Accounting Policies of VIP Clothing Ltd. Company
Mar 31, 2018
1 Summary of Significant Accounting Policies
1.1 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 read with the Companies (Indian Accounting Standards) Rules, 2015, the Companies (Indian Accounting Standards) Amendment Rules, 2016 and the Companies (Indian Accounting Standards) Amendment Rules, 2017.
Up to the year ended March 31, 2017, the Company prepared its financial statements in accordance with the requirements of previous Generally Accepted Accounting Principles in India (âIndian GAAPâ), which includes standards notified under the Companies (Accounting Standards) Rules, 2014. These are the Companyâs first Ind AS financial statements. The date of transition to Ind AS is April 1, 2016 (transition date). Refer note 2.19 for the details of first time adoption exemptions availed by the Company.
The financial statements are approved for issue by the Companyâs Board of Directors on May 16, 2018.
2.2 Basis for Preparation of Financial Statements:
The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities (including derivative financial instruments) that are measured at fair value at the end of each reporting period. Historical cost is generally based on the fair value of the considerations given in exchange for goods and services.
The financial statements are presented in INR (?) and all the values are rounded off to the nearest rupees in lakhs except when otherwise indicated.
2.3 Current versus Non-current classification
The Company presents assets and liabilities in balance sheet based on current/non-current classification.
An asset is current when it is:
1) Expected to be realised or intended to be sold or consumed in normal operating cycle;
2) Held primarily for the purpose of trading;
3) Expected to be realised within twelve months after the reporting period; or
4) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non- current.
A liability is current when:
1) It is expected to be settled in normal operating cycle;
2) It is held primarily for the purpose of trading;
3) It is due to be settled within twelve months after the reporting period; or
4) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as Non-current assets and liabilities.
Advance tax paid is classified as Current assets.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Property, plant and equipment
Property, plant and equipment held for use in production or supply of goods or services or for administrative purposes are stated at cost less accumulated depreciation/amortization less accumulated impairment, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use.
Capital work-in-progress for production, supply of administrative purposes is carried at cost less accumulated impairment loss, if any, until construction and installation are complete and the asset is ready for its intended use.
Depreciation is recognized (other than on capital work-in-progress) on a straight line method over the estimated useful lives of assets. Depreciation on assets acquired/ purchased, sold/discarded during the year is provided on a pro-rata basis from the date of each addition till the date of sale/retirement. The estimated useful lives of assets are stated below:
Useful life of assets consistent with the useful life specified in the Schedule II of the Companies Act, 2013.
The useful lives of assets is assessed based on a technical evaluation, taking into account the nature of assets, the estimated usage of assets, the operating conditions of the assets, past history of replacement, anticipated technological changes, maintenance history, etc. The estimated useful life is reviewed at the end of each reporting period, with effect of any change in estimate being accounted for on a prospective basis.
Where the cost of part of the asset is significant to the total cost of the assets and the useful life of that part is different from the useful of the remaining asset, useful life of that significant part is determined separately. Depreciation of such significant part, if any, is based on the useful life of that part.
Freehold land is not depreciated.
Subsequent Expenditure relating to PPE is capitalised only when it is probable that future economic benefits will flow to the Company and cost of the item can be measured reliably.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment, determined as the difference between the sales proceeds and the carrying amount of the asset, is recognized in the Statement of Profit and Loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment except land recognized as at April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost as of the transition date. Land is recognize at fair value.
Intangible assets:
An intangible asset shall be recognized if, and only if: (a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and (b) the cost of the asset can be measured reliably. The entity assesses the probability of expected future economic benefits using reasonable and supportable assumptions that represent managementâs best estimate of the set of economic conditions that will exist over the useful life of the asset. An intangible asset is measured initially at cost.
Amortisation is recognized on a straight line basis over their estimated useful lives, which reflects the pattern in which the asset''s economic benefits are consumed.
An intangible asset is derecognized on disposal or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognized in the profit or loss when the asset is derecognized.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognized as at April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost as of the transition date.
2.5 Leases:
At the inception of a lease, the lease arrangement is classified either as a finance lease of an operating lease, based on the substance of the lease arrangement. 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.
Assets taken on finance lease
Assets held under finance leases are initially recognized as an asset and a lease obligation at the lower of the fair value of the asset and the present value of minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Minimum lease payments are apportioned between finance expense and reduction of the outstanding lease obligation. Finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the lease obligation. Finance expense is recognized immediately in the Statement of Profit and Loss, unless they are directly attributable to qualifying asset, in which case they are capitalized in accordance with the policy on borrowing costs.
Assets taken on operating lease
Rental expenses from operating leases are generally recognized in profit or loss on a straight-line basis over the term of the lease, unless the payments are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
2.6 Impairment of tangible and intangible assets:
At the end of each reporting period, the Company reviews the carrying amounts of tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of individual asset, the Company estimates the recoverable amount of the cash generating unit to which an individual asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing, value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount.
2.7 Inventories:
Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition is accounted for as follows:
Raw materials, stores and spare parts and traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
Finished goods and work in progress: cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs. Cost is determined on weighted average basis.
Net realisable value represents the estimated selling price for inventories less all estimated cost of completion and costs necessary to make the sale.
2.8 Revenue recognition:
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates, value added taxes, Goods and service tax and amounts collected on behalf of third parties.
Sale of goods
Revenue from sale of goods is recognized when the substantial risks and rewards of ownership are transferred to the buyer which generally coincides with dispatch of goods from factory/stock points. Sales are recorded net of trade discounts, quantity discounts, rebates, indirect taxes. Sales exclude Sales tax, value added tax and goods and service tax.
Interest income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset''s net carrying amount on initial recognition.
Dividends
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Export Incentives
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
2.9 Foreign currencies:
The financial statements are presented in Indian rupees, which is the functional currency of the Company.
Transactions in currencies other than the Company''s functional currency are recognized at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the closing exchange rate prevailing as at the reporting date. Non-monetary assets and liabilities denominated in a foreign currency are translated using the exchange rate prevailing at the date of initial recognition (in case measured at historical cost) or at the rate prevailing at the date when the fair value is determined (in case measured at fair value).
Foreign exchange differences are recognized in profit or loss in the period in which they arise except for exchange difference on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest cost on those foreign currency borrowings.
2.10 Employee Benefits:
Gratuity, which is a defined benefit plan, is accrued based on an independent actuarial valuation, which is done based on project unit credit method as at the balance sheet date. The Company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/(asset) are recognized in other comprehensive income. In accordance with Ind AS, re-measurement gains and losses on defined benefit plans recognized in OCI are not to be subsequently reclassified to statement of profit and loss. As required under Ind AS compliant Schedule III, the Company transfers it immediately to retained earnings.
The cost of short term compensated absences are provided for based on estimates. Long term compensated absence are provided for based on estimates. Long term compensated absence costs are provided for based on actuarial valuation using the project presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.
Contributions payable to recognized provident funds, which are defined contribution schemes, are charged to the statement of profit and loss.
2.11 Share based payments
Company has equity-settled employee stock option plans. The stock options granted to employees in pursuant to the Group''s Stock Options Schemes, are measured at the fair value of the options at the grant date. The fair value of the options is treated as discount and accounted as employee benefit expenses over the vesting period on a straight line basis. The amount recognized as expense in each year is arrived at based on the number of grants expected to vest. If a grant lapses after the vesting period, the cumulative discount recognized as expense in respect of such grant is transferred to the general reserve within equity.
2.12 Borrowing costs:
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
2.13Taxation:
Income tax expense represents the sum of tax currently payable and deferred tax.
Current tax
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current tax is calculated using the tax rates that have been enacted or substantially enacted by the end of the reporting period.
Advance taxes and provisions for current income taxes are presented in the balance sheet after offsetting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying units intends to settle the asset and liability on net basis.
Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (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 recognized if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax asset 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 is realized, based on tax taxes 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.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
Current tax and deferred tax for the year
Current and deferred tax are recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
2.14 Provisions:
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of 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. Provisions are reviewed at the end of each reporting period.
The amount recognized as provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of time value of money is material).
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 recognized as an asset it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities and contingent assets
Contingent liabilities and contingent assets, if any, are disclosed in the notes to accounts.
2.15Financial instruments:
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments and are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or liabilities on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
Financial assets
Classification and subsequent measurement
Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.
These include trade receivables, loans, deposits, balances with banks, and other financial assets with fixed or determinable payments.
Impairment
The Company applies the expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, other contractual right to receive cash or other financial assets or other financial assets not designated at fair value through profit or loss. The loss allowance for a financial instrument is equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increase significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal 12-month expected credit losses. 12-month expected credit losses are portion of the lifetime expected credit losses and represent the lifetime cash shortfalls that will result if the default occurs within 12 months after the reporting date.
For trade receivables or any contractual right to receive cash or another financial assets that results from transactions that are within the scope of Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses. The Company has used a practical expedient permitted by Ind AS 109 and determines the expected credit loss allowance based on a provision matrix which takes into account historical credit loss experience and adjusted for forward looking information.
De-recognition
The Company derecognizes financial asset when the contractual right to the cash flows from the asset expires, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for the amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of the transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On de-recognition of a financial asset, the difference between the asset''s carrying amount and the sum of consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income, if any, is recognized in the Statement of Profit and Loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of the financial asset.
Financial liabilities
Classification
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into 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 an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received net of direct issue costs.
Subsequent measurement
Financial liabilities (that are not held for trading or not designated at fair value through profit or loss) are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method.
Effective interest method is a method of calculating amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Foreign exchange gains and losses
Financial liabilities denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments and are recognized in the Statement of Profit and Loss.
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. For financial liabilities that are measured at fair value through profit or loss, the foreign exchange component forms part of the fair value gains or losses and is recognized in the Statement of Profit and Loss.
De-recognition
Financial liabilities are derecognized when, and only when, the obligations are discharged, cancelled or have expired. An exchange with a lender of a debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability 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 a financial liability derecognized and the consideration paid or payable is recognized in the Statement of Profit and Loss.
2.16 Cash and cash equivalents:
Cash and cash equivalents comprise cash in hand and unencumbered, highly liquid bank and other balances (with original maturity of three months or less) that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
2.17 Earnings per share:
The Company reports basic and diluted earnings per share (EPS) in accordance with Indian Accounting Standard 33 "Earnings per Share". Basic EPS is computed by dividing the net profit or loss attributable to ordinary equity holders of the parent entity by the weighted average number of equity shares outstanding during the period. Diluted EPS is computed by dividing the net profit or loss attributable to ordinary equity holders of the parent entity by weighted average number of equity shares outstanding during the year as adjusted for the effects of the effects of all dilutive potential ordinary shares of dilutive potential equity shares (except where the results are anti-dilutive).
2.18 Critical accounting judgements and key sources of estimation uncertainty:
In the application of the Companyâs accounting policies, which are described in Note 2.1, the Management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
2.18.1 Impairment of property, plant and equipment
Determining whether property, plant and equipment is impaired requires an estimation of the value in use of the cash-generating unit. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. When the actual future cash flows are less than expected, a material impairment loss may arise.
2.18.2 Useful lives of property, plant and equipment
The Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. During the currently year, the directors have determined that no changes are required to the useful lives of assets.
2.18.3 Discount rate - defined benefit obligation
The Companyâs defined benefit obligation is discounted at a rate set by reference to market yields at the end of the reporting period on high quality corporate bonds. Significant judgement is required when setting the criteria for bonds to be included in the population from which the yield curve is derived. The most significant criteria considered for the selection of bonds include the issue size of the corporate bonds, quality of the bonds and the identification of outliers which are excluded.
2.18.4 Provision for litigations and contingencies
The provision for litigations and contingencies are determined based on evaluation made by the management of the present obligation arising from past events the settlement of which is expected to result in outflow of resources embodying economic benefits, which involves judgements around estimating the ultimate outcome of such past events and measurement of the obligation amount. Due to the judgements involved in such estimations the provisions are sensitive to the actual outcome in future periods.
2.19First time adoption of Ind AS - Mandatory exceptions and optional exemptions:
The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets and liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to certain exceptions and certain optional exemptions availed by the company as detailed below:
2.19.1 De-recognition of financial assets and financial liabilities
The Company has applied the de-recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 1, 2016 (the transition date).
2.19.2 Classification of debt instruments
The Company has determined that classification of debt instruments in terms of whether they meet the amortized cost criteria or the fair value through profit or loss criteria based on facts and circumstances that existed as of the transition date.
2.19.3 Deemed cost for property, plant and equipment and intangible assets
The Company has elected to continue with the carrying value of all its plant and equipment and intangible assets recognized as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
2.19.4 Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there has been significant increase in credit risk since the initial recognition, as permitted by Ind AS 101.
2.19.5 Past Business Combinations
The Company has elected not to apply Ind AS 103 Business Combinations retrospectively to past business combinations that occurred before the transition date of April 1, 2016. Consequently, the Company has kept the same classification for the past business combinations as in its previous GAAP financial statements. The Company has not recognized assets and liabilities that were not recognized in accordance with previous GAAP in the balance sheet of the acquirer and would also not qualify for recognition in accordance with Ind AS in the separate balance sheet of the acquire. The Company has excluded from its opening balance sheet those items recognized in accordance with previous GAAP that do not qualify for recognition as an asset or liability under Ind AS.
2.19.6 Leases
Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make an assessment on basis of facts and circumstances existing at the date of transition to Ind AS, except where impact is expected not to be material. The company has elected to apply this exemption for such contracts under Para D9A of Ind AS 101.
Mar 31, 2015
A) Basis of accounting and preparation of financial statements
These financial statement have been prepared in accordance with the
generally accepted accounting principal in India under the historical
cost convention on accrual basis, pursuant to section 133 of the
Companies Act, 2013 read with rule 7 of the Companies (Accounting)
Rule, 2014, till the standard of accounting or addendum thereto are
prescribed by the Central Government in consultation and recommendation
of the National Financial Reporting Authority, existing Accounting
Standard notified under Companies Act, 1956 shall continue to apply.
Consequently, these financial statement have been prepared to comply in
all aspect with the accounting standards notified under section 211(3C)
of the Companies Act, 1956 (Companies Accounting Standard) Rules, 2006,
as amended and other relevant provisions of the Companies Act, 2013.
b) Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known/materialize.
c) Inventories
i) Cost of Inventories has been computed to include all Cost of
Purchases. Cost of Conversion and other costs incurred in bringing the
inventories to their present location.
ii) Raw materials and components, Stores and Spares are valued at cost.
The cost are ascertained using the weighed average method, except
incase of slow moving and obsolete material, at lower of cost or
estimated realizable value.
iii) Work-in-progress and finished goods are valued at lower of cost or
realizable value include appropriate proportion of overheads and where
applicable excise duty.
iv) Scrap is valued at estimated realizable value.
v) Goods in transit are stated at actual cost up to the Balance Sheet.
d) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
e) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
f) Fixed Assets, Depreciation and Amortization
i) Fixed assets are valued at cost of acquisition/construction
(including expenses /interest on borrowings, directlyattributable to
such asset, during construction period). Cost of acquisition is
inclusive of freight, insurance, duties net of credits under
CENVATscheme, levies and all incidentals attributable to bringing the
asset to its working condition.
ii) Depreciation is provided on straight line method at the rates and
in the manner specified in Schedule II to the Companies Act, 2013. Some
of the Assets are depreciated 100% in the year of acquisition itself
depending upon the useful life of the assets as estimated by the
management.
Item of value less than Rs. 5,000/- each are depreciated at 100% in the
year of acquisition.
Intangible assets are amortized on a straight line basis based on
useful life of the assets.
iii) Assets subject to impairment, on the asset's revised carrying
amount, over its remaining useful life.
g) Revenue recognition
Sales are recognized, net of returns and trade discounts/rebates,
incentives on sales on transfer of significant risks and rewards of
ownership to the buyer, which generally coincides with the delivery of
goods to customers. Sales include excise duty but exclude sales tax and
value added tax.
h) Other income
i) Income from Interest is recognized in the year in which it is
accrued and stated at gross of tax deducted at source.
ii) Rental income from hiring of facilities is accounted in accordance
with the terms and conditions agreed with the customer.
iii) Dividend is recognized when the right to receive the dividend is
unconditionally established on the Balance Sheet date.
i) Foreign currency transactions and translations
i) Initial recognition
Transactions in foreign currencies are recorded in the reporting
currency, by applying to the foreign currency amount the exchange rate
between the reporting currency and the foreign currency at the date of
the transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non- monetary items are reported using the exchange rate at the date of
transaction.
In respect of transactions covered by forward exchange contracts
premium or discount being the difference between the forward rate and
the exchange rate on the date of the transaction is recognized as
income or expense over the life of the contract.
iii) Exchange difference
Transactions not covered by forward contracts and outstanding at year
end are translated at exchange rates prevailing at the year end and the
profit / loss so determined is recognized in the Profit and Loss
Account.
j) Export incentives
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
k) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Long term
investments are stated at cost less provision for diminution other that
temporary, if any in the value of such investments. Current investments
are valued at lower of cost or market value.
l) Retirement and other Employee benefits
Retirement benefits to employees are provided for by payments to
Gratuity, Superannuation and Provident Funds Retirement benefit in the
form of provident fund /pension schemes are charged to Profit and Loss
account of the year when the contributions to the respective funds are
due.
i) Gratuity Plan
The company has taken an insurance policy under the group gratuity
scheme with Life Insurance Corporation of India to cover the gratuity
liability of the employees of the company. The Liability for gratuity
is provided for on the basis of actuarial valuation done at the end of
the financial year.
ii) Leave Encashment Liability for leave encashment is provided for on
actuarial valuation done at the end of financial year.
m) Borrowing costs
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets to the extent
they relate to the period till such assets are ready to put to use. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to Profit and Loss account. Borrowing cost comprises of
interest and other cost incurred in connection with borrowing of funds.
n) Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
o) Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.Minimum Alternate Tax (MAT) paid in accordance with the tax
laws, which gives future economic benefits in the form of adjustment to
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Accordingly, MAT is recognized as an asset in the Balance Sheet when it
is probable that future economic benefit associated with it will flow
to the Company.
Deferred tax is recognized on timing differences being the difference
between taxable income and accounting income that originate in one year
and are capable of reversal in one or more subsequent years. Deferred
tax assets and liabilities are computed on the timing differences
applying the tax rates enacted or substantively enacted by the Balance
Sheet date. Deferred tax assets are recognized only to the extent that
there is reasonable certainty that sufficient future taxable income
will be available against such deferred tax assets can be realized.
Current and deferred tax relating to items directly recognized in
equity are recognized in equity and not in the Statement of Profit and
Loss.
p) Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognized, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognized for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognized in the Statement of Profit and Loss,
except in case of revalued assets.
q) Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
r) Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilizing the credits.
Note:
(i) 3,57,50,000 Ordinary Shares of Rs. 2/- each allotted as fully paid up
Bonus Shares by way of Capitalization of Share Premium.
(ii) The Company had allotted the 24,35,000, 5% Redeemable Preference
Shares of Rs. 100/- each on 1st February, 2006, redeemable after
31.01.2016 with an option to the Company to redeem it at the end of the
8th, 9th and 10th Year, in three equal installment of Rs. 811.60 Lakhs
each i.e redeemable on 31.01.2014, 31.01.2015 and 31.01.2016. After the
buyback of 12,50,050 Preference Shares the installment will be
proportionately reduce to Rs. 394.98 Lakhs each year to be redeemed on
31.03.2014, 31.01.2015 and 31.01.2016. The Company had redeemed its
first trench on 31st July, 2014 and 2nd trench was redeemed on 31st
January, 2015.
(iii) The Company had issued and allotted 30,00,000 warrant at price of
Rs. 38 per warrant belonging to Promoter group as per SEBI (ICDR)
Regulations, 2009. The Company had received Rs. 342 Lakhs being 30% of Rs.
1,140 Lakhs is initial contribution towards subscription of warrants
from the subscriber to warrant.
Mar 31, 2014
A) Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year. All the amounts in financial are presented in Rupees in
Lakhs except per share data or as otherwise stated, figures for the
previous year have been regrouped/rearranged wherever considered
necessary to conform the figure presented in the current year.
b) Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
c) Inventories
i) Cost of Inventories has been computed to include all Cost of
Purchases. Cost of Conversion and other costs incurred in bringing the
inventories to their present location.
ii) Raw materials and components, Stores and Spares are valued at cost.
The cost are ascertained using the weighed average method , except
incase of slow moving and obsolete material , at lower of cost or
estimated realizable value.
iii) Work-in-progress and finished goods are valued at lower of cost or
realizable value include appropriate proportion of overheads and where
applicable excise duty.
iv) Scrap is valued at estimated realizable value
v) Goods in transit are stated at actual cost up to the Balance Sheet.
d) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
e) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
f) Fixed Assets, Depreciation and Amortization
i) Fixed assets are valued at cost of acquisition/construction
(including expenses /interest on borrowings, directly attributable to
such asset, during construction period). Cost of acquisition is
inclusive of freight, insurance, duties net of credits under CENVAT
scheme, levies and all incidentals attributable to bringing the asset
to its working condition.
ii) Buildings, Plant & Machinery(except assets subject matter of
impairment ) and other assets, including intangible assets are
depreciated over their estimated useful lives or lives derived from the
rates specified in Schedule XIV to the Companies Act, 1956, whichever
is lower, except for assets costing less than Rs. 5000/- which are
fully depreciated in the year of acquisition.
iii) Assets subject to impairment, on the asset''s revised carrying
amount, over its remaining useful life.
g) Revenue recognition
Sales are recognized, net of returns and trade discounts/rebates,
incentives on sales on transfer of significant risks and rewards of
ownership to the buyer, which generally coincides with the delivery of
goods to customers. Sales include excise duty but exclude sales tax and
value added tax.
h) Other income
i) Income from Interest is recognized in the year in which it is
accrued and stated at gross of tax deducted at source.
ii) Rental income from hiring of facilities is accounted in accordance
with the terms and conditions agreed with the customer.
iii) Dividend is recognized when the right to receive the dividend is
unconditionally established on the Balance Sheet date.
i) Foreign currency transactions and translations
i) Initial recognition
Transactions in foreign currencies are recorded in the reporting
currency, by applying to the foreign currency amount the exchange rate
between the reporting currency and the foreign currency at the date of
the transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non- monetary items are reported using the exchange rate at the date of
transaction.
In respect of transactions covered by forward exchange contracts
premium or discount being the difference between the forward rate and
the exchange rate on the date of the transaction is recognized as
income or expense over the life of the contract.
iii) Exchange difference
Transactions not covered by forward contracts and outstanding at year
end are translated at exchange rates prevailing at the year end and the
profit / loss so determined is recognized in the Profit and Loss
Account.
j) Export incentives
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
k) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Long term
investments are stated at cost less provision for diminution other that
temporary, if any in the value of such investments. Current investments
are valued at lower of cost or market value.
l) Retirement and other Employee benefits
Retirement benefits to employees are provided for by payments to
Gratuity, Superannuation and Provident Funds Retirement benefit in the
form of provident fund /pension schemes are charged to Profit and Loss
account of the year when the contributions to the respective funds are
due.
i) Gratuity Plan
The company has taken an insurance policy under the group gratuity
scheme with Life Insurance Corporation of India to cover the gratuity
liability of the employees of the company. The Liability for gratuity
is provided for on the basis of actuarial valuation done at the end of
the financial year.
ii) Leave Encashment Liability for leave encashment is provided for on
actuarial valuation done at the end of financial year.
m) Borrowing costs
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets to the extent
they relate to the period till such assets are ready to put to use. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to Profit and Loss account. Borrowing cost comprises of
interest and other cost incurred in connection with borrowing of funds.
n) Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
o) Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.Minimum Alternate Tax (MAT) paid in accordance with the tax
laws, which gives future economic benefits in the form of adjustment to
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Accordingly, MAT is recognized as an asset in the Balance Sheet when it
is probable that future economic benefit associated with it will flow
to the Company.
Deferred tax is recognized on timing differences being the difference
between taxable income and accounting income that originate in one year
and are capable of reversal in one or more subsequent years. Deferred
tax assets and liabilities are computed on the timing differences
applying the tax rates enacted or substantively enacted by the Balance
Sheet date. Deferred tax assets are recognized only to the extent that
there is reasonable certainty that sufficient future taxable income
will be available against such deferred tax assets can be realized.
Current and deferred tax relating to items directly recognized in
equity are recognized in equity and not in the Statement of Profit and
Loss.
p) Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognized, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognized for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognized in the Statement of Profit and Loss,
except in case of revalued assets.
q) Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
r) Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilizing the credits.
Mar 31, 2013
A) Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year. All the amounts in financial are presented in Rupees in
Lakhs except per share data or as otherwise stated, figures for the
previous year have been regrouped/rearranged wherever considered
necessary to conform the figure presented in the current year.
b) Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
c) Inventories
i) Cost of Inventories has been computed to include all Cost of
Purchases. Cost of Conversion and other costs incurred in bringing the
inventories to their present location.
ii) Raw materials and components, Stores and Spares are valued at cost.
The cost are ascertained using the weighed average method , except
incase of slow moving and obsolete material , at lower of cost or
estimated realizable value.
iii) WorkÂin-progress and finished goods are valued at lower of cost or
realizable value include appropriate proportion of overheads and where
applicable excise duty.
iv) Scrap is valued at estimated realizable value
v) Goods in transit are stated at actual cost up to the Balance Sheet.
d) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
e) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
f) Fixed Assets, Depreciation and Amortization
i) Fixed assets are valued at cost of acquisition/construction
(including expenses /interest on borrowings, directly attributable to
such asset, during construction period). Cost of acquisition is
inclusive of freight, insurance, duties net of credits under CENVAT
scheme, levies and all incidentals attributable to bringing the asset
to its working condition.
ii) Buildings, Plant & Machinery(except assets subject matter of
impairment ) and other assets, including intangible assets are
depreciated over their estimated useful lives or lives derived from the
rates specified in Schedule XIV to the Companies Act, 1956, whichever
is lower, except for assets costing less than Rs. 5000/- which are fully
depreciated in the year of acquisition.
iii) Assets subject to impairment, on the asset''s revised carrying
amount, over its remaining useful life.
g) Revenue recognition
Sales are recognized, net of returns and trade discounts/rebates,
incentives on sales on transfer of significant risks and rewards of
ownership to the buyer, which generally coincides with the delivery of
goods to customers. Sales include excise duty but exclude sales tax and
value added tax.
h) Other income
i) Income from Interest is recognized in the year in which it is
accrued and stated at gross of tax deducted at source.
ii) Rental income from hiring of facilities is accounted in accordance
with the terms and conditions agreed with the customer.
iii) Dividend is recognized when the right to receive the dividend is
unconditionally established on the Balance Sheet date.
i) Foreign currency transactions and translations
i) Initial recognition
Transactions in foreign currencies are recorded in the reporting
currency , by applying to the foreign currency amount the exchange rate
between the reporting currency and the foreign currency at the date of
the transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non- monetary items are reported using the exchange rate at the date of
transaction.
In respect of transactions covered by forward exchange contracts
premium or discount being the difference between the forward rate and
the exchange rate on the date of the transaction is recognized as
income or expense over the life of the contract.
iii) Exchange difference
Transactions not covered by forward contracts and outstanding at year
end are translated at exchange rates prevailing at the year end and the
profit / loss so determined is recognized in the Profit and Loss
Account.
j) Export incentives
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
k) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Long term
investments are stated at cost less provision for diminution other that
temporary, if any in the value of such investments. Current investments
are valued at lower of cost or market value.
l) Retirement and other Employee benefits
Retirement benefits to employees are provided for by payments to
Gratuity, Superannuation and Provident Funds
Retirement benefit in the form of provident fund /pension schemes are
charged to Profit and Loss account of the year when the contributions
to the respective funds are due.
i) Gratuity Plan
The company has taken an insurance policy under the group gratuity
scheme with Life Insurance Corporation of India to cover the gratuity
liability of the employees of the company. The Liability for gratuity
is provided for on the basis of actuarial valuation done at the end of
the financial year.
ii) Leave Encashment Liability for leave encashment is provided for on
actuarial valuation done at the end of financial year.
m) Borrowing costs
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets to the extent
they relate to the period till such assets are ready to put to use. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to Profit and Loss account. Borrowing cost comprises of
interest and other cost incurred in connection with borrowing of funds.
n) Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
o) Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.Minimum Alternate Tax (MAT) paid in accordance with the tax
laws, which gives future economic benefits in the form of adjustment to
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Accordingly, MAT is recognized as an asset in the Balance Sheet when it
is probable that future economic benefit associated with it will flow
to the Company.
Deferred tax is recognized on timing differences being the difference
between taxable income and accounting income that originate in one year
and are capable of reversal in one or more subsequent years. Deferred
tax assets and liabilities are computed on the timing differences
applying the tax rates enacted or substantively enacted by the Balance
Sheet date. Deferred tax assets are recognized only to the extent that
there is reasonable certainty that sufficient future taxable income
will be available against such deferred tax assets can be realized.
Current and deferred tax relating to items directly recognized in
equity are recognized in equity and not in the Statement of Profit and
Loss.
p) Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognized, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognized for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognized in the Statement of Profit and Loss,
except in case of revalued assets.
q) Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
r) Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilizing the credits.
Mar 31, 2012
A) Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year. All the amounts in financial are presented in Rupees in
Lacs except per share data or as otherwise stated, figures for the
previous year have been regrouped/rearranged wherever considered
necessary to conform the figure presented in the current year.
b) Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
c) Inventories
(i) Cost of Inventories has been computed to include all cost of
Purchases. Cost of Conversion and other costs incurred in bringing the
inventories to their present location.
(ii) Raw materials and components, Stores and Spares are valued at
cost. The cost are ascertained using the weighed average method, except
incase of slow moving and obsolete material, at lower of cost or
estimated realizable value.
(iii) Work-in-progress and finished goods are valued at lower of cost
or realizable value include appropriate proportion of overheads and
where applicable excise duty.
(iv) Scrap is valued at estimated realizable value
(v) Goods in transit are stated at actual cost up to the Balance Sheet.
d) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
e) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
f) Fixed Assets, Depreciation and amortization
(i) Fixed assets are valued at cost of acquisition /construction
(including expenses /interest on borrowings, directly attributable to
such asset, during construction period). Cost of acquisition is
inclusive of freight, insurance, duties net of credits under CENVAT
scheme, levies and all incidentals attributable to bringing the asset
to its working condition.
(ii) Buildings, Plant & Machinery(except assets subject matter of
impairment) and other assets, including intangible assets are
depreciated over their estimated useful lives or lives derived from the
rates specified in Schedule XIV to the Companies Act, 1956, whichever
is lower, except for assets costing less than Rs 5000/- which are fully
depreciated in the year of acquisition.
(iii) Assets subject to impairment, on the asset's revised carrying
amount, over its remaining useful life.
g) Revenue recognition
Sales are recognized, net of returns and trade discounts/rebates,
incentives on sales on transfer of significant risks and rewards of
ownership to the buyer, which generally coincides with the delivery of
goods to customers. Sales include excise duty but exclude sales tax and
value added tax.
h) Other income
(i) Income from Interest is recognized in the year in which it is
accrued and stated at gross of tax deducted at source.
(ii) Rental income from hiring of facilities is accounted in accordance
with the terms and conditions agreed with the customer.
(iii) Dividend is recognized when the right to receive the dividend is
unconditionally established on the Balance Sheet date.
i) Foreign currency transactions and translations
(i) Initial recognition
Transactions in foreign currencies are recorded in the reporting
currency, by applying to the foreign currency amount the exchange rate
between the reporting currency and the foreign currency at the date of
the transaction.
(ii) conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items are reported using the exchange rate at the date of
transaction.
In respect of transactions covered by forward exchange contracts
premium or discount being the difference between the forward rate and
the exchange rate on the date of the transaction is recognized as
income or expense over the life of the contract.
(iii) Exchange difference
Transactions not covered by forward contracts and outstanding at year
end are translated at exchange rates prevailing at the year end and the
profit/loss so determined is recognized in the Profit and Loss Account.
j) Export incentives
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
k) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Long term
investments are stated at cost less provision for diminution other that
temporary, if any in the value of such investments. Current investments
are valued at lower of cost or market value.
I) Retirement and other Employee benefits
Retirement benefits to employees are provided for by payments to
Gratuity, Superannuation and Provident Funds.
Retirement benefit in the form of provident fund /pension schemes are
charged to Profit and Loss account of the year when the contributions
to the respective funds are due.
(i) Gratuity Plan
The company has taken an insurance policy under the group gratuity
scheme with Life Insurance Corporation of India to cover the gratuity
liability of the employees of the company. The Liability for gratuity
is provided for on the basis of actuarial valuation done at the end of
the financial year.
(ii) Leave Encashment Liability for leave encashment is provided for on
actuarial valuation done at the end of financial year, m) Borrowing
costs
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets to the extent
they relate to the period till such assets are ready to put to use. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to Profit and Loss account. Borrowing cost comprises of
interest and other cost incurred in connection with borrowing of funds.
n) Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
o) Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961 .Minimum Alternate Tax (MAT) paid in accordance with the tax
laws, which gives future economic benefits in the form of adjustment to
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Accordingly, MAT is recognized as an asset in the Balance Sheet when it
is probable that future economic benefit associated with it will flow
to the Company.
Deferred tax is recognized on timing differences being the difference
between taxable income and accounting income that originate in one year
and are capable of reversal in one or more subsequent years. Deferred
tax assets and liabilities are computed on the timing differences
applying the tax rates enacted or substantively enacted by the Balance
Sheet date. Deferred tax assets are recognized only to the extent that
there is reasonable certainty that sufficient future taxable income
will be available against such deferred tax assets can be realized.
Current and deferred tax relating to items directly recognized in
equity are recognized in equity and not in the Statement of Profit and
Loss.
p) Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognized, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognized for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognized in the Statement of Profit and Loss,
except in case of revalued assets.
q) Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
r) Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilizing the credits.
Mar 31, 2011
A) Basis of preparation of financial statements:
The financial statements have been prepared under the historical cost
convention, on the accrual basis of accounting and comply with the
mandatory accounting standards and statement issued by Institute of
Chartered Accountant of India(ICAI) and the provisions of the Companies
Act, 1956.
All amounts in financial are presented in Rupees in lakhs except per
share data or as otherwise stated. Figures for the previous year have
been regrouped /rearranged wherever considered necessary to conform to
the figures presented in the current year.
B) Fixed assets and depreciation
i) Fixed assets are valued at cost of acquisition /construction
(including expenses /interest on borrowings, directly attributable to
such asset, during construction period). Cost of acquisition is
inclusive of freight, insurance, duties net of credits under CENVAT
scheme, levies and all incidentals attributable to bringing the asset
to its working condition.
ii) Buildings, Plant & Machinery(except assets subject matter of
impairment) and other assets, including intangible assets are
depreciated over their estimated useful lives or lives derived from the
rates specified in Schedule XIV to the Companies Act, 1956, whichever
is lower, except for assets costing less than Rs. 5000/-which are fully
depreciated in the year of acquisition.
iii) Assets subject to impairment, on the asset's revised carrying
amount, over its remaining useful life.
C) Investments:
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Long term
investments are stated at cost less provision for diminution other that
temporary, if any in the value of such investments. Current investments
are valued at lower of cost or market value.
D) Foreign Currency Transactions:
a) Initial Recognition.
Transactions in foreign currencies are recorded in the reporting
currency , by applying to the foreign currency amount the exchange rate
between the reporting currency and the foreign currency at the date of
the transaction.
b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non- monetary items are reported using the exchange rate at the date of
transaction.
In respect of transactions covered by forward exchange contracts
premium or discount being the difference between the forward rate and
the exchange rate on the date of the transaction is recognized as
income or expense over the life of the contract.
c) Exchange difference
Transactions not covered by forward contracts and outstanding at year
end are translated at exchange rates prevailing at the year end and the
profit / loss so determined is recognized in the Profit and Loss
Account.
E) Inventories:
i. Cost of Inventories has been computed to include all cost of
Purchases. Cost of Conversion and other costs incurred in bringing the
inventories to their present location.
ii. Raw materials and components, Stores and Spares are valued at cost.
The cost are ascertained using the weighed average method, except
incase of slow moving and obsolete material, at lower of cost or
estimated realizable value.
iii. Workin-progress and finished goods are valued at lower of cost or
realizable value.
iv. Scrap is valued at estimated realizable value.
v. Goods in transit are stated at actual cost upto the Balance Sheet.
F) Revenue recognition
i. Revenue from sale of products recognized on dispatch of goods, but
net of Incentives on sales including rebates, discounts & excise duty.
ii. Income from Interest is recognized in the year in which it is
accrued and stated at gross of tax deducted at source.
iii. Rental income from hiring of facilities is accounted in
accordance with the terms and conditions agreed with the customer.
iv. Dividend is recognized when the right to receive the dividend is
unconditionally established on the Balance Sheet date.
G) Borrowing cost
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalized as part of the cost of such assets to the extent
they relate to the period till such assets are ready to put to use. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to Profit and Loss account. Borrowing cost comprises of
interest and other cost incurred in connection with borrowing of funds.
Wi Miscellaneous Expenditure (to the extent not written off or
adjusted)
The balance under the head Miscellaneous Expenditure (to the extent to
written off or adjusted) comprises of Advertisement & publicity
expenses and preliminary expenses which are amortized over a period of
5 years.
I) Income Taxes
Tax expense comprise of current, deferred tax.
i) Current Income tax is determined based on the amount of tax payable
in respect of taxable income for the year.
ii) Deferred tax is recognized on timing differences being the
difference between taxable income and accounting income that originate
in one year and are capable of reversal in one or more subsequent
years. Deferred tax assets and liabilities are computed on the timing
differences applying the tax rates enacted or substantively enacted by
the Balance Sheet date. Deferred tax assets are recognized only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against such deferred tax assets can
be realized.
J) Retirement and Other Employee Benefits
Retirement benefits to employees are provided for by payments to
Gratuity, Superannuation and Provident Funds
Retirement benefit in the form of provident fund /pension schemes are
charged to Profit and Loss account of the year when the contributions
to the respective funds are due.
i) Gratuity Plan
The Company has taken an insurance policy under the group gratuity
scheme with Life Insurance Corporation of India to cover the gratuity
liability of the employees of the company. The liability for gratuity
is provided for on the basis of actuarial valuation done at the end of
the financial year.
ii) Leave Encashment
Liability for leave encashment is provided for on actuarial valuation
done at the end of the financial year.
Mar 31, 2010
A) Basis of preparation of financial statements:
The financial statements have been prepared under the historical cost
convention, on the accrual basis of accounting and comply with the
mandatory accounting standards and statements issued by the Institute
of Chartered Accountants of India(ICAI) and the provisions of the
Companies Act, 1956.
All amounts in the financial statements are presented in Rupees in
lakhs except earning per share data or as otherwise stated. Figures
for the previous year have been regrouped /rearranged wherever
considered necessary to conform to the figures presented in the current
year.
B) Fixed assets and depreciation
i) Fixed assets are valued at cost of acquisition /construction
(including expenses /interest on borrowings, directly attributable to
such asset, during construction period). Cost of acquisition is
inclusive of freight, insurance, duties net of credits under CENVAT
scheme, levies and all incidentals, attributable to bring the assets to
its working condition.
ii) Buildings, Plant & Machinery (except assets which are subject
matter of impairment) and other assets, including intangible assets are
are depreciated over their estimated useful lives or lives derived from
the rates specified in Schedule XIV to the Companies Act, 1956,
whichever is lower. Assets costing less than Rs. 5000/- are fully
depreciated in the year of acquisition.
iii) Assets subject to impairment, on the assets revised carrying
amount, over its remaining useful life.
C) Investments:
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Long term
investments are stated at cost less provision for diminution other than
temporary, if any, in the value of such investments. Current
investments are valued at lower of cost or market value.
D) Foreign Currency Transactions:
i) Initial Recognition.
Transactions in foreign currencies are recorded in the reporting
currency, by applying to the foreign currency the exchange rate between
the reporting currency and the foreign currency on the date of the
transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non- monetary items are reported using the exchange rate at the date of
transaction.
In respect of transactions covered by forward exchange contracts
premium or discount being the difference between the forward rate and
the exchange rate on the date of the transaction is recognized as
income or expense over the life of the contract.
iii) Exchange difference
Transactions not covered by forward contracts and outstanding at year
end are translated at exchange rates prevailing at the year end and the
profit / loss so determined, is recognized in the Profit and Loss
Account.
E) Inventories:
i) Cost of Inventories have been computed to include all cost of
Purchases. Cost of Conversion and other costs incurred in bringing the
inventories to their present location.
ii) Raw materials and components, Stores and Spares are valued at cost.
The cost are ascertained using the weighted average method, except
incase of slow moving and obsolete material, which are valued at lower
of cost or estimated realizable value.
iii) Work-in-progress and finished goods are valued at lower of cost or
realizable value.
iv) Scrap is valued at estimated realizable value.
v) Goods in transit are stated at actual cost.
F) Revenue recognition
i) Revenue from sale of products are recognized on dispatch of goods,
but net of incentives on sales including rebates & discounts.
ii) Revenue from sale of scrap, interest subsidy on SIDBI TUFF loan is
accounted on cash basis.
iii) Income from Interest is recognized in the year in which it is
accrued and stated at gross of tax deducted at source.
iv) Rental income, from hiring of facilities is accounted in accordance
with the terms and conditions agreed with the customer.
v) Dividend is recognized when the right to receive the dividend is
unconditionally established on the Balance Sheet date.
G) Borrowing cost
Borrowing costs, that are attributable to the acquisition of qualifying
assets, are capitalized as part of the cost of such assets to the
extent, they relate to the period, till such assets are ready to be put
use. A qualifying asset is one that necessarily takes substantial
period of time to get ready for intended use. All other borrowing costs
are charged to Profit and Loss account. Borrowing cost comprises of
interest and other cost incurred in connection with borrowing of funds.
H) Miscellaneous Expenditure (to the extent not written off or
adjusted)
The balance under the head Miscellaneous Expenditure (to the extent not
written off or adjusted) comprises of Advertisement & publicity
expenses and preliminary expenses which are amortized over a period of
5 years.
I) Income Taxes
Tax expenses comprise of current, deferred and fringe benefit tax.
i) Current Income tax is determined based on the amount of tax payable
in respect of taxable income for the year.
ii) Deferred tax is recognized on timing differences being the
difference between taxable income and accounting income that originate
in one year and are capable of reversal in one or more subsequent
years. Deferred tax assets and liabilities are computed on the timing
differences applying the tax rates enacted or substantively enacted at
the Balance Sheet date. Deferred tax assets are recognized only to the
extent that there is reasonable certainty {hat sufficient future
taxable income will be available against which such which deferred tax
assets can be realized.
J) Retirement and Other Employee Benefits
Retirement benefits to employees are provided for by payments to
Gratuity, Superannuation and Provident Funds. Retirement benefit in the
form of provident fund /pension schemes are charged to Profit and Loss
account of the year when the contributions to the respective funds are
due.
i) Gratuity Plan
The Company has taken an insurance policy under the group gratuity
scheme with Life Insurance Corporation of India to cover the gratuity
liability of the employees of the Company. The liability for gratuity
is provided for on the basis of actuarial valuation done at the end of
the financial year.
ii) Leave Encashment
Liability for leave encashment is provided for on actuarial valuation
done at the end of financial year.
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 VIP Clothing Ltd.
-
VIP Clothing Ltd. Tools
- Bulk Deals
- Block Deals
-
VIP Clothing Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- Rights
- BSE Price History
- NSE Price History
-
VIP Clothing Ltd. Key Financial Ratios
- Ratios
-
VIP Clothing Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
VIP Clothing Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
VIP Clothing Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
VIP Clothing Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
- Change of Name
