1 Corporate Information:
Bharati Shipyard Limited is a listed public company incorporated on 22nd June, 1976. The company is primarily engaged in manufacturing of Ships, Non Propelled Vessels, Cranes, Rigs, off shore structures, ship repairing and related activities.
2 Significant Accounting Policies
a. Basis of Preparation of financial statements:
The financial statements are prepared under the historical cost convention, except for certain Fixed Assets which are carried at revalued amounts, on accrual basis of accounting, in accordance with the generally accepted accounting principles in India (Indian GAAP), on a going concern basis and in line with Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions of the Companies Act, 2013.
The financial statements are presented in Indian rupees rounded off to the nearest rupees in Lakhs.
b Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amount of income and expenses during the year. The management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Further, the 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 or materialized. Any changes in such estimates are recognized prospectively.
c. Fixed Assets
i. Tangible Assets:
Tangible Assets are stated at cost less accumulated depreciation and impairment losses, if any and includes amounts added on revaluation if any. The cost includes 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), borrowing costs and any directly attributable expenses, incurred to bring the tangible assets to its present location and condition.
ii. Intangible Assets:
Intangible Assets are stated at cost less accumulated amortization and impairment losses, if any. The cost includes 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), borrowing costs and any directly attributable expenses, incurred to bring the intangible asset to its working condition for the intended use.
d. Capital Work-in-progress:
Capital work-in-progress includes the cost of tangible assets that are not yet ready for their intended use at the balance sheet date and are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
e. Depreciation and Amortization:
i. Depreciation on Tangible Assets has been provided on Straight - Line Method based on the useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.
ii. Depreciation on additions /deletions is calculated on pro-rata basis from /to the date of such additions / deletions.
iii Leasehold land - Cost of leasehold land is amortized over lease period
f. Impairment of Assets:
The carrying value 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.
g. Investments:
Long Term Investments are valued at cost of acquisition. Provision for diminution in value of Long Term Investments is made only if such a decline is other than temporary in the opinion of the Management.
Current investments are stated at the lower of cost and fair value, determined by category of Investments.
h. Inventories:
i. Raw Material and Other Components and Stores and Spares have been valued at lower of cost determined on FIFO basis or net realizable value. Cost of Inventories comprise of all costs of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition.
ii. Work in progress is valued at amount of work done as percentage of contract value duly certified by Chartered Engineer.
i Employee Benefits
i. Short term benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries and wages, performance incentives, compensated absences etc. and the expected cost of ex-gratia are recognized in the period in which the employee renders the related service.
ii. Post employment benefits Defined contribution plans:
The Company makes specified monthly contributions towards employee provident fund. The Company's contribution paid/ payable under the schemes is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
In addition, employees of the company are also covered under Employees' State Insurance Scheme Act,
The Company's contribution paid/ payable under the schemes is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
The company has no further obligation under these plans beyond its monthly contributions.
Defined benefit plans:
The Company's gratuity benefit scheme is a defined benefit plan. The Company's net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets deducted.
The present value of any obligation under such defined benefit plan is determined based on actuarial valuation using the Project Unit Completion Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market
When the calculation results in a benefit to the Company, the recognized asset is limited to the net total of any unrecognized actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognized in the Statement of Profit and Loss as and when determined.
iii. Compensated Absences:
The company has a scheme for compensated absences for employees, the liability for which is determined on the basis of an independent actuarial valuation, carried out at the balance sheet date.
The Company's contribution paid/ payable under the schemes is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
j Revenue Recognition:
i. Revenue is recognized in accordance with 'AS-7 Accounting for Construction Contracts' specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions of the Companies Act, 2013 on percentage completion basis by applying percentage of work completed to the total contract value duly certified.
ii. Revenue from ship repair activity is recognized on the basis of job completion.
iii. Dividend income on investment is accounted for in the year in which the right to receive the payment is established.
iv. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable.
k Government Subsidy:
Government Subsidy is recognized in the Statement of Profit and Loss in accordance with the related scheme and in the period in which it is accrued. The scheme drawn up in this regard by the Ministry of Shipping, Government of India specifies that the subsidy due on vessels constructed by Private Shipyards such as the Company itself would be payable only upon completion and delivery of eligible vessels as defined by the scheme. However, since the Company follows accrual concept of accounting, the subsidy recognized in Statement of Profit and Loss also comprises of vessels under construction.
l. Borrowing Costs:
Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which takes substantial period of time to get ready for its intended use, are capitalized as part of the cost of respective assets up to the date when such asset is ready for its intended use. Other borrowing costs are charged to the Statement of Profit and Loss.
m. Provision for Taxation
i. Tax expense comprises of current tax and deferred tax.
ii. Current Tax:
Provision for current income-tax is made on the basis of estimated taxable income for the year, using the applicable tax rates and where the income is assessed by the tax authorities on the basis of such assessed income.
iii. Deferred Tax:
Deferred Tax on timing differences is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred Tax Assets are recognized only to the extent that there is virtual certainty with convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.
iv. 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.
n. Foreign Currency transactions:
Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction. Gains or Losses upon settlement of transaction during the year is recognized in the statement of profit and loss.
Monetary items denominated in foreign currencies at the yearend are restated at year end rates. Gains or losses arising as a result of the above are recognized in the statement of profit and loss.
0. Provisions, Contingent Liabilities and Contingent Assets:
1. The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
ii. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources.
iii. Where there is a possible or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
iv. Contingent assets are neither recognized nor disclosed in the financial statements.
p. Operating Leases:
Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as expenses on accrual basis in the Statement of Profit and Loss in accordance with respective lease agreements.
q. Earnings Per Share:
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) attributable to the shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
r. 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.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been allocated to segments on the basis of their relationship to the operating activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on cost.
Segment revenue, Segment expenses, Segment assets and Segment liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities."
s. Cash Flow statement:
Cash flows are reported using the indirect method, whereby profit/ (loss) before 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.
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 change in values.
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