products used as raw material are valued at transfer price linked with net realisable value. Cost for the purpose of valuation of raw materials & components, stores & spares and stock-in-trade is considered on the following basis :
(iii) By-products (excluding those used as raw materials) and scrap are valued at estimated net realisable value.
(iv) Unsold certified emission reductions (CERs) and renewable energy certificates (RECs) are recognised as inventory in accordance with the Guidance Note on Accounting for Self-generated Certified Emission Reductions, issued by the Institute of Chartered Accountants of India. Inventory of CERs and RECs is valued at lower of cost and net realisable value. The cost incurred on verification/certification of CERs/RECs is considered as the cost of inventories of CERs/RECs,
(m) Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use, This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets once classified as held for sale are neither depreciated nor amortised.
(n) Provisions, contingent liabilities and contingent assets
(i) 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 the effect of the time value of money is material, provision is measured at the present value of cash flows estimated to settle the present obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
(ii) A contingent liability is not recognised in the standalone financial statements, however, is disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote. If it becomes probable that an outflow of future economic benefits will be required for an item dealt with as a contingent liability, a provision is recognised in the standalone financial statements of the period (except in the extremely rare circumstances where no reliable estimate can be made).
(iii) A contingent asset is not recognised in the standalone financial statements, however, is disclosed, where an inflow of economic benefits is probable. When the realisation of income is virtually certain, then the asset is no longer a contingent asset, and is recognised as an asset.
(iv) Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
(o) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the undiscounted amounts expected to be paid when the liabilities are settled. The liabilities are presented as current benefit obligations in the standalone balance sheet.
(ii) Other long-term employee benefit obligations
Other long-term employee benefits include earned leaves and sick leaves. The liabilities for earned leaves and sick leaves are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The benefits are discounted using the market yield on government bonds at the end of the reporting period that have maturity term approximating to the estimated term of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as provisions in the standalone balance sheet.
(iii) Post-employment obligations
The Company operates the following postemployment schemes:
- defined benefit plan towards payment of gratuity; and
- defined contribution plans towards employeesâ provident fund & employee pension scheme, employeesâ state insurance, superannuation scheme, national pension scheme and employeesâ provident fund (set-up by the Company and administered through trust).
Defined benefit plan
The Company provides for gratuity obligations through a defined benefit retirement plan (the âGratuity Planâ) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement/termination of employment or death of an employee, based on the respective employeesâ salary and years of employment with the Company.
The liability or asset recognised in the standalone balance sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value of the defined benefit obligation is determined using projected unit credit method by discounting the estimated future cash outflows by reference to market yield at the end of the reporting period on government bonds that have maturity terms approximating to the estimated term of the related obligation, with actuarial valuations being carried out at the end of each annual reporting period.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the standalone statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the standalone statement of changes in equity and in the standalone balance sheet.
Defined contribution plans
Defined contribution plans are retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company has no further payment obligations once the contributions have been paid. The defined contributions plans are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available,
- Provident Fund Plan & Employee Pension Scheme
The Company makes monthly contributions at prescribed rates towards Employeesâ Provident Fund/ Employeesâ Pension Scheme to a Fund administered and managed by the Government of India.
- Employee State Insurance
The Company makes prescribed monthly contributions towards Employeesâ State Insurance Scheme.
- Superannuation Scheme
The Company contributes towards a fund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policy entered into by such fund with the Life Insurance Corporation of India,
- National Pension Scheme
The Company makes contributions to the National Pension Scheme fund in respect of certain employees of the Company.
- Provident fund (set-up by the Company and administered through trust)
The Company makes contribution towards provident fund, in substance a defined contribution plan, which was set-up by the Company and administered through trust for the benefit of certain employees. The interest rate payable by the trust to the beneficiaries is regulated by statutory authorities which requires that if the Board of Trustees are unable to pay interest at the rate declared by the Central Government under para 60 of the Employeesâ Provident Fund Scheme, 1952, for the reason that the return of investments is less or for any other reason, then the deficiency shall be made good by the Company.
(p) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed by the end of the reporting period.
(q) Financial assets
(i) Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- those measured at amortised cost.
The classification depends on the Companyâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For assets in the nature of debt instruments, this will depend on the business model. For assets in the nature of equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity instrument at fair value through other comprehensive income.
The Company reclassifies debt instruments when and only when its business model for managing those assets changes.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
- Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is recognised using the effective interest rate method.
- Fair value through other comprehensive income (FVTOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at FVTOCI,
Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.
- Fair value through profit or loss (FVTPL):
Assets that do not meet the criteria for amortised cost or FVTOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net in the standalone statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Equity instruments
The Company subsequently measures all equity investments at fair value, except for equity investments in subsidiaries and associates where the Company has the option to either measure it at cost or fair value. The Company has opted to measure equity investments in subsidiaries and associates at cost hence investments in subsidiaries and associates are carried at cost less impairment, if any. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
(iii) Impairment of financial assets
In accordance with Ind AS 109 Financial Instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss associated with its financial assets carried at amortised cost and FVTOCI debt instruments,
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 Construction Contracts and Ind AS 18 Revenue, the Company applies simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected life time losses to be recognised after initial recognition of receivables. For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, twelve months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on twelve-months ECL.
ECL represents expected credit loss resulting from all possible defaults and is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive, discounted at the original effective interest rate. While determining cash flows, cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms are also considered.
ECL is determined with reference to historically observed default rates over the expected life of the trade receivables and is adjusted for forward looking estimates. Note 41 (i) details how the Company determines expected credit loss.
(iv) Derecognition of financial assets
A financial asset is derecognised only when
- the Company has transferred the rights to receive cash flows from the financial asset; or
- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
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, 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.
(v) 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 through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL,
(r) Financial liabilities and equity instruments
(i) Classification
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
Financial liabilities
The Company classifies its financial liabilities in the following measurement categories:
- those to be measured subsequently at fair value through profit or loss, and
- those measured at amortised cost.
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL, other financial liabilities are measured at amortised cost at the end of subsequent accounting periods.
(ii) Measurement Equity instruments
Equity instruments issued by the Company are recognised at the proceeds received. Transaction cost of equity transactions shall be accounted for as a deduction from equity
Financial liabilities
At initial recognition, the Company measures a financial liability at its fair value net of, in the case of a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the issue of the financial liability. Transaction costs of financial liability carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement of financial liabilities depends on the classification of financial liabilities. There are two measurement categories into which the Company classifies its financial liabilities:
- Fair value through profit or loss (FVTPL): Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss.
- 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.
(iii) Derecognition
Equity instruments
Repurchase of the Companyâs own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
Financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs 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.
(iv) Effective interest method
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 through the expected life of the financial liability to the gross carrying amount of a financial liability,
(v) Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in âOther incomeâ. The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period.
(s) Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately.
(t) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the standalone balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
(u) Fair value of financial instruments
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 Company 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,
(v) Cash flow statement
Cash flows are reported using the indirect method, whereby profit/loss 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 of financing flows. The cash flows from operating, investing and financing activities of the Company are segregated,
(w) Cash and cash equivalents
Cash and cash equivalents in the standalone balance sheet comprise of cash on hand, cheques on hand, balance with banks on current accounts and short term, highly liquid investments with an original maturity of three months or less and which carry insignificant risk of change in value,
For the purpose of cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.
(x) Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and financing costs associated with dilutive potential equity shares and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(y) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Refer note 37 for segment information presented,
Mar 31, 2017
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation and presentation
(i) Compliance with Ind As
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The financial statements up to year ended 31 March 2016 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).
These financial statements are the first financial statements of the Company under Ind AS. The date of transition to Ind AS is 1 April 2015.Refer note 52 for the details of first-time adoption exemptions availed by the Company and an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
(ii) Historical cost convention
The financial statements have been prepared on a historical cost basis except for certain assets and liabilities (including derivative instruments) that are measured at fair values at the end of each reporting period, as explained in the respective accounting policies described in subsequent paragraphs.
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/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 Inventories or value in use in Ind AS 36Impairment of Assets.
(b) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.Refer note 37 for segment information presented.
(c) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, other similar allowances, value added taxes, service tax and amounts collected on behalf of third parties, if any.
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Companyâs activities as described below.
Recognising revenue from major business activities
(i) 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.
(ii) Rendering of services
Revenue from a contract to provide services is recognised when the outcome of a transaction involving the rendering of services can be estimated reliably, by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows:
- erection & commissioning/service revenue is recognised by reference to the stage of completion of the erection & commissioning/ service, determined based on technical estimate of completion of physical proportion of the contract work;
- operation & maintenance revenue is recognised by reference to the stage of completion of operations & maintenance work, determined as the proportion of the total period of services contract that has elapsed at the end of the reporting period
(iii) Construction contracts
When the outcome of a construction contract can be estimated reliably, revenue is recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the balance sheet, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the balance sheet under trade receivables.
(iv) Revenue from sale of Certified Emission reductions (CERs) and renewable Energy Certificates (RECs)
Income from the sale of CERs and RECs is recognised on the delivery of the CERs/RECs to the customerâs account as evidenced by the receipt of confirmation of execution of delivery instructions.
(v) Rental income
The Companyâs policy for recognition of revenue from operating leases is described in note 1(e) below.
(vi) Dividend income
Dividend income from investments is recognised when the Companyâs 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).
(vii) Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the 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.
(d) Government grants
Grants from the government are recognised where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented either within other income or net of related costs.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a systematic and rational basis over the expected useful lives of the related assets and presented within other income.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in profit or loss in the period in which they become receivable.
The benefit of a loan at a below market rate of interest or loan with interest subvention is treated as a government grant, measured as a difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
(e) Leases
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.
(i) As a lessee
Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Companyâs general policy on borrowing costs (see note 1(h) below).
Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases in which case lease expenses are charged to profit or loss on the basis of actual payments to the lessors.
(ii) As a lessor
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
(f) Foreign currency translation
(i) Functional and presentation currency
The financial statements are presented in Indian rupee (â), which is Companyâs functional and presentation currency unless stated otherwise.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss in the period in which they arise except for foreign exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other gains/(losses).
(g) Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
(h) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
(i) Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
(i) 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.
(ii) 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, the carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
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.
(iii) 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. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
(j) Property, plant and equipment
Property, plant and equipment are tangible items that are held for use in the production or supply for goods and services, rental to others or for administrative purposes and are expected to be used during more than one period. The cost of an item of property, plant and equipment shall be recognised as an asset if and only if 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. Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Each part of item of property, plant and equipment, if significant in relation to the total cost of the item, is depreciated separately. Further, parts of plant and equipment that are technically advised to be replaced at prescribed intervals/period of operation, insurance spares and cost of inspection/overhauling are depreciated separately based on their specific useful life provided these are of significant amounts commensurate with the size of the Company and scale of its operations. The carrying amount of any equipment / inspection / overhauling accounted for as separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Transition to Ind As
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives and residual value
Depreciation commences when the assets are available for their intended use. Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives.
The management has estimated the useful lives and residual values of all property, plant and equipment and adopted useful lives as stated in Schedule II along with residual values of 5% except for the following:
- On the basis of technical assessment and past experience:
- the useful lives of mill rollers, instrumentation and control devices installed at sugar plants is considered at ten years as against prescribed life of twenty five years in respect of continuous process plant.
- mobile phones costing Rs.5,000/- or more are depreciated over two years.
- patterns, tools, Jigs, fixtures etc. are depreciated over three years.
- machinery spares are depreciated over a life ranging from five to ten years.
- Assets costing less than Rs.5,000/- are fully depreciated in the year of purchase.
Fixture and fittings and improvements to leasehold buildings not owned by the Company are amortised over the lease period or estimated useful life of such fixture, fittings and improvements, whichever is lower.
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.
The property, plant and equipment acquired under finance leases is depreciated over the assetâs useful life or over the shorter of the assetâs useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
(k) Investment property
Property that is held for long-term rental yields or for capital appreciation or both, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
Investment properties are depreciated using the straight-line method over their estimated useful lives as stated in Schedule II along with residual values of 5%.
Transition to Ind As
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognised as at 1 April 2015 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
(l) Intangible assets
Intangible assets 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.
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, is recognised in profit or loss when the asset is derecognised.
Transition to Ind As
On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognised as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(m) Inventories
(i) Inventories of raw materials, components, stores and spares are valued at lower of cost and net realisable value. By-products used as raw material are valued at transfer price linked with net realisable value. Cost for the purpose of valuation of raw materials & components, stores and spares is considered on the following basis:
(ii) Finished goods and work-in-progress are valued at lower of cost and net realisable value. The cost of finished goods and work-in-progress includes raw material costs, direct cost of conversion and proportionate allocation of indirect costs incurred in bringing the inventories to their present location and condition. Excise duty is included in the value of finished goods.
(iii) Unsold certified emission reductions (CERs) and renewable energy certificates (RECs) are recognised as inventory in accordance with the Guidance Note on Accounting for Self-generated Certified Emission Reductions, issued by the Institute of Chartered Accountants of India. Inventory of CERs and RECs is valued at lower of cost and net realisable value. The cost incurred on verification/certification of CERs/RECs is considered as the cost of inventories of CERs/ RECs.
(iv) By-products (excluding those used as raw materials) and scrap are valued at estimated net realisable value.
(n) Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. Management must be committed to the sale. They are measured at the lower of their carrying amount and fair value less costs to sell.
(o) 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 the effect of the time value of money is material, provision is measured at the present value of cash flows estimated to settle the present obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
(p) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the undiscounted amounts expected to be paid when the liabilities are settled. The liabilities are presented as current benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
Other long-term employee benefits include earned leaves and sick leaves. The liabilities for earned leaves and sick leaves are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period.The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as provisions in the balance sheet.
(iii) Post-employment obligations
The Company operates the following postemployment schemes:
- defined benefit plans towards payment of gratuity; and
- defined contribution plans towards provident fund plan & employee pension scheme, employee state insurance, superannuation scheme, national pension scheme and provident fund (set-up by the Company and administered through trust).
Defined benefit plans
The Company provides for gratuity obligations through a defined benefit retirement plan (the âGratuity Planâ) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement/termination of employment or death of an employee, based on the respective employeesâ salary and years of employment with the Company.
The liability or asset recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value of the defined benefit obligation is determined using projected unit credit method by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation, with actuarial valuations being carried out at the end of each annual reporting period.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Defined contribution plans
Defined contribution plans are retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company has no further payment obligations once the contributions have been paid. The defined contributions plans are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
- Provident Fund Plan & Employee Pension scheme
The Company makes monthly contributions at prescribed rates towards Employeesâ Provident Fund/ Employeesâ Pension Scheme to a Fund administered and managed by the Government of India.
- Employee State Insurance
The Company makes prescribed monthly contributions towards Employeesâ State Insurance Scheme.
- Superannuation Scheme
The Company contributes towards a fund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policy entered into by such fund with the Life Insurance Corporation of India.
- National Pension Scheme
The Company makes contributions to the National Pension Scheme fund in respect of certain employees of the Company.
- Provident fund (set-up by the Company and administered through trust)
The Company makes contribution towards provident fund, in substance a defined contribution plan, which was set-up by the Company and administered through trust for the benefit of certain employees. The interest rate payable by the trust to the beneficiaries is regulated by statutory authorities which requires that if the Board of Trustees are unable to pay interest at the rate declared by the Employeesâ Provident Fund by the Government under para 60 of the Employeesâ Provident Fund Scheme, 1952 for the reason that the return of investments is less or for any other reason, then the deficiency shall be made good by the Company.
(q) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed by the end of the reporting period.
(r) Financial assets
(i) Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- those measured at amortised cost.
The classification depends on the Companyâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For assets in the nature of debt instruments, this will depend on the business model. For assets in the nature of equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity instrument at fair value through other comprehensive income.
The Company reclassifies debt instruments when and only when its business model for managing those assets changes.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
- Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is recognised using the effective interest rate method.
- Fair value through other comprehensive income (FVTOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at FVTOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.
- Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortised cost or FVTOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Equity instruments
The Company subsequently measures all equity investments at fair value, except for equity investments in subsidiaries and associates where the Company has the option to either measure it at cost or fair value. The Company has opted to measure equity investments in subsidiaries and associates at cost.Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
(iii) Impairment of financial assets
In accordance with Ind AS 109 Financial Instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss associated with its financial assets carried at amortised cost and FVTOCI debt instruments.
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 Construction Contractsand Ind AS 18 Revenue, the Company applies simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected life time losses to be recognised after initial recognition of receivables. For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, twelve months ECL is used to provide for impairment loss.
However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on twelve-months ECL.
ECL represents expected credit loss resulting from all possible defaults and is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive, discounted at the original effective interest rate. While determining cash flows, cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms are also considered.
ECL is determined with reference to historically observed default rates over the expected life of the trade receivables and is adjusted for forward looking estimates. Note 41 details how the Company determines expected credit loss.
(iv) Derecognition of financial assets
A financial asset is derecognised only when
- the Company has transferred the rights to receive cash flows from the financial asset; or
- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
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, 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.
(v) 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 through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
(s) Financial liabilities and equity instruments
(i) Classification
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
Financial liabilities
The Company classifies its financial liabilities in the following measurement categories:
- those to be measured subsequently at fair value through profit or loss, and
- those measured at amortised cost.
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL, other financial liabilities are measured at amortised cost at the end of subsequent accounting periods.
(ii) Measurement
Equity instruments
Equity instruments issued by the Company are recognised at the proceeds received. Transaction cost of equity transactions shall be accounted for as a deduction from equity.
Financial liabilities
At initial recognition, the Company measures a financial liability at its fair value net of, in the case of a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the issue of the financial liability. Transaction costs of financial liability carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement of financial liabilities depends on the classification of financial liabilities. There are two measurement categories into which the Company classifies its financial liabilities:
- Fair value through profit or loss
(FVTPL):Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL.Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss.
- 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.
(iii) derecognition Equity instruments
Repurchase of the Companyâs own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
Financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs 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.
(iv) Effective interest method
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 through the expected life of the financial liability to the gross carrying amount of a financial liability.
(v) Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in âOther incomeâ. The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period.
(t) Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately.
(u) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
(v) Fair value of financial instruments
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 Company 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.
Mar 31, 2016
a) Basis of preparation of Financial Statements
The financial statements of the Company have been prepared as a going concern on an accrual basis of accounting under the historical cost convention and in accordance with generally accepted accounting principles in India. The financial statements comply, in all material respects, with the applicable accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) in accordance with section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2014. All assets and liabilities have been classified as current and non-current as per the criteria set out in the Schedule III of the Companies Act 2013.
b) Use of Estimates
The presentation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialize.
c) Fixed Assets
i. Fixed assets are stated at their acquisition cost less accumulated depreciation. Acquisition cost includes taxes, duties (excluding excise duty, service tax and VAT for which CENVAT/VAT credit is available), freight and other incidental expenses relating to acquisition and installation. In the acquisition of fixed assets involved in the establishment of a new project/ factory, all direct expenses including borrowing costs are capitalized.
ii. Fixed assets pending disposal are stated at lower of net book value (at the time of discarding of assets) and net realizable value. Wherever, the net book value of the assets cannot be reasonably determined, it is stated at net realizable value.
d) Recognition of Income/Expenditure
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria are applied for revenue recognition:
i. Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and therefore these are not economic benefits flowing to the Company and accordingly they are excluded from revenue.
ii. Revenue from service contracts is recognized as the service is performed. Performance of service is measured either under the completed service contract method or under the proportionate completion method, whichever relates the revenue to the work accomplished or obligations fulfilled and when no significant uncertainty exist regarding the consideration receivable for the service performed. The Company collects service tax on behalf of the government and therefore, it is not an economic benefit flowing to the Company and accordingly it is excluded from revenue.
iii. Income from sale of Certified Emission Reductions (CERs) and Renewable Energy Certificates (RECs) is recognized on the delivery of the CERs/RECs to the customers'' account as evidenced by the receipt of confirmation of execution of delivery instructions.
iv. Revenue from construction contracts is recognized on the percentage of completion method, measured by the proportion that contract costs incurred for work performed till the reporting date bear to the estimated total contract cost. Contract costs for this purpose include :
a. Costs that relate directly to the specific contract;
b. Costs that are attributable to contract activity in general and can be allocated to the contract; and
c. Such other costs as are specifically chargeable to the customer under the terms of contract.
Foreseeable losses, if any, are provided for immediately.
v. Income/Expenditure relating to prior periods and prepaid expenses which do not exceed '' 10,000/- in each case, are treated as Income/Expenditure of current year.
vi. Compensation under Voluntary Retirement Scheme and all other termination benefits, if any, incurred during the year, are recognized as expense in the statement of profit and loss.
e) Foreign Currency Transactions
i. Transactions denominated in foreign currencies are initially recorded at the exchange rate prevailing at the date of transaction.
ii. Foreign currency monetary items (including forward contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculative purposes) are translated at year end rates. Exchange differences arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise.
iii. The premium or discount on forward exchange contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculative purposes is amortized as expense or income over the life of the contracts.
iv. In respect of derivative contracts relating to firm commitments or highly probable forecast transactions, provision is made for mark to market losses, if any, at the balance sheet date. Gains, if any, are not recognized till settlement.
f) Inventories
i. Inventories of raw materials, components, stores and spares are valued at lower of cost and net realizable value. By-products used as raw material are valued at transfer cost. Cost for the purpose of valuation of raw materials and components, stores and spares is considered on the following basis :
ii. Finished goods and Work-in-progress are valued at lower of cost and net realizable value. The cost of finished goods and work-in-progress includes raw material costs, direct cost of conversion and proportionate allocation of indirect costs incurred in bringing the inventories to their present location and condition. Excise duty is included in the value of finished goods.
iii. Unsold certified emission reductions (CERs) and renewable energy certificates (RECs) are recognized as inventory in accordance with the Guidance Note on Accounting for Self-generated Certified Emission Reductions, issued by the Institute of Chartered Accountants of India. Inventory of CERs and RECs is valued at lower of cost and net realizable value. The cost incurred on verification/certification of CERs/RECs is considered as the cost of inventories of CERs/RECs.
iv. Patterns, Loose tools, Jigs and Fixtures are written off equally over three years.
v. By-products (excluding those used as raw materials) and scrap are valued at estimated net realizable value.
g) Depreciation
(i) Depreciation on fixed assets is provided on the straight line method in accordance with Schedule II of the Companies Act, 2013. Schedule II provides the useful lives of various categories of fixed assets and allows the Company to use higher / lower useful lives and residual values if such lives and residual values can be technically supported and the justification for any difference is disclosed in the financial statements.
Accordingly, the management has estimated the useful lives and residual values of all its fixed assets and adopted useful lives as stated in Schedule II along with residual values of 5% except for the following:
- On the basis of technical assessment involving technology obsolescence and past experience, the useful lives of mill rollers, instrumentation and control devices installed at sugar plants is considered at ten years as against prescribed life of twenty five years in respect of continuous process plant.
- Based on the experience and assessment, mobile phones costing Rs, 5,000/- or more are depreciated over 2 years.
- Assets costing less than Rs, 5,000/- are fully depreciated in the year of purchase.
(iii) Cost of leasehold land, other than acquired on perpetual basis, is amortized over the lease period.
(iv) Fixture and fittings and improvements to leasehold buildings not owned by the Company are amortized over the lease period or estimated useful life of such fixture, fittings and improvements, whichever is lower.
h) Investments
Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as noncurrent / long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision is made to recognize a decline, other than temporary, in the value of long-term investments, such reduction being determined and made for each investment individually.
i) Employee Benefits
1) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months after the end of the period in which the employees render the related services are classified as short term employee benefits and are recognized as expense in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid (including compensated absences) in exchange for services rendered, as a liability.
2) Long Term Employee Benefits:
i) Defined Contribution Plans
Defined contribution plans are retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company''s contribution to defined contribution plans is recognized in the statement of profit and loss in the financial year to which they relate.
The Company contributes to the following defined contribution plans.
- Provident Fund Plan & Employee Pension Scheme
The Company makes monthly contributions at prescribed rates towards Employee Provident Fund/ Employee Pension Scheme to fund administered and managed by the Government of India.
- Employee State Insurance
The Company makes prescribed monthly contributions towards Employees State Insurance Scheme.
- Superannuation Scheme
The Company contributes towards a fund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policies entered into by such fund with the Life Insurance Corporation of India.
- National Pension Scheme
The Company makes contributions to the National Pension Scheme fund in respect of certain employees of the Company.
ii) Defined Benefit Plans
Defined benefit plans are plans under which the Company pays certain defined benefits to its employees at the time of their retirement/ resignation/death based on rules framed for such schemes. The Company operates following defined benefit plans:
- Provident fund (set-up by the Company and administered through trust)
The Company also contributes to a provident fund which was set-up by the Company and administered through trust for the benefit of certain employees. The interest rate payable by the trust to the beneficiaries is regulated by statutory authorities. The Company has an obligation to make good the shortfall, if any, between the return on investments of the Trust and the notified interest rate.
- Gratuity
The Company provides for gratuity obligations through a defined benefit retirement plan (the ''Gratuity Plan'') covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement/termination of employment or death of an employee, based on the respective employees'' salary and years of employment with the Company. The Company provides for its liability under the Gratuity Plan based on actuarial valuation.
iii) Other long-term benefits
- Earned Leaves / Sick Leaves
The Company provides for the liability at year end on account of un-availed accumulated leaves on the basis of actuarial valuation.
j) Borrowing costs
Borrowing costs attributable to the acquisition of qualifying assets are capitalized till the period such assets are ready for their intended use. All other borrowing costs are charged to the statement of profit and loss.
k) Operating leases
Lease payments under an operating lease are recognized as an expense in the statement of profit and loss on a straight line basis over the lease term.
l) Government Grants
Recognition
Government grants are recognized where:
i) There is reasonable assurance of complying with the conditions attached to the grant.
ii) Such grant/benefit has been earned and it is reasonably certain that the ultimate collection will be made.
Presentation in Financial Statements:
i) Government grants relating to specific fixed assets are adjusted with the value of such fixed assets.
ii) Government grants in the nature of promoters'' contribution, i.e. which have reference to the total investment in an undertaking or by way of contribution towards total capital outlay, are credited to capital reserve.
iii) Government grants related to revenue items are either adjusted with the related expenditure/revenue or shown under âOther Income", in case direct linkage with cost/income is not determinable.
m) Taxes on Income
i) Current tax on income is determined on the basis of taxable income computed in accordance with the applicable provisions of the Income Tax Act, 1961.
ii) Deferred tax is recognized for all timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.
iii) Deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized,
except in the case of unabsorbed depreciation or carry forward of losses under the Income Tax Act, 1961, where such deferred tax asset is 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.
iv) Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will be in a position to avail of such credit under the provisions of the Income Tax Act, 1961.
n) Impairment of Asset
Impairment of individual assets/cash generating unit (a group of assets that generates identified independent cash flows) is identified using external and internal sources of information and impairment loss, if any, is determined and recognized in accordance with the Accounting Standard (AS) 28 â Impairment of Assets"
o) Provisions, Contingent liabilities and Contingent assets
Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if:
i) the Company has a present obligation as a result of a past event;
ii) a probable outflow of resources is expected to settle the obligation; and
iii) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.
Contingent liability is disclosed in the case of
i) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation.
ii) a possible obligation, unless the probability of outflow of resources is remote.
Contingent assets are not recognized.
b) Terms/rights attached to equity shares
The Company has only one class of equity shares with a par value of Rs, 1/- per share. Each holder of equity shares is entitled to one vote per share. 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.
In the event of liquidation of the Company, the holders of equity shares are entitled to receive the remaining assets of the Company, after meeting all liabilities and distribution of all preferential amounts, in proportion to their shareholding.
The amount shown above represent the best possible estimates arrived at on the basis of available information. The uncertainties, possible payments and reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants, as the case may be, and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal position against such disputes.
(b) Guarantees/surety given on behalf of companies Rs, 1,734.99 lakhs (previous year Rs, 1,688.13 lakhs), including a corporate guarantee of Rs, 1,693.99 lakhs (previous year Rs, 1,647.13 lakhs) equivalent to GBP 17.62 lakhs (previous year GBP 17.62 lakhs) given on behalf of an associate company as a surety for due performance of its obligations under a contract awarded by an overseas customer and in respect of which, the associate company has fully indemnified the Company against any claims, damages or expenses, including legal costs. The guarantees have been given in the normal course of operations of these companies and are not expected to result in any loss to the Company on the basis of such companies fulfilling their ordinary commercial obligations.
(c) Estimated amount of contracts remaining to be executed on capital account and not provided for as at the end of the year Rs, 1,033.75 lakhs (previous year Rs, 3,525.70 lakhs), after adjusting advances aggregating to Rs,116.07 lakhs (previous year Rs, 409.78 lakhs).
Mar 31, 2015
A) Basis of preparation of Financial statements
The fnancial statements of the Company have been prepared as a going
concern on an accrual basis of accounting under the historical cost
convention and in accordance with generally accepted accounting
principles in India. The financial statements comply in all material
respects with the applicable accounting standards notified under the
Companies (Accounting Standards) Rules, 2006 (as amended) in accordance
with section 133 of the Companies Act, 2013, read with Rule 7 of
Companies (Accounts) Rules, 2014.
All assets and liabilities have been classified as current and
non-current as per the criteria set out in the Schedule III of the
Companies Act 2013. In line with the normal operating cycle of the main
products, the Company has considered a period of 12 months for the
purpose of determination of classification between current and
non-current assets and liabilities.
b) use of estimates
The presentation of financial statements requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Difference between the actual results and estimates are recognized in
the period in which the results are known/ materialize.
c) Fixed Assets
i) Fixed assets are stated at their acquisition cost less accumulated
depreciation. Acquisition cost includes taxes, duties (excluding excise
duty, service tax and VAT for which CENVAT/VAT credit is available),
freight and other incidental expenses relating to acquisition and
installation. In case of certain machineries acquired under lease prior
to 01.04.2001, the cost of acquisition represents the principal value
of the respective lease (including the residual value at expiry of
lease). In the acquisition of fixed assets involved in the establishment
of a new project/ factory, all direct expenses including borrowing
costs are capitalized.
ii) Fixed assets pending disposal are stated at lower of net book value
(at the time of discarding of assets) and net realizable value.
Wherever, the net book value of the assets cannot be reasonably
determined, it is stated at net realizable value.
d) recognition of income / expenditure
Revenue is recognized to the extent that it is probable that the
economic benefits will few to the Company and the revenue can be
reliably measured. The following specific recognition criteria are
applied for revenue recognition:
i) Revenue from sale of goods is recognized when all the significant
risks and rewards of ownership of the goods have been passed to the
buyer. The Company collects sales taxes and value added taxes (VAT) on
behalf of the government and therefore these are not economic benefits
flowing to the Company and accordingly they are excluded from revenue.
ii) In contracts involving the rendering of services, revenue is
recognized as and when the services are rendered. The Company collects
service tax on behalf of the government and therefore, it is not an
economic benefit fowling to the Company and is accordingly excluded from
revenue.
iii) Income from sale of Certified Emission Reductions (CERs) and
Renewable Energy Certificates (RECs) is recognized on the delivery of
the CERs/RECs to the customers' account as evidenced by the receipt of
confirmation of execution of delivery instructions.
iv) Revenue from construction contracts is recognized on the percentage
of completion method, measured by the proportion that contract costs
incurred for work performed till the reporting date bear to the
estimated total contract cost. Contract costs for this purpose include
:
a) Costs that relate directly to the specific contract;
b) Costs that are attributable to contract activity in general and can
be allocated to the contract; and
c) Such other costs as are specifically chargeable to the customer under
the terms of contract.
Foreseeable losses, if any, are provided for immediately.
v) Income / Expenditure relating to prior periods and prepaid expenses
which do not exceed Rs. 10,000/- in each case, are treated as Income /
Expenditure of current year.
vi) Compensation under Voluntary Retirement Scheme and all other
termination benefits, if any, incurred during the year, are recognized
as expense in the statement of profit and loss.
e) Foreign Currency Transactions
i) Transactions denominated in foreign currencies are initially
recorded at the exchange rate prevailing at the date of transaction.
ii) Foreign currency monetary items (including forward
contracts not relating to from commitments or highly probable forecast
transactions and not intended for trading or speculative purposes) are
translated at year end rates. Exchange differences arising on settlement
of transactions and translation of monetary items are recognized as
income or expense in the year in which they arise.
iii) The premium or discount on forward exchange
contracts not relating to from commitments or highly probable forecast
transactions and not intended for trading or speculative purposes is
amortized as expense or income over the life of the contracts.
iv) In respect of derivative contracts relating to form commitments or
highly probable forecast transactions, provision is made for mark to
market losses, if any, at the balance sheet date. Gains, if any, are
not recognized till settlement.
f) inventories
i) Inventories of raw materials, components, stores and spares are
valued at lower of cost and net realizable value. By-products used as
raw material are valued at transfer cost. Cost for the purpose of
valuation of raw materials and components, stores and spares is
considered on the following basis :
ii) Finished goods and Work-in-progress are valued at lower of cost and
net realizable value. The cost of finished goods and work-in-progress
includes raw material costs, direct cost of conversion and
proportionate allocation of indirect costs incurred in bringing the
inventories to their present location and condition. Excise duty is
included in the value of finished goods.
iii) Unsold certified emission reductions (CERs) and renewable energy
certificates (RECs) are recognized as inventory in accordance with the
Guidance Note on Accounting for Self-generated Certified Emission
Reductions, issued by the Institute of Chartered Accountants of India.
Inventory of CERs and RECs is valued at lower of cost and net
realizable value. The cost incurred on verification / certification of
CERs/RECs is considered as the cost of inventories of CERs/RECs.
iv) Patterns, Loose tools, Jigs and Fixtures are written of equally
over three years.
v) By-products (excluding those used as raw materials) and scrap are
valued at estimated net realizable value.
g) depreciation
i) Depreciation on fixed assets is provided on the straight line method
in accordance with Schedule II of the Companies Act, 2013. Schedule II
provides the useful lives of various categories of fixed assets and
allows the Company to use higher / lower useful lives and residual
values if such lives and residual values can be technically supported
and the justification for any difference is disclosed in the financial
statements.
Accordingly, the management has re-estimated the useful lives and
residual values of all its fixed assets and adopted useful lives as
stated in Schedule II along with residual values of 5% except for the
following:
On the basis of technical assessment involving technology obsolescence
and past experience, the useful lives of instrumentation and control
devices installed at sugar plants is considered at ten years as against
prescribed life of twenty five years in respect of continuous process
plant.
Based on the experience and assessment, mobile phones costing Rs. 5,000/-
or more are depreciated over 2 years.
Assets costing less than Rs. 5,000/- are fully depreciated in the year of
purchase.
ii) Double or triple shift depreciation, wherever applicable, is
provided in respect of machines on the basis of actual number of days
for which such machines work on double or triple shift.
iii) Intangible assets are recognized as specified in the applicable
accounting standard and are amortized as follows:
iv) Cost of leasehold land, other than acquired on perpetual basis, is
amortized over the lease period.
v) Fixture and fittings and improvements to leasehold buildings not
owned by the Company are amortized over the lease period or estimated
useful life of such fixture, fittings and improvements, whichever is
lower.
h) investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as non-current / long-term investments. Current investments
are carried at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However,
provision is made to recognize a decline, other than temporary, in the
value of long-term investments, such reduction being determined and
made for each investment individually.
i) employee Benefits
1) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months after the end
of the period in which the employees render the related services are
classified as short term employee benefits and are recognized as expense
in the period in which the employee renders the related service. The
Company recognizes the undiscounted amount of short term employee
benefits expected to be paid (including compensated absences) in
exchange for services rendered, as a liability.
2) Long Term Employee Benefits:
i) Defend Contribution Plans
Defend contribution plans are retirement benefit plans under which the
Company pays fixed contributions to separate entities (funds) or
financial institutions or state managed benefit schemes. The Company's
contribution to defend contribution plans is recognized in the
statement of profit and loss in the financial year to which they relate.
The Company operates the following defned contribution plans.
Provident Fund Plan & Employee Pension Scheme:
The Company makes monthly contributions at prescribed rates towards
Employee Provident Fund/ Employee Pension Scheme to fund administered
and managed by the Government of India.
Employee State Insurance
The Company makes prescribed monthly contributions towards Employees
State Insurance Scheme.
Superannuation Scheme
The Company contributes towards a fund established to provide
superannuation
benefit to certain employees in terms of Group Superannuation Policies
entered into by such fund with the Life Insurance Corporation of India.
ii) Defend Benefit Plans
Defend benefit plans are plans under which the Company pays certain
defend benefits to its employees at the time of their retirement /
resignation / death based on rules framed for such schemes. The Company
operates following defend benefit plans:
Provident fund (set-up by the Company and administered through trust)
The Company also contributes to certain funds which were set-up by the
Company and administered through trust for the benefit of certain
employees. The interest rate payable by the trust to the beneficiaries
is regulated by statutory authorities. The Company has an obligation to
make good the shortfall, if any, between the return on investments of
the Trust and the notified interest rate.
Gratuity
The Company provides for gratuity obligations through a defned beneft
retirement plan (the 'Gratuity Plan') covering all employees. The
Gratuity Plan provides a lump sum payment to vested employees at
retirement / termination of employment or death of an employee, based
on the respective employees' salary and years of employment with the
Company. The Company provides for its liability under the Gratuity Plan
based on actuarial valuation.
Earned Leaves / Sick Leaves
The Company provides for the liability at year end on account of
un-availed accumulated leaves on the basis of actuarial valuation.
3) Employee Stock Options:
Compensation cost in respect of stock options granted to eligible
employees is recognized using the intrinsic value of the stock options
and is amortized over the vesting period of such options granted .
j) Borrowing costs
Borrowing costs attributable to the acquisition of qualifying assets
are capitalized till the period such assets are ready for their
intended use. All other borrowing costs are charged to the statement
of profit and loss.
k) operating leases
Lease payments under an operating lease are recognized as an expense in
the statement of profit and loss on a straight line basis over the lease
term.
l) government grants
Recognition
Government grants are recognized where:
i) There is reasonable assurance of complying with the conditions
attached to the grant.
ii) Such grant / benefit has been earned and it is reasonably certain
that the ultimate collection will be made.
Presentation in Financial Statements:
i) Government grants relating to specific fixed assets are adjusted with
the value of such fixed assets.
ii) Government grants in the nature of promoters' contribution, i.e.
which have reference to the total investment in an undertaking or by
way of contribution towards total capital outlay, are credited to
capital reserve.
iii) Government grants related to revenue items are either adjusted
with the related expenditure / revenue or shown under "Other Income",
in case direct linkage with cost / income is not determinable.
m) Taxes on income
i) Current tax on income is determined on the basis of taxable income
computed in accordance with the applicable provisions of the Income Tax
Act, 1961.
ii) Deferred tax is recognized for all timing differences between the
accounting income and the taxable income for the year and quantified
using the tax rates and laws enacted or substantively enacted as on the
Balance Sheet date.
iii) Deferred tax asset is recognized and carried forward only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized, except in the case of unabsorbed depreciation or carry
forward of losses under the Income Tax Act, 1961, where such deferred
tax asset
is 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.
iv) Minimum Alternate Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will be in a position to avail of such credit under the provisions of
the Income Tax Act, 1961.
n) impairment of Asset
Impairment of individual assets / cash generating unit (a group of
assets that generates identified independent cash fows) is identified
using external and internal sources of information and impairment loss
if any, is determined and recognized in accordance with the Accounting
Standard (AS) 28 "Impairment of Assets".
o) provisions, Contingent liabilities and Contingent assets
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if:
i) the Company has a present obligation as a result of a past event;
ii) a probable outfox of resources is expected to settle the
obligation; and
iii) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a
provision is recognized only when it is virtually certain that the
reimbursement will be received.
Contingent liability is disclosed in the case of
i) a present obligation arising from a past event, when it is not
probable that an outfox of resources will be required to settle the
obligation.
ii) a possible obligation, unless the probability of outfox of
resources is remote.
Sep 30, 2012
A) Basis of preparation of Financial Statements
These financial statements have been prepared on a going concern basis
to comply in all material respects with the applicable accounting
standards notified under section 211(3C) of the Companies Act, 1956.
B) Adoption of revised Schedule VI of the Companies Act,1956
For the year ended September 30th, 2012, the revised Schedule VI,
notified under the Companies Act 1956 has become applicable to the
Company for preparation and presentation of its financial statements.
The adoption of revised Schedule VI does not impact recognition and
measurement of principles followed for preparation of its financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
All assets and liabilities have been classified as current and
non-current as per the criteria set out in the revised Schedule VI. In
line with the normal operating cycle of the main products, the Company
has considered a period of 12 months for the purpose of determination
of classification between current and non-current assets and
liabilities.
C) Use of Estimates
The presentation of financial statements requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Difference between the actual results and estimates are recognised in
the period in which the results are known/ materialize.
D) Fixed Assets
i. Fixed assets are stated at their acquisition cost (except in the
case of revaluation of certain assets where these are stated at
revalued amounts) less accumulated depreciation. Acquisition cost
includes taxes, duties (excluding excise duty, service tax and VAT for
which CENVAT/VAT credit is available), freight and other incidental
expenses relating to acquisition and installation. In case of certain
machineries acquired under lease prior to 01.04.2001, the cost of
acquisition represents the principal value of the respective lease
(including the residual value at expiry of lease). In the acquisition
of fixed assets involved in the establishment of a new project/
factory, all direct expenses including borrowing costs are capitalised.
ii. Fixed assets pending disposal are stated at lower of net book
value (at the time of discarding of assets) and net realisable value.
Wherever, the net book value of the assets can not be reasonably
determined, it is stated at net realisable value.
E) Recognition of Income/Expenditure
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria are
applied for revenue recognition:
i. Revenue from sale of goods is recognised when all the significant
risks and rewards of ownership of the goods have been passed to the
buyer, usually on delivery of goods. The Company collects sales taxes
and value added taxes (VAT) on behalf of the government and therefore
these are not economic benefits flowing to the Company and accordingly
they are excluded from revenue.
ii. In contracts involving the rendering of services, revenue is
recognised as and when the services are rendered. The Company collects
service tax on behalf of the government and therefore, it is not an
economic benefit flowing to the Company and is accordingly excluded
from revenue.
iii. Income from sale of certified emission reductions (CERs/carbon
credits) is recognised on the delivery of the carbon credits to the
customers'' account as evidenced by the receipt of confirmation of
execution of delivery instructions.
iv. Revenue from construction contracts is recognised on the
percentage of completion method, measured by the proportion that
contract costs incurred for work performed till the reporting date bear
to the estimated total contract cost. Contract costs for this purpose
include :
a. Costs that relate directly to the specific contract;
b. Costs that are attributable to contract activity in general and can
be allocated to the contract; and
c. Such other costs as are specifically chargeable to the customer
under the terms of contract.
Foreseeable losses, if any, are provided for immediately.
v. Off-season expenses relating to sugar and bagasse based
co-generation units, other than interest, selling and non-operating
expenses/income incurred/earned during off-season, are deferred and are
absorbed over the duration of the ensuing operating season.
vi. Income/Expenditure relating to prior periods and prepaid expenses
which do not exceed Rs. 0.10 lacs in each case, are treated as
Income/Expenditure of current year.
vii. Compensation under Voluntary Retirement Scheme and all other
termination benefits, if any, incurred during the year, are recognised
as expense in the statement of profit and loss.
F) Foreign Currency Transactions
i. Transactions denominated in foreign currencies are initially
recorded at the exchange rate prevailing at the date of transaction.
ii. Foreign currency monetary items (including forward contracts not
relating to firm commitments or highly probable forecast transactions
and not intended for trading or speculative purposes) are translated at
year end rates. Exchange differences arising on settlement of
transactions and translation of monetary items are recognised as income
or expense in the year in which they arise.
iii. The premium or discount on forward exchange contracts not relating
to firm commitments or highly probable forecast transactions and not
intended for trading or speculative purposes is amortised as expense or
income over the life of the contracts.
iv. In respect of derivative contracts relating to firm commitments or
highly probable forecast transactions, provision is made for mark to
market losses, if any, at the balance sheet date. Gains, if any, are
not recognised till settlement.
G) Inventories
i. Inventories of raw materials, components, stores and spares are
valued at lower of cost and net realisable value. By-products used as
raw material are valued at transfer cost. Cost for the purpose of
valuation of raw materials and components, stores and spares is
considered on the following basis :
ii. Finished goods and Work-in-progress are valued at lower of cost
and net realisable value. The cost of finished goods and
work-in-progress includes raw material costs, direct cost of conversion
and proportionate allocation of indirect costs incurred in bringing the
inventories to their present location and condition. Excise duty is
included in the value of finished goods.
iii. Unsold certified emission reductions are recognised as inventory
in accordance with the Guidance Note on Accounting for Self-generated
Certified Emission Reductions (CERs), issued by the Institute of
Chartered Accountants of India. Inventory of CERs is valued at lower of
cost and net realisable value. The cost incurred on
verification/certification of CERs is considered as the cost of
inventories of CERs.
iv. Patterns, Loose tools, Jigs and Fixtures are written off equally
over three years.
v. By-products (excluding those used as raw materials) and scrap are
valued at estimated net realisable value.
H) Depreciation
i) Depreciation on fixed assets is provided on the straight line method
at the rates specified in Schedule XIV of the Companies Act, 1956 other
than the following assets which are depreciated at higher rates on the
straight line basis over their estimated useful economic life as
follows :
ii) Cost of leasehold land is amortised over the lease period.
iii) Fixture and fittings and improvements to leasehold buildings not
owned by the Company are amortised over the lease period or estimated
useful life of such fixture, fittings and improvements, whichever is
lower.
iv) The additional depreciation on increase in cost on account of
revaluation of certain assets, is adjusted against the Revaluation
Reserve and is thus not charged to the statement of profit and loss.
I) Research & Development
Revenue expenditure on research & development is charged under
respective heads of account. Capital expenditure on research and
development is included as part of cost of fixed assets and depreciated
on the same basis as other fixed assets.
J) Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as non-current / long-term investments. Current investments
are carried at the lower of cost and fair value. Long-term investments
are carried at cost. However, provision is made to recognize a
decline, other than temporary, in the value of long-term investments,
such reduction being determined and made for each investment
individually.
K) Employee Benefits
1) Short Term Employee Benefits:
All employee benefits payable wholly within 12 months after the end of
the period in which the employees render the related services are
classified as short term employee benefits and are recognised as
expense in the period in which the employee renders the related
service. The Company recognizes the undiscounted amount of short term
employee benefits expected to be paid (including compensated absences)
in exchange for services rendered, as a liability.
2) Long Term Employee Benefits:
i) Defined Contribution Plans
Defined contribution plans are retirement benefit plans under which the
Company pays fixed contributions to separate entities (funds) or
financial institutions or state managed benefit schemes. The Company''s
contribution to defined contribution plans is recognised in the
statement of profit and loss in the financial year to which they
relate.
The Company operates the following defined contribution plans.
- Provident Fund Plan & Employee Pension Scheme:
The Company makes monthly contributions on prescribed basis towards
Employee Provident Fund/ Employee Pension Scheme to fund administered
and managed by the Government of India / funds (set up by the Company
and administered through Trusts). The Company has an obligation to
make good the shortfall, if any, between the return on investments of
the Trusts and notified interest rate.
- Employee State Insurance
The Company makes specified monthly contributions towards Employees
State Insurance Scheme.
- Superannuation Scheme
The Company contributes towards a fund established to provide
superannuation benefit to certain employees in terms of Group
Superannuation Policies entered into by such fund with the Life
Insurance Corporation of India. Contribution towards aforesaid fund is
charged to the statement of profit and loss in the financial year to
which it relates.
ii) Defined Benefit Plans
Defined benefit plans are retirement benefit plans under which the
Company pays certain defined benefits to the employees at the time of
their retirement/resignation/death based on rules framed for such
schemes. The Company operates following defined benefit plans:
- Gratuity
The Company provides for gratuity obligations through a defined benefit
retirement plan (the ''Gratuity Plan1) covering all employees. The
Gratuity Plan provides a lump sum payment to vested employees at
retirement/termination of employment or death of an employee during
service, based on the respective employees'' salary and years of
employment with the Company. The Company provides for its liability
under the Gratuity Plan based on actuarial valuation.
- Earned Leaves / Sick Leaves
The Company provides for the liability at year end on account of
unavailed accumulated leaves on the basis of actuarial valuation.
3) Employee Stock Options:
Compensation cost in respect of stock options granted to eligible
employees is recognised using the intrinsic value of the stock options
and is amortised over the vesting period of such options granted.
L) Borrowing costs
Borrowing costs attributable to the acquisition of qualifying assets
are capitalised till the period such assets are ready for their
intended use. All other borrowing costs are charged to the statement of
profit and loss.
M) Operating leases
Lease payments under an operating lease are recognised as an expense in
the statement of profit and loss on a straight line basis over the
lease term.
N) Government Grants
Recognition
Government grants are recognised where:
i) There is reasonable assurance of complying with the conditions
attached to the grant.
ii) Such grant/benefit has been earned and it is reasonably certain
that the ultimate collection will be made.
Presentation in Financial Statements:
i) Government grants relating to specific fixed assets are adjusted
with the value of such fixed assets.
ii) Government grants in the nature of promoters'' contribution, i.e.
which have reference to the total investment in an undertaking or by
way of contribution towards total capital outlay, are credited to
capital reserve.
iii) Government grants related to revenue items are either adjusted
with the related expenditure/revenue or shown under "Other Income", in
case direct linkage with cost/income is not determinable.
O) Taxes on Income
i) Current tax on income is determined on the basis of taxable income
computed in accordance with the applicable provisions of the Income Tax
Act, 1961.
ii) Deferred tax is recognised for all timing differences between the
accounting income and the taxable income for the year, and quantified
using the tax rates and laws enacted or substantively enacted as on the
Balance Sheet date.
iii) Deferred tax asset is recognised and carried forward only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised, except in the case of unabsorbed depreciation or carry
forward of losses under the Income Tax Act, 1961, where such deferred
tax asset is recognised 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 realised.
iv) Minimum Alternate Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will be in a position to avail of such credit under the provisions of
the Income Tax Act, 1961.
P) Intangible Assets
Intangible assets are recognised as per the criteria specified in
Accounting Standard (AS) 26 "Intangible Assets" and are amortised on
straight line basis as follows:
Q) Impairment of Asset
Impairment of individual assets/cash generating unit (a group of assets
that generates identified independent cash flows) is identified using
external and internal sources of information and impairment loss if
any, is determined and recognised in accordance with the Accounting
Standard (AS) 28 " Impairment of Assets"
R) Provisions, Contingent liabilities and Contingent assets
Provisions are recognised for liabilities that can be measured only by
using a substantial degree of estimation, if:
i) the Company has a present obligation as a result of a past event;
ii) a probable outflow of resources is expected to settle the
obligation; and
iii) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a
provision is recognised only when it is virtually certain that the
reimbursement will be received.
Contingent liability is disclosed in the case of
i) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
ii) a possible obligation, unless the probability of outflow of
resources is remote.
Contingent assets are not recognised.
Sep 30, 2010
A) Basis of preparation of Financial Statements
These financial statements have been prepared on a going concern basis
to comply in all material respects with the applicable accounting
standards notified under section 211(3C) of the Companies Act, 1956 and
the relevant provisions of the Companies Act, 1956.
b) Fixed Assets
i. Fixed assets are stated at cost of acquisition (eRs.cept in case of
revaluation of certain assets where these are stated at revalued
amounts) less accumulated depreciation. Cost includes taRs.es, duties
(eRs.cluding eRs.cise duty, service taRs. and VAT for which CenvatTVAT credit
is available), freight and other incidental eRs.penses relating to
acquisition and installation. In respect of new projects, all direct
eRs.penses including borrowing costs incurred upto the date of
commencement of commercial production or when related asset is put to
use are capitalized.
ii. Discarded fiRs.ed assets are stated at lower of net book value (at
the time of discarding of assets) and net realisable value. Wherever,
the net book value of the assets can not be reasonably determined, it
is stated at net realisable value.
c) Recognition of Income/ERs.penditure
i. Income from sale of products and services is recognised on despatch
of goods or when the services are rendered. Gross sales are stated at
contractual realisable values inclusive of eRs.cise duty and eRs.port
incentive and net of sales taRs. and trade discounts.
ii. Income from carbon credits is recognized on the delivery of the
carbon credits to the customers account as evidenced by the receipt of
confirmation of eRs.ecution of delivery instructions.
iii. Revenue from fiRs.ed price construction contracts is recognized on
the percentage of completion method, measured by the proportion that
contract costs incurred for work performed upto the reporting date bear
to the estimated total contract cost. Contract costs for this purpose
include:
a. Costs that relate directly to the specific contract;
b. Costs that are attributable to contract activity in general and can
be allocated to the contract; and
c. Such other costs as are specifically chargeable to the customer
under the terms of contract.
Foreseeable losses, if any, are provided for immediately.
iv. Off-season eRs.penses relating to sugar and bagasse based
co-generation units, other than interest, selling and non- operating
eRs.penses/income incurred/earned during off- season, are deferred and
are absorbed over the duration of the ensuing operating season.
v. Income/ERs.penditure relating to prior periods and prepaid eRs.penses
which do not eRs.ceed Rs.10,000/- in each case, are treated as
Income/ERs.penditure of current year.
vi. Compensation under Voluntary Retirement Scheme (VRS) incurred till
September 30, 2009, is amortised over 36 months or over the duration
till 30th September 2010 from the date of its incurrence, whichever
period is shorter. VRS compensation and all other termination benefits,
if any. incurred during the year, are recognized as eRs.penses.
d) Foreign Currency Transactions
i. Transactions denominated in foreign currencies are recorded at the
eRs.change rate prevailing at the date of transaction.
ii. Foreign currency monetary items (including forward contracts) are
translated at year end rates. ERs.change differences arising on
settlement of transactions and translation of monetary items (including
forward contracts) are recognised as income or eRs.pense in the year in
which they arise.
iii. The premium or discount on forward eRs.change contracts not relating
to firm commitments or highly probable forecast transactions and not
intended for trading or speculative purposes is amortised as eRs.pense or
income over the life of the contracts.
iv. In respect of derivative contracts relating to firm commitments or
highly probable forecast transactions, provision is made for mark to
market losses, if any, at the balance sheet date. Gains, if any, on
such transactions are not recognized till settlement.
e) Inventories
i. Inventories of raw materials, components, stores and spares are
valued at lower of cost and net realisable value. By- products used as
raw material are valued at transfer cost. Cost for the purpose of
valuation of raw materials and components, stores and spares is
considered on the following basis:
Raw Materials & Components Manufacturing Units Basis SugarFirst in
first out Turbine, Gears, Co-generation & Distillery_Weighted Average
Water Business GroupSpecific Cost Stores and Spares Manufacturing Units
Basis Water Business GroupSpecific Cost
Other UnitsWeighted Average
ii. Finished goods and Work-in-progress are valued at lower of cost and
net realisable value. The cost of finished goods and work-in-progress
includes raw material costs, direct cost of conversion and
proportionate allocation of indirect costs incurred in bringing the
inventories to their present location and condition. ERs.cise duty is
included in the value of finished goods.
iii. Patterns, Loose tools, Jigs and FiRs.tures are written off equally
overthreeyears.
iv. By-products (eRs.cluding those used as raw materials) and scrap are
valued at estimated net realisable value.
f) Depreciation
ii) Cost of Leasehold Land is amortised overthe lease period.
iii) FiRs.ture and Fittings and improvements to leasehold buildings not
owned by the Company are amortised over the lease period or estimated
life, whichever is lower.
iv) The additional depreciation, on increase in cost on account of
revaluation is adjusted against the Revaluation Reserve and is thus not
charged to Profit & Loss Account for the year.
g) Research & Development
Revenue eRs.penditure on research & development is charged under
respective heads of account. Capital eRs.penditure on research and
development is included as part of cost of fiRs.ed assets and depreciated
on the same basis as other fiRs.ed assets.
h) Investments
Investments are valued at cost inclusive of eRs.penses incidental to
their acquisition. Long term investments are carried at cost. Provision
is made for diminution in value, if suchdimunition is, in the opinion
of the management, other than temporary in nature. Current investments
are valued at lower of cost and fair value.
i) Employee Benefits
1) Short Term Employee Benefits:
All employee benefits payable wholly within 12 months after the end of
the period in which the employees render the related services are
classified as short term employee benefits and are recognized as
eRs.pense in the period in which the employee renders the related
service. The Company recognizes the undiscounted amount of short term
employee benefits eRs.pected to be paid (including compensated absences)
in eRs.change for services rendered as a liability.
2) Long Term Employee Benefits:
a). Defined Contribution Plans
Defined contribution plans are retirement benefit plans under which the
Company pays fiRs.ed contributions to separate entities (funds) or
financial institutions or state managed benefit schemes. The Companys
contribution to defined contribution plans is recognized in the Profit
& Loss account in the financial year to which they relate.
The Company operates the following defined contribution plans.
I) Provident Fund Plan & Employee Pension Scheme:
The Company makes specified monthly contributions towards Employee
Provident Fund/ Employee Pension Scheme to fund administered and
managed by the Government of India / funds (set up by the Company and
administered through Trusts). The Company has an obligation to make
good the shortfall, if any, between the return on investments of the
Trusts and notified interest rate.
ii). Employee State Insurance:
The Company makes specified monthly contributions towards Employees
State Insurance Scheme.
iii). Superannuation Scheme:
The Company has taken Group Superannuation Policies with Life Insurance
Corporation of India for superannuation payable to specific employees.
Contribution towards aforesaid fund is charged to the Profit & Loss
account in the financial year to which it relates.
b). Defined Benefit Plans
Defined benefit plans are retirement benefit plans under which the
Company pays certain defined benefits to the employees at the time of
their retirement/resignation/death based on rules framed for such
schemes.
I). Gratuity:
The Company provides for gratuity obligations through a defined benefit
retirement plan (the Gratuity Plan) covering all employees. The
Gratuity Plan provides a lump sum payment to vested employees at
retirement or termination of employment based on the respective
employee salary and years of employment with the Company. The Company
provides for its liability under the Gratuity Plan based on actuarial
valuation.
ii). Earned Leaves/Sick Leaves:
The Company provides for the liability at year end on account of
unavailed accumulated leaves on the basis of actuarial valuation.
3) Employee Stock Options:
Compensation cost in respect of stock options granted to eligible
employees is recognised using the intrinsic value ot the stock options
and is amortised over the vesting period ot such options granted.
j) Borrowing costs
Borrowing costs attributable to the acquisition of qualifying assets
are capitalised upto the period such assets are ready for its intended
use. All other borrowing costs are charged to Profits Loss Account.
k) Government Grants
Recognition
Government grants are recognised where:
i) There is reasonable assurance of complying with the conditions
attached to the grant.
ii) Such grant/benefit has been earned and it is reasonably certain
that the ultimate collection will be made.
Presentation in Financial Statements:
i) Government grants relating to specific fiRs.ed assets are adjusted
with the value of the fiRs.ed assets.
ii) Government grants in the nature of promoters contribution, i.e.
which have reference to the total investment in an undertaking or by
way of contribution towards total capital outlay, are credited to
capital reserve.
iii) Government grants related to revenue items are either adjusted
with the related eRs.penditure/revenue or shown under "Other Income", in
case direct linkage with cost/income is not determinable.
l) Accounting for assets acquired under lease
In respect of plant & machinery acquired on lease before 1 st April
2001, the principal value of the lease (including sale value on the
eRs.piry of lease), representing fair value of the assets, is amortised
over technically estimated lives of such assets and unamortised value
of such lease rentals are stated separately under "FiRs.ed Assets". Lease
rentals of other assets, acquired before 1st April 2001 are charged off
in the period in which these accrue.
m) TaRs.es on Income
i) Current taRs. on income is determined on the basis of taRs.able income
computed in accordance with the applicable provisions of thelncome TaRs.
Act, 1961.
ii) Deferred taRs. is recognised for all timing differences between the
accounting income and the taRs.able income for the year, and quantified
using the taRs. rates and laws enacted or substantively enacted as on the
Balance Sheet date.
iii) Deferred taRs. asset is recognised and carried forward only to the
eRs.tent that there is a reasonable certainty that sufficient future
taRs.able income will be available against which such deferred taRs. assets
can be realized, eRs.cept in the case of unabsorbed depreciation or carry
forward of losses under the Income TaRs. Act, 1961, deferred taRs. asset is
recognised only to the eRs.tent that there is virtual certainty supported
by convincing evidence that sufficient future taRs.able income will be
available against which such deferred taRs. assets can be realized.
iv) Minimum Alternate TaRs. (MAT) credit is recognized as an asset only
when and to the eRs.tent there is convincing evidence that the Company
will be in a position to avail of such credit under the provisions of
the Income TaRs. Act,1961.
n) Intangible Assets
Intangible assets are recognised as per the criteria specified in
Accounting Standard (AS) 26 "Intangible Assets" and are amortised on
straight line basis as follows:
Period of amortisation
Computer Software 36 months
Designs Drawings 72 months
Technical Know-how fees 72 months
o) Impairment of Asset
Impairment of individual assets/cash generating unit (a group of assets
that generates identified independent cash flows) is identified using
eRs.ternal and internal sources of information and impairment loss if
any, is determined and recognised in accordance with the Accounting
Standard (AS) - 28 - Impairment of Assets.
p) Provisions, Contingent liabilities and Contingent assets
Provisions are recognised for liabilities that can be measured only by
using a substantial degree of estimation, if
i) the Company has a present obligation as a result of a past event.
ii) a probable outflow of resources is eRs.pected to settle the
obligation and
iii) the amount of the obligation can be reliably estimated.
Reimbursement eRs.pected in respect of eRs.penditure required to settle a
provision is recognised only when it is virtually certain that the
reimbursement will be received.
Contingent Liability is disclosed in the case of
i) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settlethe
obligation.
ii) a possible obligation, unless the probability of outflow of
resources is remote.
Contingent Assets are neither recognised nor disclosed.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on Triveni Engineering & Industries Ltd.
-
Triveni Engineering & Industries Ltd. Tools
- Bulk Deals
- Block Deals
-
Triveni Engineering & Industries Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- BSE Price History
- NSE Price History
-
Triveni Engineering & Industries Ltd. Key Financial Ratios
- Ratios
-
Triveni Engineering & Industries Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
Triveni Engineering & Industries Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
Triveni Engineering & Industries Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
Triveni Engineering & Industries Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
