1.1. Company overview
The INCAP Limited (“the company”) a public limited company incorporated and domiciled in India and has its
registered office at Vijayawada. The securities of the company were listed in Bombay Stock Exchange Limited.
The Company is engaged in the business of manufacture and sale of aluminium electrolytic capacitors. The
financial statements for the year ended March 31,2024 were approved by the Board of Directors and authorize
for issue on 25th May, 2024.
1.2. Basis for preparation of financial statements
These financial statements are prepared in accordance with Indian Accounting Standards (IND AS) notified
under section 133 of the Companies Act, 2013 (the Act) read with Rule 3 of the Companies (Indian Accounting
Standards ) Rules, 2015 and Companies (Indian Accounting Standards ) Amendment Rules, 2016 and guidelines
issued by the Securities and Exchange Board of India (SEBI).
Up to the year ended March 31, 2017, the Company prepared its financial statements in accordance with the
requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards)
Rules, 2006, Companies (Accounting Standards) Amendment Rules, 2016 and the relevant provisions of
Companies Act,2013. These are the Company's first Ind AS financial statements. The date of transition to Ind
AS is April 1, 2016. The company has adopted all the Ind AS standards and the adoption was carried out in
accordance with Ind AS 101 'First time adoption of Indian Accounting Standards'. The transition was carried
out from Indian Accounting principles generally accepted in India, as prescribed under section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.
Reconciliations and descriptions of the effect of the transition has been summarized.
The financial statement has been prepared on the historical cost convention under accrual basis of accounting
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
I. USE OF ESTIMATES
The preparation of financial statements in conformity with the IND AS requires management to make certain
estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. The
management believes that these estimates and assumptions are reasonable and prudent. However, actual
results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in
the current and future period. The application of Accounting policies that require critical accounting estimates
involving complex and subjective judgments and the use of assumptions in these financial statements have
been disclosed below.
m Defined benefit obligation.
m Estimation of useful life of Property, Plant and Equipment.
m Estimation and evaluation of provisions and contingencies relating to tax litigations.
II. REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or receivable and net of returns, trade
allowances rebates and amounts collected on behalf of third parties. It excludes Value Added Tax, Sales Tax,
Service tax and Goods and Services Tax (GST).
a) Sales and service earnings are inclusive of freight, insurance etc. recovered thereon.
b) Other Income: Revenue in respect of other income are recognised when there is a reasonable
certainty as to its realisation.
III. BORROWING COST
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets
are capitalised as part of the cost of that asset. Qualifying asset is an asset that necessarily takes a substantial
period of time to get ready for its intended use. Interest income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for
capitalization. Borrowing costs also includes exchange differences to the extent regarded as an adjustment to
the borrowing costs.
Borrowing costs also includes exchange differences to the extent regarded as an adjustment to the borrowing
costs.
All other borrowing costs are charged to revenue in the period in which they are incurred.
IV. EMPLOYEE BENEFITS
Employee benefits include provident fund, employee state insurance scheme, and gratuity fund.
a) Defined Contribution Plans:
The Company's contribution to provident fund and employee state insurance scheme are considered as defined
contribution plans and are charged as an expense based on the amount of contribution required to be made
and when services are rendered by the employees.
b) Defined Benefit Plans:
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit
credit method, with actuarial valuations being carried out at the end of each annual reporting period.
Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by
applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined
benefit costs are categorised as follows:
m Service cost (including current service cost, past service cost, as well as gains and losses on
curtailments and settlements);
m Net interest expense or income and
m Re-measurement.
c) Provident fund and Employees' state insurance scheme:
Eligible employees of the INCAP Limited receive benefits from a provident fund and employees' state insurance
scheme which is a defined benefit plan. Both the eligible employee and the company make monthly contributions
to the provident fund and employees' state insurance equal to a specified percentage of the covered employee's
salary.
V. PROPERTY PLANT AND EQUIPMENT
TANGIBLE FIXED ASSETS
a) Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if
any. The cost of property, plant and equipment comprises its purchase price net of any trade discounts and
rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities),
any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses
and borrowings costs attributable to acquisition of qualifying property, plant and equipment up to the date
the asset is ready for its intended use and initial estimate of cost of decommissioning, dismantling and
removing the item & restoring the site on which it is located . Freehold land is not depreciated.
b) Construction Period Expenses on Projects: All identifiable revenue expenses including interest on term
loans incurred in respect of various projects/ expansions are allocated to capital cost of respective assets/
capital work in progress.
c) An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or
retirement of an item of property, plant and equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in profit or loss.
d) Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties
under construction) less their residual values over their useful lives.
e) The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting
period, with the effect of any changes in estimate accounted for on a prospective basis.
f) Fixed assets retired from active use and held for disposal are stated at the lower of their net book value and
net realisable value and are disclosed separately under “Other Current Assets”.
g) Tangible assets not ready for the intended use on the date of Balance Sheet are disclosed as “Capital work-
in-progress”. Advances given towards acquisition / construction of fixed assets outstanding at each Balance
Sheet date are disclosed as Capital Advances under “Other Non-Current Assets”.
DEPRECIATION
Depreciation is provided in accordance with the useful life as prescribed under Part C of Schedule II to the
Companies Act, 2013 as follows:-
Buildings - 60 years; Computer Software - 3 Years; Data Processing Equipment - 3 Years; Electrical Installa-tion
- 15 Years; Furniture and Fixtures - 10 Years; Lab Equipment - 15 Years; Office Equipment - 15 Years; Plant and
Machinery - 25 Years; Roads and Culverts - 10 Years; Vehicles - 8 Years.
In respect of all the assets, the company is following straight line method of depreciation.
VI. IMPAIRMENT
a. Non-financial assets i.e. Property, plant & equipment:
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's
carrying amount exceeds its recoverable amount in the statement of Profit and loss. The recoverable
amount is the higher of an asset's fair value less costs of disposal and value in use. An impairment loss is
reversed in the Statement of Profit and loss if there has been a change in the estimates used to determine
the recoverable amount. Non-Financial assets other than goodwill that suffered impairment are reviewed
for possible reversal of the impairment at the end of the each reporting period.
VII. FINANCIAL INSTRUMENTS
a. Initial Recognition:
The company recognises financial assets and financial liabilities when it becomes a party to the contractual
provisions of the instruments. All financial assets and liabilities are recognised at fair value on initial recognition,
except for trade receivables which are directly measured at transaction price. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and liabilities that are not at fair value
through profit or loss, are added to the fair value on initial recognition.
b. Subsequent Recognition:
Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose
objective is to hold the asset in order to collect contractual cash flows, and the contractual terms of the financial
asset gives rise on specified dates to cash flow that are solely payments of principal and interest on the principal
amount outstanding.
Financial assets at fair value through other comprehensive income
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
asset and contractual terms of the financial asset give rise on specified dates to cash flows that solely payments
of principal and interest on the principal amount outstanding.
Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit
or loss.
Financial liabilities:
Financial liabilities are subsequently carried at amortised cost using the effective interest method, except for
contingent consideration recognised in a business combination which is subsequently measured at fair value
through profit and loss. For trade and other payables measuring within one year from the Balance Sheet date,
the carrying amounts approximate fair value due to the short maturity of these instruments.
De-recognition of financial assets and liabilities:
Financial assets:
A financial asset shall be derecognised when, and only when
m the contractual rights to the cash flows from the financial asset expire, or
m it transfer the financial asset and the transfer qualifies for de-recognition.
On de-recognition of a financial asset in it's entirely, the difference between the carrying amount and the
consideration received shall be recognised in profit or loss.
Financial Liabilities:
A financial liability shall be derecognised when, and only when, obligation specified in the contract is discharged
or cancelled or expires. The difference between the carrying amount of a financial liability extinguished or
transferred and consideration paid should be recognised in profit or loss.
VIII. INVENTORIES
Inventories are valued at the lower of cost and estimated net realisable value (net of allowances) after providing
for obsolescence and other losses, where considered necessary. The cost comprises cost of purchase, cost of
conversion and other costs including appropriate production overheads in the case of finished goods and work-
in-progress, incurred in bringing such inventories to their present location and condition. Trade discounts or
rebates are deducted in determining the costs of purchase. Net realisable value represents the estimated
selling price for inventories less all estimated costs of completion and costs necessary to make the sale. The
cost (net of taxes subsequently recoverable from tax authorities) of raw materials, stores & spares and traded
goods is determined on first in first out method.
IX. CURRENT AND NON-CURRENT CLASSIFICATION
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
Cash or cash equivalent is treated as current, unless restricted from being exchanged or used to settle a liability
for at least twelve months after the reporting period. In respect of other assets, it is treated as current when it is:
expected to be realized or intended to be sold or consumed in the normal operating cycle held primarily for the
purpose of trading and expected to be realized within twelve months after the reporting period.
a) All other assets are classified as non-current.
b) A liability is treated as current when:
m it is expected to be settled in the normal operating cycle it is held primarily for the purpose of trading
m it is due to be settled within twelve months after the reporting period, or
m there is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
c) All other liabilities are classified as non-current.
d) Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash
and cash equivalents. The Company has identified twelve months as its operating cycle.
X. CASH AND CASH EQUIVALENTS
For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on
hand, deposits held at call with financial institutions/banks, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the balance sheet.
XI. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby the profit for the period is adjusted for the effects of
transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments
and item of income or expenses associated with investing or financing cash flows. The cash flows from operating,
investing and financing activities of the company are segregated.
XII. FOREIGN EXCHANGE TRANSACTIONS
Functional Currency of the company is Indian Rupee. These financial statements are presented in Indian
Rupees.
Transactions and translations:
Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of the transaction
and adjusted appropriately with the difference in the rate of exchange arising on actual receipt/payment during
the year in determining net profit for the period.
m Foreign currency denominated monetary assets/ liabilities- are translated into the relevant functional currency
at exchange rates in effect at the balance sheet date. The gains or losses resulting from such translations
are included in net profit in the statement of profit and loss.
m Foreign currency denominated non-monetary assets/ non-liabilities are translated at the exchange rate
prevalent at the date of the transaction.
m Exchange differences arising on settlement of transactions and translation of monetary items are recognised
as income or expense in the year in which they arise.
XIII. TAXES ON INCOME
Tax expense comprises of current and deferred taxes. The income tax expense (income) for the period is the tax
payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused
tax losses.
a) The current income tax is the amount of income taxes payable in respect of the taxable profit (tax loss) for
a period. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on
the basis of amounts expected to be paid to the tax authorities
b) Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements.
However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred
income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting profit nor taxable
profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilise
those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a
net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in
other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive
income or directly in equity, respectively.
XIV EARNING PER SHARE
The company's Basic EPS is calculated by dividing profit or loss from continuing operations attributable to
ordinary equity holders by the weighted average number of ordinary shares outstanding during the period as
per IND AS-33, Earnings per Share.
The diluted EPS of an entity is calculated on the same basis as basic EPS, after adjusting for the effects of
dilutive potential ordinary shares unless the effect of the potential dilutive equity shares is anti-dilutive.
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