CORPORATE INFORMATION:
Hindustan Aeronautics Limited (the Company) is a public company domiciled in India and is incorporated under the provisions of
the Companies Act applicable in India with its registered office located at Bengaluru, Karnataka, India. The Company's shares are
listed on Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company is a public sector enterprise and is
under the administrative control of the Department of Defence Production, Ministry of Defence.
The Company is engaged in the design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of
products including, aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures.
1. BASIS OF PREPERATION OF FINANCIAL STATEMENTS:
The Financial Statements are prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) as
prescribed under Section 133 of Companies Act, 2013 read together with relevant rules of the Companies (Indian Accounting
Standards) Rules, 2015 (as amended). The Financial Statements have been prepared under the historical cost convention, on
the accrual basis of accounting except for certain financial instruments that are qualified to be measured at fair value.
The functional currency of the Company is Indian Rupee.
2. USES OF ESTIMATES:
a) Preparation of financial statements in conformity with the recognition and the measurement principle of Ind AS requires
the management of the Company to make estimates, judgments and assumptions that affects the reported balances
of Assets and Liabilities, disclosure relating to contingent liabilities as on the date of the Financial Statements and the
reported amount of revenues and expense for the reporting period.
b) Estimates and the underlying assumption are reviewed on an ongoing basis. The revision to the accounting estimates, if
material is recognized in the period in which the estimates are revised.
c) Estimates and judgments made in applying accounting policies that have significant effect on the amounts recognized
in the financial statements are as follows:
i. Employee Defined benefit plans
The liabilities and costs for defined benefit plans are determined using actuarial valuations. The actuarial valuation
involves making assumptions. These assumptions include salary escalation rate, discount rates, expected rate of
return on assets and mortality rates.
ii. Provisions and contingencies
Assessments undertaken in recognising provisions and contingencies have been made as per the best judgment of
the management based on the current available information.
iii. Income Taxes
The Company's tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the
purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/
recovered for uncertain tax positions.
3. CURRENT/NON-CURRENT CLASSIFICATION:
An asset is classified as current if it satisfies any of the following conditions:
a) the asset is expected to be realized or intended to be sold or consumed in Company's normal operating cycle;
b) the asset is held primarily for the purpose of trading;
c) the asset is expected to be realized within twelve months after the reporting period;
d) the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting date;
All other assets are classified as non-current.
A liability is classified as current if it satisfies any of the following conditions:
a) the liability is expected to be settled in Company's normal operating cycle;
b) the liability is held primarily for the purpose of trading;
c) the liability is due to be settled within 12 months after the reporting period;
d) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after
the reporting date;
All other liabilities are classified as non-current.
The Company is having multiple business activities. For the purpose of current/non-current classification of assets and
liabilities, the Company has ascertained its normal operating cycle, business activity wise as follows:
i. For major manufacturing projects, repair and overhaul activities, spares, normal operating cycle is considered as the time
period starting from the acquisition of assets for processing to their realization in cash or cash equivalents.
ii. In respect of Design and Development projects operating cycle is considered as the time period starting from the date of
implementation of the project till the date of initial operational clearance.
iii. In respect of those activities/projects for which operating cycle cannot be determined or identified the same is taken as
12 months.
4. PROPERTY, PLANT AND EQUIPMENT (PPE):
a) Items of Property, Plant and Equipment Property that qualifies for recognition as an asset is initially measured at its
cost. Following initial recognition, the items of Property, Plant and Equipment are carried at their cost less accumulated
depreciation and accumulated impairment losses if any.
b) The cost includes purchase price, import duties and non-refundable purchase taxes after deducting trade discounts
and rebates and any cost directly attributable including borrowing cost on qualifying assets to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner intended by the management.
c) Subsequent expenditure relating to PPE including major inspection costs, spare parts, standby and servicing equipment
are 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.
d) In accordance with Ind AS 101-First Time Adoption of Indian Accounting Standards, the Company had chosen to
consider the carrying value for all its PPE as their deemed cost at the Opening Balance Sheet as at April 01, 2015.
e) Depreciation is calculated on straight line basis over estimated useful life as prescribed in Schedule II of the Companies
Act, 2013. Where the useful life of the asset is not as per Schedule II of the Companies Act 2013, the same is disclosed
under Notes to Accounts.
f) PPE individually costing ' 50,000 and below are fully depreciated in the year of purchase.
g) Where part of an item of PPE with a cost significant in relation to the total cost of the item and have different useful lives,
they are treated as separate components and depreciated over their estimated useful life.
h) Certain items like Special Tools are amortized over the number of units of production expected to be obtained from the
asset based on technical assessment and management estimates depending on the nature and usage of the respective
assets.
i) CSR Assets are fully depreciated in the year of capitalization.
j) The cost and the related accumulated depreciation are eliminated from the Financial Statements upon sale or
de-recognition or retirement of the asset and the resultant gains or losses are recognized in the Statement of Profit and
Loss of the relevant period.
k) The estimated useful lives, residual values and depreciation / amortisation method are reviewed at the end of each
reporting period with the effect of changes in estimates accounted for on a prospective basis.
5 CAPITAL ADVANCES AND CAPITAL WORK IN PROGRESS (CWIP)
a) Advances given towards acquisition of PPE outstanding at each Balance sheet date are disclosed as other non-current
assets.
b) Cost of Assets not ready for its intended use as on the Balance sheet date is shown as CWIP. Such properties are classified
to the appropriate categories of PPE when completed and ready for its intended use.
c) Depreciation on such assets commence when the assets are ready for their intended use.
6. INVESTMENT PROPERTY
a) A property is considered as investment property only if the same is held for earning rentals and /or for capital appreciation
or both. Properties held by the Company (directly or indirectly) which are used in the production of supply of goods or
services for administrative purposes are not considered as Investment Property.
b) Investment Properties are measured initially at cost. Subsequent to initial recognition, investment properties are stated
at cost less accumulated depreciation and accumulated impairment loss, if any. In accordance with Ind AS 101, First
Time Adoption of Indian Accounting Standards, the Company has chosen to consider the carrying value for all its
Investment Property recognized in its Indian GAAP financial statement as their deemed cost as at the transition date viz,
April 01, 2015.
c) Depreciation is calculated on straight line basis over estimated useful life as prescribed in Schedule II of the Companies
Act, 2013. Where the useful life of the asset is not as per Schedule II of the Companies Act 2013, the same is disclosed
under Notes to Accounts.
7. INTANGIBLE ASSETS
a) Intangible Assets controlled and from which future economic benefits are expected to flow and having useful life are
initially measured at cost and subsequently at cost less accumulated amortization and cumulative impairment losses,
if any.
b) Development Costs having useful life and which will generate probable future economic benefits are recognized as an
intangible asset and amortised over production based on technical estimate and to the extent not amortized are carried
forward.
c) Expenditure on license fees, documentation charges etc, based on the definition criteria of intangible assets in terms of
reliability of measurement of cost and future economic benefits from the assets, are amortised over production based on
technical estimates, and to the extent not amortised, are carried forward.
d) The cost of software internally generated / acquired for internal use which is not an integral part of the related hardware,
is recognized as an intangible asset and is amortised over three years, on straight line method. Amortisation commences
when the asset is available for use.
e) Expenditure on Research is recognized as expenditure in the period in which it is incurred.
f) Wherever it is not possible to assess the useful life of an intangible asset (whether or not significant) the same is not
amortised. Impairment on such intangible assets are reviewed annually and when there is an indication of impairment,
the asset is impaired.
8. LEASE ACCOUNTING
The Company recognizes, at inception of a contract 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.
Company as a lessee
a) At the date of commencement of the lease, the Company recognizes a right-of-use ("ROU") asset representing its right
to use the underlying asset for the lease term and a lease liability for all lease arrangements in which it is a lessee except
for leases with a term of 12 months or less (short term leases) and leases for which the underlying assets is of low value.
For such short term and assets of low value leases, the Company recognizes the lease payment as an expense on a
straight-line basis over the term of the lease.
b) At commencement date the ROU asset is measured at cost. The cost of the ROU asset measured at inception shall
comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or
before the commencement date less any lease incentives received, plus any initial direct costs incurred. The ROU assets
are subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any.
c) The ROU assets are depreciated using the straight-line method from the commencement date over the shorter of lease
term or useful life of ROU asset. The estimated useful lives of ROU assets are determined on the same basis as those of
PPE. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not
be recoverable. Impairment loss, if any, is recognized in the statement of profit and loss.
d) At the commencement date, the Company measures the lease liability at the present value of the lease payments that
are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease or, if not readily
determinable, using the Company's incremental borrowing rate.
e) Lease liability and ROU asset are separately presented in the Balance Sheet and lease payments are classified as financing
cash flows. Short term lease payments and payments for leases of low value assets are classified as operating cash flows.
Company as a lessor
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease.
I. Finance Lease:
a) A lease that transfers substantially all the risks and rewards incidental to ownership of an underlying asset to the
Lessee is classified as a finance lease. Title may or may not eventually be transferred.
b) At commencement date, an amount equal to the net investment in the lease is presented as receivable. The interest
rate implicit in the lease is used to measure the value of net investment in the lease.
c) The finance income is recognized over the lease term in the statement of profit and loss account so as to reflect a
constant periodic rate of return on the net investment in the lease.
d) The de-recognition and impairment requirement of the underlying asset is tested as per Ind AS 109- Financial
instruments.
e) Any modifications in the lease are accounted as a separate lease when the recognition criteria specified in paragraph
79 of the standard are met.
II. Operating Lease:
a) Lease other than finance leases are operating leases.
b) The lease payment from operating leases are recognized as income on either a straight-line basis or another
systematic basic, if required.
c) The expenses including depreciation cost associated with earning of the lease income is recognized as an expense.
d) Depreciation on underlying assets subject to operating leases are calculated on straight line basis over estimated
useful life as prescribed in Schedule II of the Companies Act, 2013.
e) Any modifications in the lease are accounted as a separate lease if the recognition criteria specified in the standard
is met.
Transition to Ind AS 116
a) Effective April 1, 2019, the Company has applied Ind AS 116 on Lease Accounting. Ind AS 116 replaces Ind AS
17. The Company has adopted Ind AS 116 using the cumulative effect method. The effect of initially applying
this standard is recognized at the date of initial application (i.e. April 1, 2019) and the comparative information
continues to be reported under Ind AS 17.
b) The Company has chosen the practical expedient provided by the standard to apply Ind AS 116 only to contracts
that were previously identified as leases under Ind AS 17 and therefore has not reassessed whether a contract is or
contains a lease at the date of initial application.
9. NON CURRENT INVESTMENTS
a) In accordance with Ind AS 101, First time adoption of Indian Accounting Standards, the Company has chosen to consider
the carrying amount of investment as their deemed cost as at the Opening Balance Sheet as at 01st April, 2015.
b) The Company has elected to recognize its investments in subsidiary and joint venture companies at cost in accordance
with the option available in Ind AS 27 'Separate financial statements'.
c) Investments are carried individually at cost less accumulated impairment in the value of such Investments.
d) Cost of Investment includes acquisition charges such as brokerage, fees and duties.
e) The Company reviews the book value of the investment on a quarterly basis and provides for diminution in the value of
the investment based on the net worth of the investee company.
f) Impairment in the value of investment is made only if in the opinion of management when there is a permanent fall in
value of investment.
10. IMPAIRMENT OF NON-FINANCIAL ASSETS
As at each reporting date the Company assesses whether there is any indication that an asset may be impaired. If any
indication exists, the Company estimates the recoverable amount. If the estimated recoverable amount is found less than its
carrying amount, the impairment loss is recognised and assets are written down to their recoverable amount.
11. FINANCIAL INSTRUMENTS
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity. The Company recognizes a financial asset or a financial liability only when it becomes party to the contractual
provisions of the instrument.
I. Financial Assets
Initial recognition and Measurement
All financial assets are recognized at fair value on initial recognition except for trade receivables which are initially
measured at transaction price.
Transaction costs that are directly attributable to the acquisition or issue of the financial asset, which are not valued at
fair value through profit or loss (FVTPL), are added to the fair value on initial recognition.
Subsequent Measurement
For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria:
i. The Company's business model for managing the financial asset and
ii. The contractual cash flow characteristics of the financial asset
Based on the above criteria, for purpose of subsequent measurement, financial assets are classified in the following
categories:
a) Financial assets carried at amortised cost:
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is
to hold the financial asset in order to collect contractual cash flows and 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.
This category applies to cash and bank balances, trade receivables, loans and other financial assets of the Company.
b) Financial assets carried at fair value through other comprehensive income (FVOCI):
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a
business model whose objective is achieved by both collecting contractual cash flows and selling financial assets
and 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.
c) Financial assets carried at fair value through profit or loss (FVTPL):
A financial asset, which is not classified in any of the above categories are subsequently measured at fair value
through profit or loss.
Derecognition
The Company derecognizes (i.e removes from the Company's balance sheet) a financial asset (or where applicable
a part of a financial asset) when the contractual rights to receive the cash flows from the financial asset expire or it
transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109.
On derecognition of a financial asset, (except as mentioned in (b) above for financial assets measured at FVTOCI),
the difference between the asset's carrying amount and the consideration received is recognized in the Statement
of Profit and Loss.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies the expected credit loss (ECL) model for measurement and
recognition of impairment loss on financial assets with credit risk exposure.
a) Debts from the Government departments are generally treated as fully recoverable, based on past experience,
and hence in the opinion of Management there is no increase in the credit risk of such financial assets.
b) In respect of dues outstanding for a significant period of time, impairment on account of expected credit loss
is being assessed on a case-to-case basis.
c) Suitable provision is made for dues which are disputed.
d) ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense/income in
the Statement of Profit and Loss.
II. Financial Liability
Initial recognition and Measurement
All financial liabilities are recognized at fair value on initial recognition and in the case of liabilities subsequently measured
at amortized cost, net of directly attributable transaction cost.
The Company's Financial Liabilities include trade and other payables, loans and borrowings. For trade and other
payables liabilities are recognized for the amounts to be paid for the goods / services received whether billed by the
supplier or not.
Subsequent Measurement
All financial liabilities of the Company are subsequently measured at amortized cost.
Derecognition
A financial liability (or where applicable a part of the financial liability) is derecognized from the Company's Balance Sheet
when the obligation specified in the contract is discharged or cancelled or expires.
The difference between the carrying amount of the financial liability derecognized and the consideration paid 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 wherever there is
a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis or
to realize the asset and settle the liability simultaneously.
12. FAIR VALUE MEASUREMENT
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.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair
value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to measure
value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities
(Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs):
Level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
The Company measures financial instruments, in its financial statements at fair value at each reporting date.
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.
13. DEFERRED DEBTS
Unpaid installment payments under deferred payment terms for the cost of imported materials and tooling content of
the equipment / products sold are accounted as deferred debts from the customer and are recovered as and when the
installments are paid.
14. INVENTORIES
a) Inventories other than Saleable / Disposable scrap are valued at lower of Cost and Net Realisable Value. Saleable /
Disposable scrap is valued at net realisable value.
b) The cost of raw material excluding Goods-in-Transit, components and stores are assigned by using the weighted average
cost formula. Goods-in-Transit are valued at cost-to-date. In the case of Finished Goods, Stock-in-Trade and Work-In¬
Progress, cost includes costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their
present location and condition. Cost includes Taxes and duties (other than Taxes and duties for which input credit is
available).
c) Provision for redundancy is assessed on ageing at a suitable percentage / level of the value of closing inventory of raw
material and components, stores and spare parts and construction material. Besides, wherever necessary, adequate
provision is made for the redundancy of such materials in respect of completed / specific projects and other surplus /
redundant material pending transfer to salvage stores.
d) Stores declared surplus / unserviceable / redundant are charged to revenue in the year of such identification.
e) Consumables issued from stores and lying unused at the end of the year are not reckoned as inventory.
15. REVENUE RECOGNITION
I. Manufacturing of Aircraft/ Helicopter/Spares/Repair Contracts
a) Revenue on Sale of Goods and Services is recognized at a point in time when the Company satisfies the performance
obligation on transfer of control of the products to the Customer in an amount that reflects the consideration the
Company expects to receive in exchange for those products pursuant to the Contract with customer. It is measured
at transaction price. Revenue from service Warranty is recognized on straight line basis over the period of Warranty.
Transfer of Control happens on:
i. Acceptance by the buyer's Inspector, by way of Signaling Out Certificate (SOC)
or
Acceptance by the buyer's pilot, by way of Certificate of Conformity (COC), wherever, specifically required in
the contract, in the case of Aircrafts/Helicopters,
ii. Acceptance by the Buyer's inspection agency/SOC or as agreed to by the Buyer, in the case of Repair & Overhaul
of Aircraft/Helicopter/Engine, Rotables, Site repairs, Cat 'B' repair servicing etc.,
iii. For other deliverables like Spares, Revenue is recognized based on the Acceptance by the buyer's inspection
agency or as agreed to by the buyer.
b) In case of Performance Based Logistic Contracts, Revenue is recognized over a period of time, based on Helicopter
Availability Certificate, jointly signed by Seller and Buyer.
c) Revenue is recognized based on the prices agreed with Customers. Where the prices are yet to be agreed/
determined, the revenue is recognised at the most likely amount based on past experience. Differential revenue, if
any, is recognised on receipt of approval / sanction.
II. Development Contracts
a) Revenue is recognized over a period of time on incurrence of expenditure identifiable to work orders:
i. where milestones have been defined, on achievement of milestone under the output method.
ii. where milestones have not been defined, on incurrence of expenditure under the input method.
b) Where the customer's sanction for revision is pending, the expenditure incurred is retained in work-in-progress/
intangible asset. Subsequent revenue is recognized on receipt of revised financial sanction from the customer.
III. Significant Financing Component
a) For the majority of the contracts, advance payments are received, prior to commencement of work and milestone
payments are paid in accordance with the terms of the contract.
b) Payments received from customers in advance are not considered to be a significant financing component as they
are given with the objective to protect the interest of the contracting parties.
IV. Contract Modification
A contract modification exists when the change in scope is agreed but the corresponding change in price is not
determined. In such circumstances, revenue is recognized, based on the Company's assessment of the estimated change
in the transaction price arising from the modification.
V. Other Income
Interest Income is accrued on a time proportion basis, by reference to the principal outstanding and at the effective
interest rate applicable.
Dividend income from investments is recognised when the right to receive payment has been established.
VI. Receivables
Receivables represent the Company's unconditional right to consideration under the contract. The right to consideration
is considered unconditional, if only passage of time is required before payment of that consideration is due.
VII. Contract Assets
Contract Assets represents the Company's right to receive the consideration in exchange for the Goods or Services that
the Company has transferred to the Customer, when that right is conditioned on something other than passage of time.
16. EMPLOYEE BENEFITS
I. Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the related service are classified as short-term
employee benefits and they mainly include wages & salaries, incentives, performance related pay, non-monetary benefits
such as medical care, etc. They are valued on undiscounted basis and recognized as an expense in the statement of profit
and loss of the period in which the employee renders the related service.
II. Post-Employment Benefits:
a) The Company operates Defined Contribution Pension Scheme and Post Superannuation Group Health Insurance
Scheme for employees which are considered as defined contribution plans. The schemes are managed by duly
constituted trusts. The Company periodically contributes to the trust fund. The Company recognizes contribution
payable to a defined contribution plan as an expense in the statement of profit and loss account. The Company's
liability is limited to the extent of contribution made to these trusts.
b) Provident Fund Scheme
Eligible employees of the Company receive benefits from a provident fund, which is a defined benefit plan. The
Company makes specified monthly contributions towards Employee Provident Fund scheme to separate trusts
established for the purpose based on a fixed percentage of the eligible employee's salary and the same is charged
to the Statement of Profit and Loss.
The minimum rate at which annual interest is payable by the trust to the beneficiaries is being notified by the
Government. The Company has an obligation to make good the shortfall, if any, between the return on investments
of the trust and the notified interest rate. Such shortfall is determined at each Balance Sheet date based on actuarial
valuation and charged to the Statement of Profit and Loss.
c) Gratuity Scheme
The Company provides for gratuity covering eligible employees. The same is considered as a defined benefit
retirement plan. The Company contributes Gratuity liabilities to the Gratuity Trust.
Recognition and measurement of defined benefit plans:
The cost of providing defined benefits is determined on the basis of actuarial valuation using the Projected Unit
Credit method with valuation being carried out at each Balance Sheet date.
The Company recognises the net obligation of a defined benefit plan in its Balance Sheet as an asset or liability. The
net defined benefit obligations recognised in the Balance Sheet represent the present value of the defined benefit
obligations as reduced by the fair value of plan assets.
The Company recognises the following changes in the net defined benefit obligation as an expense in the statement
of profit and loss.
i. Service cost comprising current service costs, past service costs.
ii. Net interest on the defined benefit liability (asset). Net interest cost is calculated by applying the discount rate
to the net balance of the defined benefit obligation and the fair value of plan assets.
Gains and losses through re-measurements of the net defined benefit liability/(asset) comprising actuarial gains
and losses and the return on the plan assets (excluding amounts included in net interest on the net defined benefit
liability/asset), are recognized in the balance sheet with a corresponding debit or credit to retained earnings through
other comprehensive income in the period in which they occur. Re-measurements are not classified to the statement
of profit and loss in the subsequent period. The effect of any plan amendments is recognized in net profit in the
Statement of Profit and Loss.
III. Compensated Absences:
The Company has a policy on compensated absences like Vacation leave which are accumulating in nature. Vacation
leave can either be availed or encashed subject to restrictions on the maximum number of accumulations of leave.
The Company determines the liability for such accumulated leaves using the Project Unit Credit method with actuarial
valuations being carried out at each Balance Sheet date. The obligation is funded through qualifying insurance policies
made with insurance companies.
17. FOREIGN CURRENCY TRANSACTION/TRANSLATION
Initial Recognition:
On initial recognition, transaction in foreign currencies, entered into by the Company, are recorded in the functional currency
by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency
at the date of the transaction.
Measurement of Foreign currency items at reporting date:
Foreign currency monetary items are translated at closing exchange rates. Non- monetary items that are measured in terms
of historical cost in a foreign currency are translated using the exchange rate at the date of transaction. Non-monetary items
that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value is
measured.
Recognition of Exchange Difference:
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from
those at which they are translated on initial recognition during the period or in previous financial statement is recognized in
statement of profit and loss in the period in which they arise.
18. INCOME TAXES
a) Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the
provisions of Income Tax Act,1961(the "Act").
b) Deferred Tax is recognized using the Balance Sheet method, providing for temporary differences between the carrying
amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred
Tax Assets in excess of Deferred Tax Liability are recognized to the extent that it is probable that future taxable profits will
be available against which the temporary difference can be utilized. 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.
19. CLAIMS BY THE COMPANY
Claims on suppliers / underwriters / carriers towards loss / damages, claims for export subsidy, duty drawbacks, and claims on
Customs department for refunds are accounted when claims are preferred.
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