1. COMPANY OVERVIEW
Alkali Metals Limited, which was established in 1968, at Hyderabad, Telangana, India, as a closely held Company. It became a Public Listed Company on 6th November 2008 being listed on BSE & NSE. Originally set up for manufacturing of Sodium Metal, the Company subsequently diversified into manufacturing of Sodium Derivatives, Pyridine Derivatives, Fine Chemicals and APIs etc. The Company is recognised as an “Export House” by DGFT and is also recognised by the Department of Science and Technology, New Delhi as an approved “In house R & D Facility”. The Company has three manufacturing units, at Uppal, Dommara Pochampally at Hyderabad and JNPC Visakhapatnam.
2. BASIS OF PREPARATION AND MEASUREMENT2.1. Statement of Compliance
The financial statements for the year ended 31st March 2024 have been prepared in accordance with Indian Accounting Standards (“Ind AS”) prescribed under Section 133 of the Companies Act, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
2.2. Accounting Convention and Basis of Measurement
The financial statements have been prepared on the historical cost convention and on an accrual basis, except for the following material items that have been measured at fair value as required by relevant Ind AS:
a. Certain financial assets and liabilities measured at fair value (refer accounting policy on financial instruments)
b. Defined benefit and other long-term employee benefits.
2.3. Functional and Presentation Currency
The financial statements are presented in Indian rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates. All financial information presented in Indian rupees has been rounded off to the nearest lakh, except for number of shares and Earnings Per Share data.
2.4. Use of Judgements, Estimates and Assumptions
The preparation of the financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities at the date of the financial statements and reported amounts of revenues and expenses during the year and the disclosure of contingent liabilities and assets. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
Information about critical judgements in applying accounting policies, as well as estimates and assumptions in respect of the following areas, that have most significant effect to the carrying amounts within the next financial year are included in the relevant notes.
a. Useful lives of property, plant, equipment and intangibles
b. Measurement of defined benefit obligations
c. Measurement and likelihood of occurrence of provisions and contingencies
d. Recognition of deferred tax assets/liabilities
e. Impairment of intangibles
f. Expenditure relating to research and development activities.
2.5. Operating Cycle
Based on the nature of products/ activities of the Company and the normal time between acquisition of
assets and their realisation in cash or cash equivalents, the Company has determined its operating
cycle as 12 months for the purpose of classification of its assets and liabilities as current and noncurrent.
3. SIGNIFICANT ACCOUNTING POLICIES3.1. Property Plant and Equipment
a. Property Plant and Equipment are measured at cost less accumulated depreciation and impairment losses.
b. The cost ofproperty, plant and equipment includes those incurred directly for the construction or acquisition of the asset, and directly attributable to bringing it to the location and condition necessary for it to be capable of operating in the manner intended by the management and includes the present value of expected cost for dismantling/ restoration wherever applicable.
c. The cost of major spares is recognised in the carrying amount of the item of property, plant and equipment in accordance with the recognition criteria set out in the Standard. The carrying amount of the replaced part is derecognised at the time of actual replacement. The cost of the day-to-day servicing of the item are recognised in statement of profit and loss account.
d. Depreciation on Property, Plant and Equipment is provided under straight line method over the useful life of the assets as specified in Part C of Schedule II to the Companies Act, 2013 and the manner specified therein. Assets costing less than ' 10,000 are fully depreciated in the year of purchase.
e. Expenditure attributable / relating to PPE under construction / erection is accounted as below:
• To the extent directly identifiable to any specific plant / unit, trail run expenditure net of revenue is included in the cost ofproperty plant and equipment.
• To the extent not directly identifiable to any specific plant / unit, it is kept under “expenditure during construction” for allocation to property plant and equipment and is grouped under capital work in progress.
• Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as capital advances under other non-current assets.
3.2. Intangible Assets
a. Intangible Assets are recognised when it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Expenditure incurred for creating infrastructure facilities where the ownership does not rest with the Company and where the benefits from it accrue to the Company over a future period is also considered as Intangible Asset.
b. New product development expenditure, software licenses, technical knowhow fee, infrastructure and logistic facilities etc., are recognised as Intangible Assets upon completion of development and commencement of commercial production.
c. Intangible Assets are amortised on straight line method over their technically estimated useful life.
d. Residual values and useful lives for all Intangible Assets are reviewed at each reporting date. Changes if any are accounted for as changes in accounting estimates.
3.3. Impairment of Asseta. FinancialAssets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
• Financial assets that are debt instruments and are measured at amortised cost whether applicable for e.g. loans debt securities, deposits, and bank balances.
• Trade Receivables
The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivables which do not contain a significant financing component. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
b. Non - financial assets
The Company assesses at each reporting date whether there is any objective evidence that a nonfinancial asset or a group of non-financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
3.4. Inventories
Items of inventories are valued at lower of cost or net realisable value after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. Cost of raw material is determined on FIFO method.
The factors that the Company considers in determining the provision for slow moving, obsolete and other non-saleable inventory include estimated shelf-life, ageing of inventory and to the extent each of these factors impact the Company’s business and markets. The Company considers all these factors and adjusts the inventory provision to reflect its actual experience on a periodic basis.
3.5. Foreign Currency Transactions
a. Transactions relating to non-monetary items and purchase and sale of goods /services denominated in foreign currency are recorded at the exchange rate prevailing or a rate that approximates the actual rate on the date oftransaction.
b. Assets and liabilities in the nature of monetary items denominated in foreign currencies are translated and restated at prevailing exchange rates as at the end of the reporting period.
c. Exchange differences arising on account of settlement / conversion of foreign currency monetary items are recognised as expense or income in the period in which they arise.
d. Foreign currency gains and losses are reported on a net basis.
3.6. Revenue Recognition
While recognizing the revenue under Ind AS-115, in respect of Contracts which meet the defined criteria, due consideration has been given to identify all the performance obligations stated therein including transfer of goods or services as well as term of payment. The transaction price is allocated to each distinct and identifiable performance obligation and is also adjusted for the time value of money. In respect of goods, revenue is recognised on transfer of significant risks and rewards of the ownership including effective control of the buyer. In respect of all other services/performance obligations, revenue is recognised upon of completion of such performance. The revenue so measured is stated net of trade discounts / rebated and other price allowances, wherever applicable. Other income including interest is recognised on accrual basis.
3.7. Government Grants:
The incentives received on Exports/Imports of Goods are deducted from the respective expense head on receipt basis.
3.8. Employee Benefitsa. Short term Benefits
All employee benefits falling due wholly within twelve months of rendering the service are classified as short-term employee benefits. The cost ofthe benefits like salaries, wages, medical, leave travel assistance, short term compensated absences, bonus, exgratia etc., are recognised as an expense in the period in which the employee renders the related service.
b. Post -employment benefits
• Defined Contribution Plans
The contribution paid /payable under provident fund scheme, ESI scheme, and employee pension scheme is recognised as expenditure in the period in which the employee renders the related service.
• Defined Benefit Plans
The Company’s obligation towards gratuity is a defined benefit plan. The present value of the estimated future cash flows of the obligation under such plan is determined based on actuarial valuation using the projected unit credit method. Any difference between the interest income on plan asset and the return actually achieved and any changes in the liabilities over the year due to changes in actuarial assumptions or experienced adjustments within the plan are recognised immediately in other comprehensive income and subsequently not reclassified to the statement ofprofit and loss.
All defined benefit plans obligations are determined based on valuation as at the end of the reporting period, made by independent actuary using the projected unit credit method. The classification of the Company’s net obligation into current and non-current is as per the actuarial valuation report.
c. Long term Employee Benefits
The obligation for long term employee benefits such as long-term compensated absences, is determined and recognised in the similar manner stated in the defined benefit plan.
3.9. Borrowing Cost
a. Borrowing costs incurred for obtaining assets which take substantial period to get ready for their intended use are capitalised to the respective assets wherever the costs are directly attributable to such assets and in other cases by applying weighted average cost of borrowings to the expenditure on such assets.
b. Other borrowing costs are treated as expense for the year.
c. Significant transaction costs in respect of long-term borrowings are amortised over the tenor of respective loans using effective interest method.
3.10. Provision for Current Tax and Deferred Taxa. Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profits differ from the profit as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s current tax is calculated using tax rates that have been enacted or substantially enacted by the end of the reporting period. In the event of Tax computed as stated is less than the tax computed under section 115JB of the Income tax Act., 1961, provision for current tax will be made in accordance with such provisions.
b. Deferred Tax
Deferred Tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred Tax liabilities are generally recognised for all taxable temporary differences. Deferred Tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
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 realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of Deferred Tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period to recoveror settle the carrying amount of its assets and liabilities.
c. Current Tax and Deferred Tax for the year
Current and deferred tax are recognised in profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Deferred Tax resulting from “timing difference” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred Tax asset is recognised and carried forward only to the extent there is reasonably certain that there will be sufficient future income to recover such Deferred Tax Asset.
3.11. Minimum Alternate Tax Credit
Minimum Alternate Tax Credit Entitlement is recognized in the books of account when there is convincing evidence that the Company will pay normal income tax during the specified period. The Entitlement is reviewed at each balance sheet date with regard to the correctness of the carrying amount.
3.12. Research and Development
Capital expenditure incurred has been disclosed under separate heads of account and revenue expenditure incurred is charged off as a distinct item in the Statement of Profit and Loss.
3.13. Financial Instruments (Financial Assets and Financial Liabilities):
All Financial Instruments are recognized initially at fair value. The classification of Financial Instruments depends on the objective of the business model for which it is held and the contractual cash flows that are solely payments of principal and interest on the principal outstanding. For the purpose of subsequent measurement, Financial Instruments of the Company are classified into(a) Non-Derivate Financial Instruments and (b) Derivative Financial Instruments.
a. Non-Derivative Financial Instruments:
• Security Deposits, Cash and Cash Equivalents, Other Advances, Trade Receivables and Eligible Current and non-current financial assets are classified as financial assets under this clause.
• Loans and borrowings, trade and other payables including deposits collected from various parties and eligible current and non-current financial liabilities are classified as financial liabilities under this clause.
• Financial instruments are subsequently carried at amortized cost.
• Transaction costs that are attributable to the financial instruments recognized at amortized cost are included in the fair value of such instruments.
b. Derivative Financial Instruments:
• The policy in respect of Derivatives will be formulated as and when required.
3.14. Claims
Claims by and against the Company, including liquidated damages, are recognised on acceptance basis.
3.15. Leases:
The Company’s lease asset classes primarily consist of leases for land and building. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company avails itself substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset. At the date of commencement of the lease, the Company recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Company determines the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease.
Lease liability and Right to Use assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
|