a. Compliance with Ind AS
The Standalone Financial Statements comply in all material aspects with Indian Accounting
Standards (“Ind AS”) notified under Section 133 of the Companies Act, 2013 (“the Act”), and
relevant rules issued thereunder and the relevant provisions of the Act. In accordance with
proviso to Rule 4A of the Companies (Accounts) Rules, 2014, the terms used in these financial
statements are in accordance with the definitions and other requirements specified in the
applicable Accounting Standards.
b. Historical Cost Convention
These Ind AS Financial Statements have been prepared on a going concern basis using
historical cost convention and on an accrual method of accounting, except for certain financial
assets and Financial Liabilities that are measured at fair values at the end of each reporting
period, as stated in the accounting policies set out below. The accounting policies have been
applied constantly over all the periods presented in these financial statements.
The Financial Statements are presented in INR which is also the Company’s functional
currency, and all values are rounded to the nearest Lakhs (INR 00,000), except when otherwise
indicated.
1.2) Use of Estimates
The preparation of Financial Statements in conformity with the Indian Generally Accepted
Accounting Principles (GAAP) requires the management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities
on the date of the financial statements and reported amount of income and expenses during
the period. Actual figures may differ from these estimates. Any revision to the accounting
estimates is recognized prospectively in current and future periods.
Key Assumptions
1.3) Plant and Equipment-Tangible Assets:
i. Plant and Equipment are stated at historical cost less accumulated depreciation. Cost
directly attributable to acquisition are capitalized until the Plant and Equipment are ready
to for use, as intended by the management.
ii. Subsequent expenditure relating to Plant and Equipment are capitalized only when it is
probable that the future economic benefits associated with them will flow to the
Company and the cost of the expenditure can be measured reliably. Repairs and
Maintenance costs are recognized in the statement of Profit and Loss when they are
incurred.
iii. Depreciation on Plant and Equipment has been provided under Straight Line Method
over the useful life of assets estimated by the management which is in line with terms
prescribed in Schedule II of the Companies Act-2013 except the assets costing Rs.5000
or less on which depreciation is charged @ 100% in the year of acquisition. Depreciation
for assets purchased /sold during the period is proportionately charged. Depreciation
methods, useful lives & residual values are reviewed periodically.
The management estimates the useful life of the assets as follows:
Plant and Equipment (Process) : 25years
Plant and Equipment (Others) : 15 years
Buildings (Factory Buildings) : 30 years
Buildings (other than Factory Buildings) : 60 years
iv. Transition to Ind AS: On transition to Ind AS, the Company has selected to continue with the
carrying value of all of its Plant and Equipment recognised as at April 1, 2016 measured as per
the previous GAAP and use that carrying values as deemed cost of the Plant and Equipment.
1.4) Inventory:
Inventories are valued at the lower of Cost or Net Realizable Value. The cost is determined
on Weighted Average basis. Cost of finished goods and work-in-process include all costs of
purchases, conversion costs and other costs incurred in bringing the inventories to their present
location and condition. Stores and Packing Materials are valued at cost on weighted average
basis.
1.5) Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and
financial liability or equity instrument of another entity.
A. Financial Assets:
Initial recognition and measurement
All financial instruments are recognized initially at fair value plus, in the case of financial
assets not recorded at fair value through Profit & Loss account transaction costs that are
attributable to the acquisition of the financial asset, purchase or sales of financial assets that
require delivery of assets within a time frame established by regulation or convention in the
market place are recognized on the trade date i.e. the date that the Company commits to
purchase or sell the asset.
Subsequent Measurement
For the purpose of subsequent measurement, financial assets are classified and measured at:
i. Amortized Cost
ii. Fair Value Through Profit and Loss (FVTPL)
iii. Fair Value Through Other Comprehensive Income (FVTOCI)
Financial Asset measured at Amortized Cost
Financial Assets held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows and the contractual terms of the financial asset give rise
on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding are measured at amortized cost using effective interest rate
(EIR) method. The EIR amortization is recognized as finance income in the Statement of
Profit & Loss.
The Company, while applying above criteria has classified all the financial assets (except
investments in equity shares) at Amortized Cost.
Financial Assets at Fair Value Through Profit and Loss (FVTPL)
Financial Assets are measured at fair value through Profit & Loss if it does not meet the criteria
for classification as measured at Amortized Cost or at FVTOCI. All fair value changes are
recognized in the Statement of Profit & Loss.
Financial Assets Measured at Fair Value Through Other Comprehensive Income
Financial assets that are held within a business model whose objective is achieved by both,
selling financial assets and collecting contractual cash flows that are solely payments of
principal and interest, are subsequently measured at Fair Value Through Other
Comprehensive Income. Fair value movements are recognized in the Other Comprehensive
Income (OCI). Interest income measured using the EIR method and impairment Losses, if any
are recognized in the Statement of Profit and Loss. On de-recognition, cumulative gain or
Loss previously recognized in OCI is reclassified from the equity to other income in the
Statement of Profit and Loss.
De-recognition of Financial Assets
The Company derecognizes a financial asset when the contractual rights to the cash flows
from the financial asset expire, or it transfers the contractual rights to receive the cash flows
from the asset.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for
measurement and recognition of impairment Loss on the debt instruments, that are measured
at amortized cost e.g., loans, debt securities, deposits, trade receivables and bank balance.
Expected Credit Loss is the difference between all contractual cash flows that are due to the
Company in accordance with the contract and all the cash flows that the entity expects to
receive.
The management uses a provision matrix to determine the impairment Loss on the portfolio
of trade and other receivables. The provision matrix is based on its historically observed
Expected Credit Loss rates over the expected life of the trade receivables and is adjusted for
forward-looking estimates.
Expected Credit Loss allowance or reversal recognized during the period is recognized as
income or expense, as the case may be, in the Statement of Profit and Loss. In case of Balance
Sheet, it is shown as reduction from the specific financial asset.
B. Financial Liabilities.
Initial Recognition and Measurement
Financial Liabilities are recognized initially at fair value plus any transaction cost that are
attributable to the acquisition of the financial liability except Financial Liabilities at FVTPL
that are measured at fair value.
Subsequent Measurement
Financial Liabilities are subsequently measured at amortized cost using the EIR method.
Financial Liabilities carried at Fair Value Through Profit and Loss. Gain or Losses on
liabilities held for trading are recognized in the Statement of Profit and Loss.
The Company does not designate any Financial Liability at Fair Value Through Profit and
Loss.
Financial Liabilities at Amortized cost
Amortized cost for Financial Liabilities represents amount at which Financial Liability is
measured at initial recognition minus the principal repayments, plus or minus the cumulative
amortization using the effective interest method of any difference between the initial amount
and the maturity amount.
All the Financial Liabilities of the Company are subsequently measured at Amortized Cost
using the Effective Interest method.
De recognition of Financial Liabilities
A Financial Liability shall be derecognized when, and only when, it is extinguished i.e. when
the obligation specified in the contract is discharged or cancelled or expires.
1.6) Foreign Currency Transactions
The functional and presentation currency of the Company is Indian Rupee. Transactions in
foreign currency are accounted for at the exchange rate prevailing on the transaction date.
Gains/ Losses arising on settlement as also on translation of monetary items are recognised in
the Statement of Profit and Loss.
1.7) Borrowing Costs
Borrowing Costs that are attributable to the acquisition or construction of qualifying assets
are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other Borrowing Costs are
recognized as an expense in the period in which they are incurred.
1.8) Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to
the Company and the revenue can be reliably measured regardless of when the payment is
made. The specific recognition criteria described below must also be met before revenue is
recognized.
a. Sale of Products
Revenue from the sale of Products is recognised when significant risks and rewards of
ownership have been transferred to the customer, the Company no longer retain continuing
managerial involvement to the degree usually associated with ownership nor has effective
control over the Products sold, which is mainly upon delivery, the amount of revenue can be
measured reliably and recovery of the consideration that will be derived in the sale of
Products.
Revenue from Sale of Products includes excise and other duties which the Company pays as
a principal but excludes amounts collected on behalf of third parties i.e GST and Sales tax.
Sale of Products in respect of export sales are recognized as and when the shipment of
products has taken place.
b. Recognition of Export benefits
Export benefits entitlements in respect of Incentive Schemes including Duty Drawback,
Merchandise Export Incentive Scheme (MEIS), FMS and FPS of the Government of India are
recognized in the year in which Export Sales are accounted for.
c. Interest Income
Interest on deposits with Government Departments and Financial Institutions are recognized
in Statement of Profit and Loss when the right to receive/receivable during the period.
1.9) Dividend Distribution
Dividends paid (including income tax thereon) is recognized in the period in which the interim
dividends are approved by the Board of Directors, or in respect of the final dividend when
approved by shareholders.
1.10) Employee Benefits:
• Defined Contribution Plan
Employer’s Contribution to Provident Fund/Employee State Insurance which is in the nature
of defined Contribution Scheme is expensed off when the contributions to the respective funds
are due. There are no other obligations other than the contribution payable to the fund.
• Defined Benefit Plan
a. Gratuity
Gratuity liability is in the nature of defined benefit obligation. Such liability is provided only
for employees who have completed 5 years of continuous service as per the provisions of the
Payment of Gratuity Act, 1972.
b. Compensated absences
Compensated absences which are in the nature of defined benefit obligation are provided for
based on number of leaves outstanding as on Balance Sheet date according to the policy of
the Company.
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