SIGNIFICANT ACCOUNTING POLICIES A BASIS OF PREPARATION
i) Complaince with Ind AS
The Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (herein after referred as the 'Ind AS') as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act 2013, read with paragraph 7 of the Companies (Indian Accounting Standards) Rules, 2015 as ammended and under relevant provisions of the Act.
The Accounting Policies are consistently applied to all the period presented in the Financial Statements.
ii) Historical Cost Convention
The Financial Statements have been prepared on a historical cost basis, except for the following:
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) Current/Non Current Classification
All the Assets and Liabilities have been classified as Current or Non Current as per the Company's normal operating cycle (twelve months) and other criteria set out in the Schedule III to the Act.
iv) Functional and Presentation currency
The Financial Statements are presented in Indian Rupees (INR), which is also the Company's functional currency. All amounts have been rounded off to the nearest lakhs, unless otherwise indicated.
B USE OF ESTIMATES
The preparation of Financial Statements requires estimates and assumptions to be made that affect the reported amount of Assets and Liabilites including Contingent Liabilities on the date of the Financial Statements and the reported amount of Revenues and Expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.
C CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents for the purpose of Cash Flow Statement comprise Cash in Hand, Bank and Short -Term Investments with an original maturity of three months or less.
D PROPERTY, PLANT & EQUIPMENT
Freehold Land is carried at cost. All other items of Property, Plant and Equipment are stated at cost less Depreciation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Intangible Assets:
Intangible Assets representing Computer Software is amortized using Straight Line method.
Depreciation:
a) Depreciation is provided based on useful life of the Assets as prescribed in Schedule II to the Companies Act, 2013 except in case of Leasehold Land.
b) Depreciation for the year in respect of Assets relating to undertaking at Tarapur has been provided on Straight Line Method.
c) In respect of Assets relating to undertakings at Kandivali, depreciation has been provided on written down value method, over the estimated useful life of assets.
d) Leasehold land has been amortized over the period of the lease on straight line basis.
e) Depreciation on the Fixed Assets added during the year or sale / discardment of assets, has been provided on pro-rata basis with reference to the month of addition or upto the month of such sale / discardment, as the case maybe.
f) Gains and Losses on disposals are determined by comparing proceeds with carrying amount. Theses are included in the Statement of Profit and Loss.
Impairment:
The carrying amount of assets are reviewed at each balance date if there is any indication of impairment based on internal / external factor. An asset treated impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
E LEASED ASSETS
As a Lessee:
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease or other systematic basis more representative of the time pattern of the user's benefits
As a Lessor:
The Company has leased certain Tangible Assets and such lease where the Company has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognised in the Statement of Profit and Loss on a straight line basis over the lease term or other systematic basis over the lease term which is more representative of the time pattern in which benefit derived from the use of the leased Asset is diminished. Initial direct costs are recognised as an expense in the Statement of Profit and Loss in the period in which they are incurred.
F FOREIGN CURRENCY TRANSACTIONS
Transactions denominated to foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.
Monetary items denominated in foreign currencies at the year end are restated at year end rules. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract.
Non monetary foreign currency items are carried at cost.
Any Income or Expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss except in case of long term liabilites, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.
G INVESTMENTS & 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 & Loss are expensed in the Statement of Profit & Loss.
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 cost of financial assets carried at fair value through Profit & Loss are expensed in the Statement of Profit and Loss.
Debt Instruments
Subsequent measurement of debt instruments depends on the Company's business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments into the following categories:
1) Amortised Cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest Income from these financial assets is included in other income using the effective interest rate method.
2) Fair value through Profit and Loss: Assets that do not meet the criteria for amortised cost are measured at fair value through statement of Profit and Loss. Interest income from these financial is included in other income.
H INVENTORIES
Inventories of Raw Materials, Stores and Spares, Finished goods and Work in progress are valued at lower of cost or net realizable value after providing for obsolescence, if any.
Cost comprises of all cost of purchases, cost of conversion and other cost incurred in bringing the inventory to their present location and conditions.
Cost is determined under Weighted Average method for Raw Material, stores & spares & Work in Progess and for fabrics on First-in-First--Out (FIFO) basis.
I REVENUE RECOGNITION
The Company derives revenues primarily from sale of manufactured goods and related services.
Effective 01 April 2018, the Company has adopted Indian Accounting Standard 115 (Ind AS 115) -'Revenue from contracts with customers' using the cumulative catch-up transition method, applied to contracts that were not completed as on the transition date i.e. 01 April 2018. Accordingly, the comparative amounts of revenue and the corresponding contract assets / liabilities have not been retrospectively adjusted. The effect on adoption of Ind-AS 115 was insignificant.
Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, it does not adjust any of the transaction prices for the time value of money..
The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
1. The customer simultaneously receives and consumes the benefits provided by the Company's performance.
2. The Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
3. The Company's performance does not create an asset with an alternative use to the Company and an entity has an enforceable right to payment for performance completed to date.
For performance obligations where one of the above conditions are not met, revenue is recognised at the point in time at which the performance obligation is satisfied.
Revenue from sale of products and services are recognised at a time on which the performance obligation is satisfied.
The company collects service tax, value added taxes (VAT) and Goods and service tax GST as applicable on behalf of the government and therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue. Revenue is disclosed, net of cash discounts and incentives.
Dividend income from investments is recognized when the right to receive payment is established.
J EMPLOYEES BENEFITS
Short-term Employee benefits are recognized as an expense at the undiscounted amount in the statement of Profit and Loss for the year in which the related service is rendered.
Post Employment and other long term Employee benefits are recognized as an expense in the statement of Profit and Loss for the year in which the Employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss.
The Company has taken Group/Master insurance Policy with Life Insurance Corporation of India for the future payments of retiring employee's gratuities. The premium thereon has been so adjusted as to cover the liability under scheme in respect of eligible employees at the end of their future anticipated service with the Company.
K BORROWINGS
Borrowings are initially recognised 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 recognised in the Statement of Profit and Loss over the period of borrowings using the effective interest method.
L BORROWING COST
Borrowing costs that are attributable to the acquisition or construction of qualifying Assets are capitalized as part of the cost of the Assets, up to the date the asset is ready for its intended use. All other borrowing costs are recognized as expense and charged to the Statement of Profit and Loss in the year in which they are incurred.
M 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 based on the expected outcome of assessments.
TAX EXPENSE
The Tax Expense for the period comprises Current and Deffered Tax. Tax is recognised in Statement of Profit and Loss, except to the extent to it relates to items recognised in comprehensive Income or in Equity, in which case, the tax is also recognised in other comprehensive Income or Equity.
Current Tax
Current Tax Assets and Liabilites 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.
Deferred Tax
Deferred Tax is recognised on temporary differences between the carrying amounts of Assets and Liabilites in the Financial Statements and the corresponding tax bases used in the computation of taxable profit.
Deferred Tax Liabilites 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 realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of reporting period. The carrying amount of Deffered Tax Liabilites and Assets are reviewed at the end of each reporting period.
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