2. Material Accounting Policies:-
2.1. Revenue Recognition
The Company has revenue recognition policies for its various
operating segments that are appropriate to the nature of each
business. The revenues are recognized when the general revenue
recognition criteria given in Ind AS 115 are met.
The Company derives revenue primarily from business of
manufacturer of container glass, trading in frozen foods,
indenting and real estate. The company has adopted Ind AS 115,
Revenue from contracts with customer, effective April 1, 2018,
on a modified retrospective basis, applying the standard to all
contracts that are not completed as such date. The adoption of
Ind AS 115 did not have any significant financial impact and
accordingly, no adjustment are made to the amount recognized in
the financial statement. The adoption has resulted in changes to
accounting policies and mandated certain disclosures. Revenue
is recognized upon transfer of control of promised products or
services to customer in an amount that reflects the consideration
we expect to receive in exchange for those products or services.
Arrangement with customer for manufacturer of container glass,
trading in frozen foods, indenting and real estate are either on
a fixed-price fixed-timeframe or on a time-and-material basis.
Revenue from fixed price, fixed timeframe contracts, where the
performance obligation are satisfied overtime and where there is
no uncertainty to measurement or collectability of consideration,
is recognized as per the percentage of completion method. When
there is uncertainty as to measurement or ultimate collectability,
revenue recognition is postponed until such uncertainty is
resolved. Efforts or costs expended have been used to measure
progress towards completion as there is a direct relationship
between input and productivity. Revenue in excess of invoicing
are classified as contracts assets (Which we refer as unbilled
revenue) while invoicing in excess of revenue are classified as
contract liabilities (Which we refer to as unearned revenues).
Manufacturing and Trading Division
a) Revenues from sales and services are recognized on
transfer of all significant risks and rewards of ownerships to
the customers and are net of sales returns and taxes. Scrap
sale is accounted upon sale.
Indenting Division
a) Foreign commission is recognized on shipment of goods
by foreign principals. Local commission is accounted on
accrual basis.
b) Revenue from engineering consultancy services and
business support services are recognized as and when
services are rendered.
Revenue recognition on Property Development
a) Income from property development is recognized on the
transfer of all significant risks and rewards of ownership
to the buyers and it is not unreasonable to expect ultimate
collection and no significant uncertainty exists regarding
the amount of consideration. However, if at the time of
transfer substantial acts are yet to be performed under the
contract, revenue is recognized on proportionate basis
as the act are being performed and monies received. The
percentage of completion is stated on the basis of physical
measurement of work actually completed as at the balance
sheet date and certified by the Architect. As the long-term
contracts necessarily extend beyond one year, revision
in costs and revenues estimated during the course of the
contract are reflected in the accounting period in which the
facts requiring the revision become known.
b) Determination of revenues under the percentage of
completion method necessarily involves making estimates
by the Company, some of which are of technical nature,
concerning, where relevant, the percentage of completion,
costs to completion, the expected revenues from the project
and the foreseeable losses to completion.
Contract modifications are accounted for when additions,
deletions or changes are approved either to the contract
scope or contract price. The accounting for modifications
of contracts involves assessing whether the services added
to an existing contract are distinct and whether the pricing
is at the standalone selling price. Services added that are not
distinct are accounted for on a cumulative catch up basis,
while those that are distinct are accounted for prospectively,
either as a separate contract, if the additional services are
priced at the standalone selling price, or as a termination of
the existing contract and creation of a new contract if not
priced at the standalone selling price.
The Company presents revenues net of indirect taxes in its
statement of Profit and loss.
Performance obligations and remaining performance
obligations
The remaining performing obligation disclosure provides
the aggregate amount of the transaction price yet to be
recognized as at the end of the reporting period and an
explanation as to when the company expects to recognize
these amounts in revenue. Applying the practical expedient
as given in Ind AS 115, the company has not disclosed
the remaining performance obligation related disclosures
for contracts where the revenue recognized corresponds
directly with the value to the customer of the entity’s
performance completed to date, typically those contracts
where invoicing is on time and material basis. Remaining
performance obligation estimates are subject to change
and affected by several factors including terminations,
changes in the scope of contracts, periodic revalidations,
adjustments for revenues that has not materialized and
adjustments for currency.
Deferred tax assets and deferred tax liabilities are offset
if a legally enforceable right exists to set off current tax
assets against current income tax liabilities and the deferred
taxes relate to the same taxable entity and the same taxation
authority.
The break-up of the major components of the deferred
tax assets and liabilities as at balance sheet date has been
arrived at after setting off deferred tax assets and liabilities
where the Company have a legally enforceable right to
set-off assets against liabilities and where such assets and
liabilities relate to taxes on income levied by the same
governing taxation laws.
2.2. Property, Plant and equipment
Property, plant and equipment represent a significant proportion
of the asset base of the Company.
Property, plant and equipment are stated at original cost net
of tax / duty credit availed, less accumulated depreciation
and accumulated impairment losses, if any. Cost of an asset
companies of cost of acquisition or construction and includes,
where applicable, inward freight, duties and taxes, installation
expenses, professional fees, borrowing costs, initial estimates of
the cost of dismantling, cost of replacing parts of the property,
plant and equipment’s and other costs directly attributable to
the bringing the asset to the location and condition necessary
for it to be capable of operating in the intended manner
and purposes. When significant parts of property, plant and
equipment are required to be replaced at intervals, the Company
derecognizes the replaced part and recognizes the new part with
its own associated useful life and it is depreciated accordingly.
Likewise, when a major inspection is performed, its cost is
recognized in the carrying amount of the plant and equipment as
a replacement if the recognition criteria are satisfied. All other
repair and maintenance costs are recognized in the statement of
profit and loss as incurred.
Capital work in progress includes machinery to be installed,
construction and erection materials, borrowing costs,
unallocated pre-operative and other expenditures directly
attributable towards construction and erection of the assets.
Advances paid towards the acquisition of property, plant and
equipment outstanding at each balance sheet date is classified as
“Capital Advances” under other non-current assets. Subsequent
expenditures relating to property, plant and equipment is
capitalized only when it is probable that future economic
benefits associated with these will flow to the company and the
cost of the item can be measured reliably.
Property, plant and equipment are eliminated from financial
statement on disposal. Gains or losses arising from disposal of
property, plant and equipment are recognized in the statement of
profit and loss in the year of occurrence.
The assets’ residual values, useful lives and methods of
depreciation are reviewed at each financial year end and adjusted
prospectively, if appropriate.
Depreciation on PPE commences when the assets are ready for
their intended use.
(i) Depreciation has been provided under Straight Line Method
on Buildings and Flats, Plant and Machinery and Furnace
and on other assets under the Written Down Value Method
at the rates specified as per Schedule II of Companies Act,
2013. Depreciation on the additions to assets or where any
assets has been sold or discarded, is calculated on a Pro-rata
basis from the date of such additions up to the date of such
sale or discards as the case may be.
Lease hold improvements and premium on lease hold land
is amortized over the period of lease.
2.3. Intangible Assets
Intangible assets are recognized when it is probable that the
future economic benefits that are attributable to the assets will
flow to the Company and the cost of the asset can be measured
reliably. Intangible assets are carried at cost less accumulated
amortization and accumulated impairment losses, if any.
Internally generated intangibles, excluding capitalized
development costs, are not capitalized and the related
expenditure is reflected in profit and loss in the period in which
the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite
or indefinite. The amortization period and the amortization
method for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period. Changes in
the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset are considered
to modify the amortization period or method, as appropriate,
and are treated as changes in accounting estimates.
Intangible assets with finite lives are amortized over the
estimated useful economic life of the assets by using straight
line method and assessed for impairment whenever there is an
indication that the intangible asset may be impaired.
Gains or losses arising from de - recognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognized
in the statement of profit and loss when the asset is derecognized.
2.4. Inventories
(a) Stock of raw materials, packing materials and stores &
spares are valued at weighted average cost.
(b) Cost comprises purchase cost, duties, taxes (other than
those subsequently recoverable from tax authorities) and
all other costs incurred in bringing the inventory to their
present location and condition. Damaged, unserviceable
and inert stocks are suitably written down.
(c) Work-in-Progress is valued at lower of cost and net
realisable value. Cost comprises cost of land. Materials,
services, overheads related to projects under construction
and apportioned borrowing costs.
(d) Traded goods and finished goods are valued at lower of cost
or market value / contracted price.
Goods and materials in transit are valued at actual cost
incurred up to the date of balance sheet.
2.5. Financial instruments
(i) Financial assets:
Initial recognition and measurement
All financial assets are recognized initially at fair value
plus transaction costs that are attributable to the acquisition
of the financial asset except in the case of financial assets
recorded at fair value through Profit and Loss.
Financial assets are classified, at initial recognition, as
financial assets measured at fair value or as financial assets
measured at amortized cost.
Subsequent measurement
For purposes of subsequent measurement financial assets
are classified in two broad categories:
• Financial assets at fair value
• Financial assets at amortized cost
Where assets are measured at fair value, gains and losses
are either recognized entirely in the statement of profit and
loss (i.e. fair value through profit or loss), or recognized in
other comprehensive income (i.e. fair value through other
comprehensive income).
A financial asset that meets the following two conditions
is measured at amortized cost (net of any write down for
impairment) unless the asset is designated at fair value
through profit or loss under the fair value option.
• Business model test: The objective of the Company’s
business model is to hold the financial asset to collect the
contractual cash flows (rather than to sell the instrument
prior to its contractual maturity to realise its fair value
changes).
• Cash flow characteristics test: 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.
A financial asset that meets the following two conditions
is measured at fair value through other comprehensive
income unless the asset is designated at fair value through
profit or loss under the fair value option.
• Business model test: The financial asset is held within
a business model whose objective is achieved by both
collecting contractual cash flows and selling financial
assets.
• Cash flow characteristics test: 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.
Even if an instrument meets the two requirements to be
measured at amortized cost or fair value through other
comprehensive income, a financial asset is measured
at fair value through profit or loss if doing so eliminates
or significantly reduces a measurement or recognition
inconsistency (sometimes referred to as an ‘accounting
mismatch’) that would otherwise arise from measuring
assets or liabilities or recognizing the gains and losses on
them on different bases.
All other financial asset is measured at fair value through
profit or loss.
All equity investments are measured at fair value in
the balance sheet, with value changes recognized in
the statement of profit and loss, except for those equity
investments for which the entity has elected to present
value changes in ‘other comprehensive income’.
If an equity investment is not held for trading, an irrevocable
election is made at initial recognition to measure it at fair
value through other comprehensive income with only
dividend income recognized in the statement of profit and
loss.
Investment in Debt securities and Mutual Fund are
measured at Fair Value through Profit & Loss A/c.
De - recognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
primarily derecognized (i.e. removed from the Company’s
statement of financial position) when:
• The rights to receive cash flows from the asset have
expired, or
• The Company has transferred its rights to receive cash
flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay
to a third party under a ‘pass-through’ arrangement
and either
(a) the Company has transferred substantially all the risks
and rewards of the asset,
or
(b) the Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but
has transferred control of the asset.
When the Company has transferred its rights to receive
cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it
has retained the risks and rewards of ownership. When
it has neither transferred nor retained substantially all of
the risks and rewards of the asset, nor transferred control
of the asset, the Company continues to recognize the
transferred asset to the extent of the Company’s continuing
involvement. In that case, the Company also recognizes an
associated liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights and
obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration that the Company could be
required to repay.
(ii) Financial liabilities:
Initial recognition and measurement
All financial liabilities are recognized initially at fair value
and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.
The Company’s financial liabilities include trade and other
payables, loans and borrowings including bank overdrafts,
and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair
value through profit or loss.
Financial liabilities are classified as held for trading if
they are incurred for the purpose of repurchasing in the
near term. This category also includes derivative financial
instruments entered into by the Company that are not
designated as hedging instruments in hedge relationships as
defined by Ind AS 109. Separated embedded derivatives are
also classified as held for trading unless they are designated
as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized
in the statement of profit and loss.
Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated at the initial
date of recognition, and only if the criteria in Ind AS 109
are satisfied.
Loans and borrowings
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortized cost
using the EIR method.
Gains and losses are recognized in profit or loss when the
liabilities are derecognized as well as through the EIR
amortization process.
Amortized cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortization is
included as finance costs in the statement of profit and loss.
De - recognition
A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the de¬
recognition of the original liability and the recognition of
a new liability. The difference in the respective carrying
amounts is recognized in the statement of profit and loss.
(iii) Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the
net amount is reported in the balance sheet if there is a
currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis, to
realize the assets and settle the liabilities simultaneously.
2.6. Impairment of Asset:
An asset is treated as impaired when the carrying cost of asset
exceeds its recoverable value. An impairment loss is recognized
in the statement of profit and loss, whenever the carrying amount
of assets either belonging to Cash Generating Unit (CGU) or
otherwise exceeds recoverable amount. The recoverable amount
is the higher of assets fair value less cost of disposal and its
value in use. The impairment loss recognized in prior accounting
year is reversed if there has been a change in the estimate of
recoverable amount. In such cases the carrying amount of the
asset is increased to the lower of its recoverable amount and the
carrying amount that have been determined, net of depreciation,
had no impairment loss been recognized for the asset in prior
years.
Impairment of financial assets
The amount of expected credit losses (or reversal) that is
required to adjust the loss allowance at the reporting date to the
amount that is required to be recognized is recognized as an
impairment gain or loss in profit or loss.
2.7. Foreign Currency Transactions:
Functional currency
The functional currency of the company is Indian Rupees
(‘INR’). These financial statements are presented in Indian
Rupees and the all values are rounded to the nearest Lakh,
except otherwise indicated.
Transactions and translations
Foreign-currency denominated monetary assets and liabilities
are translated into the relevant functional currency at exchange
rates in effect at the balance sheet date. Transactions in foreign
currencies are translated into the functional currency at the
exchange rates prevailing on the date of transactions. Gains
and losses, if any, at the year-end in respect of monetary assets
and monetary liabilities not covered by the forward contracts
are transferred to Profit & Loss Account except for Long Term
Foreign Currency Monetary Items. Transaction gains or losses
realized upon settlement of foreign currency transactions are
included in determining net profit for the period in which the
transaction is settled.
Non-monetary assets and non-monetary liabilities denominated
in a foreign currency and measured at fair value are translated at
the exchange rate prevalent at the date when the fair value was
determined. Non-monetary assets and non-monetary liabilities
denominated in a foreign currency and measured at historical
cost are translated at the exchange rate prevalent at the date of
the transaction.
Revenue, expense and cash-flow items denominated in foreign
currencies are translated into the relevant functional currencies
using the exchange rate in effect on the date of the transaction.
2.8. Borrowing Cost
Borrowing cost comprises of interest and other costs incurred
in connection with the borrowing of the funds. All borrowing
costs are recognized in the Statement of Profit and Loss using
the effective interest method except to the extent attributable
to qualifying Property Plant and Equipment (PPE) which are
capitalized to the cost of the related assets. A qualifying PPE is
an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale.
2.9. Taxes on Income:
Taxes on Income comprises of current tax and deferred tax.
Current tax and deferred tax are recognized in profit and loss,
except to the extent that it relates to items recognized in other
comprehensive income or directly in equity. In this case, the tax
expense is also recognized in other comprehensive income or
directly in equity, respectively.
Current Tax:
Current tax for current and prior periods is recognized at
the amount expected to be paid to or recovered from the tax
authorities, using the tax rates and tax laws that have been
enacted or substantively enacted by the balance sheet date.
Taxable income differs from ‘profit before tax’ as reported on
the statement of profit and loss because of items of income or
expenses that are taxable or deductible in other years and items
that are never taxable or deductible.
Deferred tax:
Deferred tax assets and liabilities are recognized for all temporary
differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. Deferred
tax assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable that the related tax benefit
will be realized.
Deferred tax assets and liabilities are measured using tax rates
and tax laws that have been enacted or substantively enacted
by the balance sheet date and are expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect of changes in tax
rates on deferred income tax assets and liabilities is recognized
as income or expense in the period that includes the enactment
or the substantive enactment date. A deferred tax asset is
recognized to the extent that it is probable that future taxable
profit will be available against which the deductible temporary
differences and tax losses can be utilized.
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