A. SIGNIFICANT ACCOUNTING POLICIES
1.01 (a) Statement of Compliance
These financial statements have been prepared in accordance with Ind AS as notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013.
(b) Basis of Preparation:
The financial statements are prepared under the historical cost convention, except for certain financial instruments, and Land, which are measured at fair values at the end of reporting period, as explained in accounting policies below. Historical cost is generally based on fair value of the consideration given in exchange for goods and services. Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
(c) Use of estimates and judgements:
The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected. Key sources of estimation of uncertainty at the date of the financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment of investments, useful lives of property, plant and equipment, valuation of deferred tax assets, provisions and contingent liabilities.
Impairment of investments.
The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
Useful lives of property, plant and equipment.
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.
(d) Revenue Recognition:
The Company recognises revenue in accordance with Ind-AS 18. Revenue is recognised when a customer obtains control of goods or services and thus has the ability to direct the use and obtained the benefits of the goods or services. Any advance received against supply of goods and services is recognised under the head current liabilities, sub head trade and other payables.
(e) Cost recognition
Costs and expenses are recognised when incurred and have been classified according to their nature.
The costs of the Company are broadly categorised in to material consumption, cost of trading goods, employee benefit expenses, depreciation and amortisation, other operating expenses and finance cost. Employee benefit expenses include employee compensation, allowances paid, contribution to various funds and staff welfare expenses. Other operating expenses broadly comprise manufacturing expenses, administrative expenses and selling and distribution expenses.
1.02 Foreign Currency Loans / Transactions:
(a) Import Transactions:
(i) Material imports are accounted in the entities functional currency at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is hedged, the exchange rate contracted is recognised as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement of the contract, are appropriately accounted as a part of material (consumption) cost. Similarly all related monetary liabilities at the year-end are re-instated at exchange rate prevailing at year end.
(ii) Import contracts covered by 'foreign exchange cover' with banks are booked at contracted rates. Income/ Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved/ date of execution are treated as part of purchase cost.
(b) Export Transactions:
(i) Export transactions are accounted in the entities functional currency at the custom exchange rates prevailing at the time of shipments. Exchange fluctuations, if any, at the time of realisation are appropriately accounted in the statement of profit and loss.
(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income/ expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved/ date of execution are treated as export realization, and forms part of revenue from operations.
(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.
(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.
(ii) Other Foreign Currency Term Loans balances are accounted at Exchange Rate prevailing at the year end.
(iii) The company does not enter into derivative contracts for trading or speculative purposes.
(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and/ or derivative contracts and relevant exchange gain/ loss thereto, are considered as finance cost.
1.03 Borrowing costs:
Borrowing costs attributable to the acquisition or construction of qualifying assets as defined in Ind-AS 23, "Borrowing Costs” are capitalized as part of the cost of such asset up to the date when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Any related foreign currency fluctuations on account of qualifying asset under construction is capitalized and added to the cost of asset concerned. Other borrowing costs are expensed as incurred.
1.04 The Treatment of Expenditure during Construction Period:
(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in-progress Pending capitalization under fixed asset.
1.05 Property, plant and equipment:
(a) Property, plant and equipment, other than land, are carried at cost less accumulated depreciation and impairment loss, if any in accordance with Ind-AS 16. Land is valued at fair market price, based on the valuation carried out by an independent valuer, at end of the reporting period. Valuations are performed with sufficient frequency to ensure that the carrying amount does not differ materially from its fair value.
(b) Cost excludes Cenvat credit, sales tax and service tax credit and such other levies/ taxes. Depreciation on assets is claimed on such 'reduced' cost.
(c) All items of repairs and maintenance are recognised in the statement of profit and loss, except those meet the recognition principle as defined in Ind-AS 16.
(d) Depreciation on fixed 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.
(e) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is 'Available for Intended Use'.
(f) Any revaluation of an asset is recognised in other comprehensive income and shown as revaluation reserves in other equity
1.06 Fair value measurement:
The Company measures land at fair value at each balance sheet date. Fair value is the price that would be received to sell and asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses valuation techniques that are appropriate in circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant absorbable inputs and minimizing the use of un-absorbable inputs. External valuers are adopted for valuing land. The selection criteria for these valuers include market knowledge, reputation, independence and whether professional standards are maintained.
1.07 Intangible Assets:
(a) Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss, if any.
(b) Intangible assets with finite life are amortised over the useful economic life, and assessed for impairment whenever there is an indication that assets are impaired. Intangible assets with indefinite useful life are not amortised, but are tested for impairment annually.
1.08 Impairment of Assets:
Property plant and equipment are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverable amount of assets to be held and used is the higher of fair value less cost of disposal or value in use as envisaged in Ind-AS 36. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the recoverable value of the asset. Impairment loss is recognised in the statement of profit and loss except for properties previously revalued with revaluation taken to other comprehensive income. For such properties impairment loss is recognised in other comprehensive income up to the amount of any previous revaluation.
1.09 Interest in Subsidiaries, Joint ventures and Associates:
Interest in subsidiaries, joint ventures and associates are recognised at cost. The company provides for any permanent diminution, if any, in value of such interests. Exchange Gain/ (Loss) on interest in subsidiaries, joint ventures and associates in Foreign Currency is not provided at the year end.
1.10 Inventories:
(a) Inventories are valued as under after providing for obsolescence:
(i) Raw Materials - At Cost (Moving Weighted Average Method)
(ii) Work-in-Process - At Material Cost plus labour and other appropriate portion of production and administrative overheads and depreciation.
(iii)Finished Goods - At lower of cost or net realisable value. Cost is inclusive of any taxes and duties incurred.
(iv) Stores Spares etc . - At Cost
(v) Arisings - At realisable value
(vi) Stock In Trade Land- At Fair market value
(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.
(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.
(iii) Inventory includes goods lying with third party/ job workers/ consignees.
1.11 Taxation:
(a) Current Tax:
Current income tax Assets or Liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to determine the amount are in accordance with the provisions of Income Tax Act 1961.
(b) Deferred Tax:
Deferred tax liabilities are recognised for all taxable temporary differences in accordance with Ind-AS 12. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits any unused tax losses. Deferred tax assets are recognised to the extend it is probable that taxable profit will be available, against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred tax asset is reviewed at each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rate that are expected to apply in the year when the assets are realized or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside the statement of profit and loss. Deferred tax items are recognised in correlation to the underlying transaction either in statement of total comprehensive income or directly in equity.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
1.12 Earning per Share:
The Company reports basic and diluted earning per share in accordance with Ind-AS 33, 'Earning per Share' issued by the Institute of Chartered Accountants of India (ICAI). Basic earning per share is computed by dividing the net profit after tax but before other comprehensive income by the weighted average number of shares outstanding during the year.
1.13 Accounting for Provisions, Contingent liabilities and Contingent Assets
(a) In conformity with Ind-AS 37, 'Provisions, Contingent Liabilities and Contingent Assets', issued by the ICAI. The Company recognizes provisions only when it has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made. When the Group expect some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
(b) No provision is recognised for:
(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or
(ii) Any present obligation that arises from past events but is not recognised because:
(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
(2) A reliable estimate of the amount of obligation cannot be made.
(c) All those obligations for which provisions are not required to be recognised in accordance with Ind-AS 37 are recorded as contingent liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.
In the normal course the company faces claims and assertion by various Parties. The company assesses such claims and assertions and monitors the legal environment on ongoing basis with assistance of legal counsel, wherever necessary.
(d) Contingent Assets are not recognised in the financial statements unless it has become virtually certain that an inflow of economic benefit will arise.
1.14 Export entitlements/ obligations:
(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made/ produced. Benefit/ Obligation are accounted by making suitable adjustments in raw material consumption.
(b) Export incentives receivable on export performance are recognised on accrual basis, with reference to certainty of collectability of such export incentives.
1.15 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as long term liability.
1.16 Employee Benefits:
(a) Short Term Employee Benefits
All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognised in the P&L account in the period in which the employee renders the related services.
(b) Long Term Employee Benefits
Post-employment and other long term employee benefits are recognised as an expense in the Profit and Loss Account for the year in which the employee has rendered services. The present value of these defined benefit obligations are ascertained by an independent actuarial valuation as per the requirement of Ind-AS 19- Employee Benefits. Actuarial gains and losses in respect of post-employment and other long term benefits are charged to Statement of Profit and Loss.
1.17 Inter Unit transactions are eliminated to the extent possible.
|