1 i) Company Overview
Cosmo Ferrites Limited ("the Company") is a public limited company incorporated in India and has its registered office in Himachal Pradesh, India. The Company is listed on Bombay Stock Exchange.
ii) Basis of Preparation of financial statements
The financial statements of the company have been prepared in accordance with Indian Accounting Standards (Ind AS) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
These financial statements are separate financial statements of the company.
The financial results have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:
• Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments); and
• Dened benet plans - plan assets measured at fair value.
These financial statements are presented in Indian Rupees (), which is also the functional currency of the Company.
2 Material accounting policies
2.1 Property, Plant & Equipment
Property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation. The cost comprises purchase price, borrowing cost and any other cost directly attributable to bringing the assets to its working condition for its intended use. Trade discount, rebates and recoverable taxes, if any are deducted in arriving at the purchase price.
Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Depreciation is calculated on fixed assets on straight line method in accordance with Schedule II of The Companies Act, 2013 except for machines in press section. For press section the life of the assets has, on technical evaluation, been considered as 8 years instead of 25 years. Life of tools considered as 3 years.
The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis.
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets are not depreciated or amortised while they are classified as held for sale.
2.2 Inventories
Inventories are valued at cost or net realizable value, whichever is lower.
Cost of raw materials and stores and spares are determined on weighted average bases. In case of Work-in-progress and Finished Goods, the cost includes cost of raw materials, cost of conversion, and other costs including overheads incurred to bring them to their respective present location and condition.
2.3 Revenue recognition
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership are transferred to the buyer, there is no continuing effective control of the goods transferred, and the amount of revenue can be measured reliably.
Interest income is recognized on a time proportion basis.
Dividend income is recognized when the right to receive the payment is established.
2.4 Employee benefits
i) Short Term Employee Benefits
Short term employee benefits is recognized as an expense during the period when the employee render the service.
ii) Post-Employment Benefits
a) Defined Contribution Plan
The Company makes specified monthly contributions towards Provident fund, Superannuation Fund. The Company's contribution is recognized as an expense during the period in which the employee renders the related service.
b) Defined Benefits Plan
The Company operates a defined benefit gratuity plan. The cost of providing the benefits under this plan is determined using the productive unit cost method and spread over the period during which the benefit is expected to be derived from employees services.
The gratuity liability amount is contributed to the approved gratuity fund formed exclusively for gratuity payment to the employees and is administered by Life Insurance Corporation of India.
Re-measurement of the defined benefit plan in are charged to the Other Comprehensive Income in the period in which they occur. Remeasurements are not reclassified to the Profit and Loss Statement in subsequent periods.
c) Other Employee Benefits
Lability in respect of leave encashment is recognized in the same manner as the defined benefit gratuity plan.
2.5 Research & Development
Revenue expenditure on research and development is charged to Profit and Loss Statement in the year in which it is incurred. Capital expenditure on research and development is included in the respective heads under fixed assets and depreciation thereon is charged to Profit and Loss Statement.
2.6 Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of the assets. All other borrowing costs are recognized
in the period in which they are incurred. A qualifying asset is one that necessarily take a substantial period of time to get ready for their intended use.
Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
2.7 Foreign currency transactions
Foreign Currency transaction are initially recorded at the rate of exchange ruling at the date of transaction.
Foreign currency monetary item (assets and liabilities) are translated using the exchange rate prevailing at the reporting date. Exchange gains or losses arising on settlement or translation of monetary items are recognized in the Profit and Loss Statement.
Exchange gains or losses on foreign currency borrowings taken prior to 1 st April, 201 7 which are related to the acquisition and construction of qualifying assets are adjusted to the cost of the assets.
Non-monetary items, which are measured in terms of historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction.
2.8 Taxation
The tax expense for the period comprises current and deferred tax. Tax is recognized in Profit and Loss Statement, except to the extent that it relates to items recognized in Other Comprehensive Income in which case, the tax is also recognized in Other Comprehensive Income.
Current Tax
Current tax liability is measured at the amount expected to be paid to the taxation authorities, based on tax rates and laws that are enacted or subsequently enacted at the Balance Sheet date.
Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of tax
credits (Minimum Alternate Tax credit entitlement) and the carry forward of business losses and unabsorbed tax depreciation.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.
2.9 Earnings per Share
Basic earnings per share is calculated by dividing the net profit for the year attributable to equity shareholders (after deducting the redeemable preference share dividend) by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is calculated by dividing the net profits attributable to equity shareholders (after deducting dividend on redeemable preference shares) by the weighted average number of equity shares outstanding during the year (adjusted for the effects of dilutive options).
2.10 Impairment of Non-Financial Assets
The company assesses at each reporting date weather there is an indication that an asset may be impaired.If an indication exists the Company estimates the assets recoverable amount and writes down the assets value to its recoverable amount.
2.11 Government grants, subsidies and incentives
Government grants, subsidies and incentives are recognised where there is reasonable assurance that it will be received and all attached conditions will be complied with.
2.12 Leases
Pursuant to adoption of Ind AS 116, the company recognised right-of-use assets and lease liabilities, except for short-term leases and leases of low-value assets. The company recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate at the date of initial application and right of use asset at an amount equal to the lease liability adjusted for any prepayments/accruals recognised in the balance sheet.
• Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets, which comprises the initial amount of the lease liability, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are amortised on a straight line basis over the lower of its estimated useful life and the lease term. Right-of-Use assets are subject to impairment.
• Lease liabilities
At the commencement date of the lease, the company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the company and payments of penalties for terminating a lease, if the lease term reflects the company exercising the option to terminate.
In calculating the present value of lease payments, the company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the
lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
• Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its shortterm leases (i.e., those leases that have a
lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies recognition exemption to leases for which the underlying asset is of low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
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