Summary of Material accounting policies
1.1 Statement of compliances
The financial statements have been
prepared and comply in all material aspects
with Indian Accounting Standards (Ind
AS) notified under the Section 133 of
the Companies Act, 2013, read with the
Companies (Indian Accounting Standards)
Rules 2015 ("as amended") and other
relevant provisions of the Companies Act,
2013. The material accounting policies have
been applied consistently to all the periods
presented in the financial statements, unless
otherwise indicated.
1.2 Basis of preparation and presentation
The financial statements have been
prepared on the historical cost basis, except
for certain financial instruments and defined
benefit plans which are measured at fair
value at the end of each reporting period, as
explained in the accounting policies below:
Historical cost is generally based on the 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. The
fair value measurement is based on the
presumption that the transaction to sell
the asset or transfer the liability take place
either:
- In the principal market for the asset or
liability, or
- In the absence of a principal market, in the
most advantageous market for the asset
or liability
The principal or the most advantageous
market must be accessible by the Company.
The fair value of an asset or a liability is
measured using the assumptions that
market participants would use when pricing
the asset or liability, assuming that market
participants act in their best economic
interest.
Fair value measurement of a non¬
financial asset takes into account a market
participant's ability to generate economic
benefits by using the assets in its highest
and best use or by selling it to another
market participant that would use the asset
in its highest and best use.
The Company uses valuation techniques
that are appropriate in the circumstances
and for which sufficient data are available
to measure fair value, maximizing the use of
relevant observable inputs and minimizing
the use of unobservable inputs.
All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorized within the fair
value hierarchy, described as follows, based
on the lowest level inputs that is significant
to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices
in active markets for identical
assets or liabilities.
Level 2 - Valuation techniques for which the
lowest level input that is significant
to the fair value measurement is
directly or indirectly observable.
Level 3 - Valuation techniques for which the
lowest level input that is significant
to the fair value measurement is
unobservable.
For assets and liabilities that are recognized
in the financial statements on a recurring
basis, the Company determines whether
transfers have occurred between levels in
the hierarchy by re-assessing categorization
(based on the lowest level input that is
significant to the fair value measurement as
a whole) at the end of each reporting period.
For the purpose of fair value disclosures,
the Company has determined classes of
assets and liabilities on the basis of the
nature, characteristics and risks of the asset
or liability and the level of the fair value
hierarchy as explained above.
Quantitative disclosures of fair value
measurement hierarchy (Refer Note 34)
All assets and liabilities have been classified
as current or non-current as per the
Company's normal operating cycle and other
criteria set out in Note 1.22 operating cycle.
Based on the nature of products and services
and the time between the acquisition of
assets for processing and their realization in
cash and cash equivalent, the Company has
ascertained its operating cycle as 12 months
for the purpose of current and non-current
classification of assets and liabilities, except
for salt at crystalizers for which the operating
cycle is 24 months.
The Company is confident of getting its land
lease renewed as mentioned in Note 3 (a).
Hence the financial statements have been
prepared on going concern basis.
1.3 Changes in Accounting Standards with
effect from 01.04.2024
Ministry of Corporate Affairs (“MCA”) notifies
new standards or amendments to the
existing standards under Companies (Indian
Accounting Standards) Rule as issued
from time to time. MCA has notified Ind AS
- 117 Insurance Contracts & consequential
amendments to the other standards and
amendments to Ind AS 116 - leases,
relating to sale and leaseback transactions,
applicable to the company w.e.f. April 1,
2024.
The company has reviewed this new
pronouncement and based on its evaluation
has determined that it does not have any
significant impact in its financial statements.
1.4 Changes in Accounting Standards that
may affect the Company after 31.03. 2025
New Accounting Standards/Amendments
notified but not yet effective.
MCA has not notified any new standards
or amendments to the existing standards
applicable to the company during the year
ended March 31,2025.
1.5 Property, plant and equipment
Property, Plant and equipments (PPE) held
for use in the production or supply of goods
or services, or for administrative purposes,
are stated in the balance sheet at cost less
accumulated depreciation and accumulated
impairment losses.
PPE in course of construction for
production, supply or administrative
purposes are carried at cost, less any
recognized impairment loss. Cost includes
professional fees and, for qualifying assets,
borrowings costs capitalized in accordance
with Company's accounting policy. Such
properties are classified to appropriate
categories of property, plant and equipment
when completed and ready for intended use.
Depreciation of these assets, on the same
basis as other property assets, commences
when the assets are ready for their intended
use.
Advance paid towards acquisition of
property, plant and equipment outstanding
at each balance sheet date is classified as
capital advances under other non current
assets.
Cost of assets not ready to use are disclosed
under 'capital work in progress'.
Depreciable amount is the cost of an asset
less its estimated residual value. Depreciation
on Property, plant and equipment has been
provided on the straight-line method as per
the useful life prescribed in Schedule II to
the Companies Act, 2013 except in respect
of the following categories of assets, in
whose case the life of the assets has been
assessed as under based on technical
advice, taking into account the nature of the
asset, the estimated usage of the asset, the
operating conditions of the asset, past history
of replacement, anticipated technological
changes, manufacturers warranties and
maintenance support, etc. Useful life of the
Property, plant and equipment is reassessed
at each year end based on the technical
evaluation
Fixed Assets individually costing Rs. 5,000
or less are fully depreciated in the year of
capitalization.
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 is determined as the difference
between the sale proceeds and carrying
amount of the asset and is recognized as
profit or loss.
Upon transition to the Ind AS, the Company
has elected to continue with the carrying
value of all of its Property, Plant and
Equipment as at April 01, 2017 ( transition
date) measured as per the previous GAAP,
as its deemed cost.
1.6 Intangible assets other than goodwill
Intangible assets with finite useful life
are carried at cost less accumulated
amortisation and impairment losses, if any.
The cost of an intangible asset comprises
of the purchase price, including any import
duties and other taxes and any directly
attributable expenditure on making the asset
ready for its intended use and net of any
trade discounts, tax credits and rebates.
The intangible assets are amortised over
their respective estimated useful life on a
straight-line basis, commencing from the
date the asset is available to the Company
for its use. The amortisation period are
reviewed at the end of each financial year
and the amortisation method is revised to
reflect the changed pattern.
Subsequent expenditure on an intangible
asset after its purchase / completion is
recognised as an expense when incurred
unless it is probable that such expenditure
will enable the asset to generate future
economic benefits in excess of its originally
assessed standards of performance and
such expenditure can be measured and
attributed to the asset reliably, in which case
such expenditure is added to the cost of the
asset.
Derecognition of intangible assets:
An intangible asset is derecognised on
disposal, or when no future economic
benefits are expected from use. Gains or
losses arising from derecognition of an
intangible asset, measured as the difference
between the net disposal proceeds and the
carrying amount of the asset, are recognised
in the statement of profit or loss.
Useful lives of intangible assets:
Estimated useful lives of the intangible
assets are as follows:
Software licenses - 5 Years
deemed cost on transition to Ind AS
Upon transition to Ind AS, the Company has
elected to continue with the carrying value
of all of its intangible assets as at April 1,
2017 (transition date) measured as per the
previous GAAP, as its deemed cost.
1.7 Impairment of property, plant and
equipment & intangible assets
At the end of each reporting period, the
Company reviews the carrying amounts of its
property, plant and equipment 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 an individual asset, the Company
estimates the recoverable amount of the
cash-generating unit to which the 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 assessments
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, but so that the increased carrying
amount does not exceed the carrying
amount that would have been determined
had no impairment loss been recognized for
the asset (or cash-generating unit) in prior
years. A reversal of an impairment loss is
recognized immediately in the statement of
profit and loss.
1.8 Right to use assets
The Company has adopted Indian Accounting
Standards (“Ind AS”) 116 "Leases" to all its
lease contracts existing on April 1, 2019
adopting modified prospective method.
Consequently the Company recorded the
lease liability calculated at present value of
remaining lease payments discounted at
the incremental borrowing rate. Right to use
asset has been recognised to this extent .
1.9 Investments in subsidiary
Investment in subsidiary is carried at cost
less impairment losses, if any. Where an
indication of impairment exists, the carrying
amount of investments is assessed and
impairment provision is recognised, if
required, immediately to its recoverable
amount. On disposal of such investments,
difference between the net disposal
proceeds and carrying amount is recognised
in the statement of profit and loss.
1.10 Leases
At inception of a contract, the Company
assesses whether a contract is, or contains,
a lease. 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:
- the contract involves the use of an identified
asset -this may be specified explicitly or
implicitly, and should be physically distinct
or represent substantially all of the capacity
of a physically distinct asset. If the supplier
has a substantive substitution right, then
the asset is not identified;
- the Company has the right to obtain
substantially all of the economic benefits
from use of the asset throughout the period
of use; and
- the Company has the right to direct the use
of the asset. The Company has this right
when it has the decision-making rights
that are most relevant to changing how
and for what purpose the asset is used. In
rare cases where the decision about how
and for what purpose the asset is used is
predetermined, the Company has the right
to direct the use of the asset if either:
a) the Company has the right to operate the
asset; or
b) the Company designed the asset in a
way that predetermines how and for what
purpose it will be used.
This policy is applied to contracts entered
into, or changed, on or after 1 April 2019.
At inception or on reassessment of a
contract that contains a lease component,
the Company allocates the consideration
in the contract to each lease component
on the basis of their relative stand-alone
prices. However, for the leases of land
and buildings in which it is a lessee, the
Company has elected not to separate non¬
lease components and account for the lease
and non-lease components as a single lease
component.
Short-term leases and leases of low-value
assets
The Company has elected not to recognise
right-of-use assets and lease liabilities for
short-term leases that have a lease term of
12 months or less and leases of low value
assets (assets of less than INR 10 lakhs in
value). The Company recognises the lease
payments associated with these leases as
an expense over the lease term.
1.11 Inventories
Inventories are valued at the lower of cost on
moving weighted average basis or estimated
net realisable value (net of allowances)
after providing for obsolescence and other
losses, where considered necessary. The
cost comprises of cost of purchase, cost
of conversion and other costs including
appropriate production overheads in the
case of finished goods and work-in-progress,
incurred in bringing such inventories to their
present location and condition, including
transportation cost, transit insurance and any
other charges. Trade discounts or rebates
are deducted in determining the costs of
purchase. Net realisable value represents
the estimated selling price for inventories
less all estimated costs of completion and
costs necessary to make the sales.
1.12 Cash & Cash Equivalents
For the purpose of presentation in the
statement of cash flows, cash and cash
equivalents include cash on hand, other
short-term, highly liquid investments with
original maturities of three months or
less that are readily convertible to known
amounts of cash and which are subject to an
insignificant risk of changes in value.
1.13 Foreign currency transactions and
translations
(i) Functional and presentation currency
Items included in the financial statements
of the Company are measured using
the currency of the primary economic
environment in which the entity operates
('the functional currency'). The financial
statements are presented in Indian Rupee
(INR), which is the Company's functional
and presentation currency.
(ii) Transactions and balances
In preparing the financial statement,
transactions in currencies other than
the entity's functional currency (foreign
currencies) are recognised at the rates of
exchange prevailing at the dates of the
transactions. At the end of each reporting
period, monetary items denominated in
foreign currencies are retranslated at
the rates prevailing at that date. Non¬
monetary items carried at fair value that
are denominated in foreign currencies are
retranslated at the rates prevailing at the
date when the fair value was determined.
Non-monetary items that are measured in
terms of historical cost in a foreign currency
are not retranslated.
Exchange differences on monetary items
are recognised in profit or loss in the period
in which they arise except for:
• exchange differences 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 costs on those foreign currency
borrowings;
• exchange differences on monetary items
receivable from or payable to a foreign
operation for which settlement is neither
planned nor likely to occur (therefore
forming part of the net investment in the
foreign operation), which are recognised
initially in other comprehensive income and
reclassified from equity to profit or loss on
repayment of the monetary items.
1.14 Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of an
asset that necessarily takes a substantial
period of time to get ready for its intended
use are capitalised as part of the cost of
the asset. All other borrowing costs are
expensed in the period in which they occur.
Borrowing costs consist of interest and other
costs that an entity incurs in connection with
the borrowing of funds. Borrowing cost also
includes exchange differences to the extent
regarded as an adjustment to the borrowing
costs.
1.15 Revenue recognition
Revenues are derived primarily from sale
of Industrial Salt, Liquid Bromine and other
marine chemicals. Revenue is measured
based on the consideration specified in
a contract with a customer and excludes
amounts collected on behalf of third parties.
Revenue is recognized upon transfer of
control of products or services to customers
for an amount that reflects the probable
consideration expected to be received in
exchange. Revenue is reduced for estimated
customer returns, rebates and other similar
allowances.
The Company accounts for volume discounts
and pricing incentives to customers as a
reduction of revenue based on the rateable
allocation of the discounts/ incentives to each
of the underlying performance obligation
that corresponds to the progress by the
customer towards earning the discount/
incentive. Also, when the level of discount/
pricing incentives varies with increases in
levels of revenue transactions, the Company
recognizes the liability based on its estimate
of the customer's future purchases. If it is
probable that the criteria for the discount
will not be met, or if the amount thereof
cannot be estimated reliably, then discount/
pricing incentives is not recognized until the
payment is probable and the amount can be
estimated reliably. The Company recognizes
changes in the estimated amount of
obligations for discounts/pricing incentives
in the period in which the change occurs.
Revenue from services has been recognised
as and when the service has been performed.
1.16 Employee benefits
Defined contribution plans
Payments to defined contribution retirement
benefit plans are recognized as an expense
when employees have rendered service
entitling them to the contributions.
Defined benefit plans
For defined benefit plans, the cost of
providing benefits is determined using
the projected unit credit method, with
actuarial valuations being carried out at
the end of each annual reporting period.
Remeasurement, comprising actuarial gains
and losses, the effect of the changes to the
asset ceiling ( if applicable ) and the return
on plan assets (excluding net interest),
is reflected immediately in the balance
sheet with a charge or credit recognized in
other comprehensive income in the period
in which they occur. Remeasurement
recognized in other comprehensive income
is reflected immediately in retained earnings
and is not reclassified to profit or loss. Past
service cost is recognized in profit or loss in
the period of a plan amendment. Net interest
is calculated by applying the discount rate at
the beginning of the period to the net defined
benefit liability or asset. Defined benefit
costs are categorized as follows.
- Service Cost ( including current service
cost, past service cost, as well as gain and
losses on curtailments and settlements)
- Net interest expense or income, and
- Remeasurement.
The Company presents the first two
components of defined benefit costs in profit
or loss in the line item " Employee Benefits
Expense". Curtailment gains and losses are
accounted for as past service costs.
The retirement benefit obligation recognized
in the balance sheet represents the actual
deficit or surplus in the Company's defined
benefit plans. Any surplus resulting from this
calculation is limited to the present value of
any economic benefits available in the form
of refunds from the plans or reductions in
future contributions to the plans.
A liability for a termination benefit is
recognized at the earlier of when the entity
can no longer withdraw the offer of the
termination benefit and when the entity
recognizes any related restructuring costs.
The Company has an employees ' gratuity
fund managed by the Life Insurance
Corporation of India.
Short - term and other long - term
employee benefits
A liability is recognized for benefits accruing
to employees in respect of wages and
salaries, annual leave in the period related
service is rendered at the undiscounted
amount of the benefits expected to be paid
in exchange for that service.
Liabilities recognized in respect of other
long term employee benefits are measured
at the present value of the estimated future
cash outflows expected to be made by the
Company in respect of services provided by
the employees up to the reporting date.
Share based payments
The Company recognises compensation
expense relating to share based payments
in accordance with Ind AS 102 Share-based
Payment. Stock options granted by the
Company to its employees are accounted
as equity settled options. Accordingly, the
estimated
fair value of options granted that is
determined on the date of grant, is charged
to statement of Profit and Loss on a straight
line basis
over the vesting period of options, with a
corresponding increase in equity.
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