A Basis of preparation
(i) Statement of Compliance
The Company's financial statements have been prepared in accordance with the provisions of the Companies Act, 2013
and the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015
and amendments thereto issued by Ministry of Corporate Affairs under section 133 of the Companies Act, 2013. In addition,
the guidance notes / announcements issued by the Institute of Chartered Accountants of India (ICAI) are also applied
except where compliance with other statutory promulgations require a different treatment.
(ii) Basis of Accounting & Measurement
The Company maintains its accounts on accrual basis following historical cost convention, except for certain assets and
liabilities that are measured at fair value in accordance with Ind AS:
1) Certain financial assets and liabilities that are measured at fair value;
2) Assets held for sale - measured at lower of carrying amount or fair value less cost to sell;
3) Defined benefit plans - plan assets measured at fair value;
(iii) Operating Cycle for Current non-current classification
Operating cycle for the business activities of the company covers the duration of the specific project / contract / service
including the defect liability period, wherever applicable and extends up to the realization of receivables (including retention
monies) within the agreed credit period normally applicable to the respective lines of business.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest rupees in Lakhs as per
the requirement of Schedule III, unless otherwise stated.
B. Key source of estimation
The preparation of financial statements in conformity with Ind AS requires that the management of the Company makes estimates
and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and
liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements.
The estimates and underlying assumptions made by management are explained under respective policies. Revisions to accounting
estimates include useful lives of property, plant and equipment & intangible assets, allowance for expected credit loss, future
obligations in respect of retirement benefit plans, ex-pected cost of completion of contracts, provision for rectification costs, fair
value measurement, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the
results are known.
C. Property, plant and equipment (PPE)
The Company has applied for the one-time transition exemption of considering the carrying cost on the transition date i.e. April
1,2016 as the deemed cost under IND AS. Hence, regarded thereafter as historical cost.
Freehold land is carried at cost. All other items of PPE are recognised when it is probable that future economic benefits associated
with the item will flow to the Company and the cost of the item can be measured reliably. PPE is stated at original cost net of tax/
duty credits availed, if any, less accumulated depreciation and cumulative impairment, if any.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably.
PPE is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss
arising on derecognition is recognised in the Statement of Profit and Loss in the same period.
All other items of repairs and maintenance are charged to Statement of Profit and Loss during the report-ing period in which they
are incurred.
PPE not ready for the intended use on the date of the Balance Sheet are disclosed as "capital work-in-progress".
Depreciation:
Depreciation is provided on Property, Plant and Equipment using the Written Down Value (WDV) method at the rates prescribed
in Schedule II to the Companies Act, 2013.
No depreciation is provided on freehold land and capital work-in-progress.
Intangible Assets:
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow
to the Company and the cost of the asset can be measured reliably. Intangible assets are stated at original cost net of tax/duty
credits availed, if any, less accumulated amortisation and cumulative impairment. All directly attributable costs and other
administrative and other general overhead expenses that are specifically attributable to acquisition of intangible assets are
allocated and capitalised as a part of the cost of the intangible assets.
Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as "intangible assets under
development".
Intangible assets are amortised using Written down value method at the rates prescribed in Schedule II to the Companies Act,
2013.
Asset Impairment:
As at the end of each financial year, the carrying amounts of PPE and intangible assets are reviewed to determine whether there
is any indication that those assets have suffered an impairment loss. If such in-dication exists, PPE and intangible assets are
tested for impairment so as to determine the impairment loss, if any.
Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverable amount,
in respect of an individual asset, is determined, as the higher of the fair value less costs of disposal and the value-in-use.
If recoverable amount of an asset is estimated to be less than it carrying amount, such deficit is recognised immediately in the
Statement of Profit and Loss as impairment loss and the carrying amount of the asset is reduced to its recoverable amount.
D. Investments and other financial assets
(i) Classification
The Company classifies its financial assets in the following measurement categories:
1) those to be measured subsequently at fair value (either through other comprehensive income, or through the Statement
of Profit and Loss), and
2) those measured at amortized cost.
The classification depends on the Company's business model for managing the financial assets and the contractual terms
of the cash flows.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value. Transaction costs of financial assets carried
at fair value through the Profit & Loss are expensed in the Statement of Profit and Loss.
E Valuation of Inventories
Inventories are valued as under:
The cost of the Manufacturing Work-in-progress and finished goods Inventories has been computed to include all costs of
purchase, cost of conversion and other related costs incurred in bringing the inventories to their respective present location and
condition. Due allowance is estimated and made for defective and obsolete items, wherever necessary, based on the past
experience of the Company.
F. Revenue recognition
The Company derives revenue primarily from sale of Machinery i.e. manufactured goods and the related services.
Revenue is measured at the value of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
trade allowances, rebates, discounts, loyalty discount, value added taxes/Goods and Service Tax (GST). Since, the GST is
collected by the seller on behalf of the Government, accordingly it is excluded from revenue.
The Company recognizes revenue when the amount of revenue can be reliably measured upon performance of obligation(s), it
is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Company's
activities as described below.
Sale of goods
Revenue from Sales is recognized when substantial risk and rewards of ownership are transferred to customer. In case of
domestic customer, generally sales take place when goods are dispatched or delivery is handed over to transporter. And in case
of export customers, generally sales take place when goods are shipped on-board based on bill of lading.
The Performance Obligation in our contract are fulfilled at the time of dispatch, delivery or upon formal customer acceptance
depending on customer terms
Sales Return
The Company recognizes provision for sales return, based on the historical results, measured on net basis of the margin of the
sale.
Revenue from services
Revenue from rendering of services is recognised over time as the customer receives the benefit of the Company's performance
and the Company has an enforceable right to payment for services transferred.
Other operating revenue
Other operational revenue represents income earned from the activities incidental to the business and is recognised when the
performance obligation is satisfied and right to receive the income is established as per the terms of the contract.
Government grant receivable in the form of duty credit scrips is recognised as other income in the Statement of Profit and Loss
in the period in which the export is done or the application is made to the government authorities and to the extent there is no
uncertainty towards its receipt. However, export incentive accruing under MEIS/RODTep Scheme are accounted when licenses
are generated or sold.
G. Foreign Exchange Transaction:
i) The functional currency and presentation currency of the Company is Indian Rupee.
ii) Transactions in currencies other than the Company's functional currency are recorded on initial recognition using actual
exchange rate or a rate that approximates with it at the transaction date. At each Balance Sheet date, foreign currency
monetary items are reported at the closing spot rate. Non-monetary items that are measured in terms of historical cost in
foreign currency are not translated.
Exchange differences that arise on settlement of monetary items or on reporting of monetary items at each Balance Sheet
date at the closing spot rate are recognised in the Statement of Profit and Loss in the period in which they arise.
iii) exchange rate as of the date on which the non-monetary asset or non-monetary liability is recognised on payment or
receipt of advance consideration is used for initial recognition of related asset, expense or income
H. Cash & Bank Balances
Cash and bank balances include fixed deposits, margin money deposits, earmarked balances with banks and other bank balances
which have restrictions on repatriation.
Short-term and liquid investments, being subject to more than insignificant risk of change in value, are not included as part of
Cash and cash equivalents.
I. Borrowing Costs:
The borrowings are initially recognized at net of transaction costs incurred and measured at amortised cost. Any difference
between the proceeds (net of transaction costs) and the redemption amount is recognized in the Statement of Profit and Loss
over the period of the borrowings using the effective interest method
Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised/inventoried
as part of cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that
necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognised
in profit or loss in the period in which they are incurred.
J. Taxes on Income :
Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with
the provisions of the Income Tax Act,1961 and using estimates and judgments based on the expected outcome of assessments/
appeals and the relevant rulings in the areas of allow-ances and disallowances.
The tax expense for the period comprises current and deferred tax. Tax is recognized in Statement of Profit and Loss, except to
the extent that it relates to items recognized in the comprehensive income or in equity. In which case, the tax is also recognized
in other comprehensive income or equity.
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities,
based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Company's
financial statements and the corresponding tax bases used in computation of taxable profit and quantified using the tax rates as
per laws enacted or substantively enacted as on the Balance Sheet date.
Deferred tax liabilities are generally recognised for all taxable temporary differences except where the Company is able to
control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are generally recognised for all taxable temporary differences to the extent that is probable that taxable
profits will be available against which those deductible temporary differences can be utilised. The carrying amount of deferred
tax assets 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.
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