revalued amount, in which case, the reversal
is treated as a revaluation increase.
e) Borrowing and Borrowing Costs
Borrowings are initially recognised at fair
value, net of transaction costs incurred.
Borrowings are subsequently measured
at amortised cost. Any difference between
the proceeds (net of transaction costs) and
the redemption amount is recognised in
Statement of profit and loss over the period
of the borrowings using the effective interest
method. Borrowings are derecognised from
the balance sheet when the obligation
specified in the contract is discharged,
cancelled or expired. The difference between
the carrying amount of a borrowings that has
been extinguished or transferred to another
party and the consideration paid, including
any non-cash assets transferred or liabilities
assumed, is recognised in Statement of profit
and loss as other gains/(losses). Borrowings
are classified as current liabilities unless the
Company has an unconditional right to defer
settlement of the liability for at least 12 months
after the reporting period.
Borrowing costs directly attributable to the
acquisition, construction or production of an
asset that necessarily takes a substantial
period of time to get ready for its intended use
are capitalised as part of the cost of the asset.
All other borrowing costs are expensed in the
period in which they occur. Borrowing costs
consist of interest and other costs that an
entity incurs in connection with the borrowing
of funds. Borrowing cost also includes
exchange differences to the extent regarded
as an adjustment to the borrowing costs.
Borrowing costs directly attributable to the
acquisition or construction of qualifying
assets are capitalised 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
recognised as an expense in the statement of
profit and loss in the year in which they are
incurred.
f) Inventories
Inventories are valued as follows:
Raw materials, stock in trade and stores
and spares - Lower of cost and net realisable
value. Cost is determined on a weighted
average basis. Materials and other items held
for use in the production of inventories are not
written down below costs, if finished goods in
which they will be incorporated are expected
to be sold at or above cost.
Work-in-progress and finished goods - Lower
of cost and net realisable value. Cost includes
direct materials, labour and a proportion of
manufacturing overheads.
Net realisable value is the estimated selling
price in the ordinary course of business, less
estimated costs of completion and to make
the sale. However, materials and other items
held for use in the production of finished
goods or providing services are not written
down below cost if the finished products in
which they will be incorporated are expected
to be sold at or above cost. The comparison of
cost and net realizable value is made on item
by item basis.
g) Revenue Recognition
Revenue is measured at amount of transaction
price (net of variable consideration) received
or receivable when control of the goods is
transferred to the customer and there are no
unfulfilled performance obligations as per the
contract with the customers. The Company
recognizes revenue when it satisfies a
performance obligation in accordance with
the provisions of contract with the customer.
This is achieved when;
• effective control of goods along with
significant risks and rewards of ownership
has been transferred to customer;
• the amount of revenue can be measured
reliably;
• it is probable that the economic benefits
associated with the transaction will flow to
the Company; and
• the costs incurred or to be incurred
in respect of the transaction can be
measured reliably.
Revenue represents net value of goods
and services provided to customers after
deducting for certain incentives including,
but not limited to discounts, volume rebates,
etc. For incentives offered to customers, the
Company makes estimates related customer
performance and sales volume to determine
the total amounts earned and to be recorded
as deductions. The estimate is made in such
a manner, which ensures that it is highly
probable that a significant reversal in the
amount of cumulative revenue recognised
will not occur. The actual amounts may differ
from these estimates and are accounted for
prospectively.
The Company considers shipping and
handling activities as costs to fulfill the
promise to transfer the related products and
the customer payments for shipping and
handling costs are recorded as a component
of revenue. In certain customer contracts,
shipping and handling services are treated
as a distinct separate performance obligation
and the Company recognizes revenue for such
services when the performance obligation is
completed.
Revenue are net of Goods and Service Tax. No
element of significant financing is deemed
present as the sales are made with a credit
term, which is consistent with market practice.
Company generate revenue from sale of
pumps and related support services. Revenue
from services is recognised in the accounting
period in which the services are rendered.
Revenue (other than sale) is recognised to the
extent that it is probable that the economic
benefits will flow to the company and the
revenue can be reliably measured. Export
incentives are recognized when there is
reasonable assurance that the Company will
comply with the conditions and the incentives
will be received.
Export entitlements (in the form of duty
drawback, Merchandise Export Incentive
Scheme and other schemes) are recognized
in the statement of profit and loss when the
right to receive credit as per the terms of the
scheme is established in respect of exports
made and when there is no significant
uncertainty regarding the ultimate collection
of the relevant export proceeds.
Interest income from a financial asset is
recognised when it is probable that the
economic benefits will flow to the Company
and the amount of income can be measured
reliably. Interest income is accrued on a
time basis, by reference to the principal
outstanding and at the effective interest
rate applicable, which is the rate that exactly
discounts estimated future cash receipts
through the expected life of the financial asset
to that asset's net carrying amount on initial
recognition.
Contract assets
Contract asset is right to consideration in
exchange for goods or services transferred
to the customer and performance obligation
satisfied. If the Company performs by
transferring goods or services to a customer
before the customer pays consideration or
before payment is due, a contract asset is
recognised for the earned consideration
that is conditional. Upon completion of
the attached condition and acceptance
by the customer, the amounts recognised
as contract assets is reclassified to trade
receivables upon invoicing. A receivable
represents the Company's right to an amount
of consideration that is unconditional.
Contract assets are subject to impairment
assessment.
Contract liabilities
A contract liability is the obligation to transfer
goods or services to a customer for which the
Company has received consideration from
the customer. If customer pays consideration
before the Company transfers goods or
services to the customer, a contract liability
is recognised when the payment is made.
Contract liabilities are recognised as revenue
when the Company performs under the
contract (i.e., transfers control of the related
goods or services to the customer).
Trade receivables
Trade receivables are amounts due from
customers for goods sold or services
performed in the ordinary course of business.
If the receivable is expected to be collected
within a period of 12 months or less from the
reporting date (or in the normal operating
cycle of the business, if longer), they are
classified as current assets otherwise as non¬
current assets.
Trade receivables are measured at their
transaction price unless it contains a significant
financing component in accordance with Ind
AS 115 for pricing adjustments embedded in
the contract.
Loss allowance for expected lifetime credit
loss is recognised on initial recognition.
h) Foreign currencies
The Company's standalone financial
statements are presented in INR, which is also
its functional currency.
Transactions and balances
Transactions in foreign currencies are initially
recorded by the Company at functional
currency spot rates at the date the transaction
first qualifies for recognition.
Monetary assets and liabilities denominated
in foreign currencies are translated at the
functional currency closing rate of exchange
at the reporting date.
Non-monetary items that are measured in
terms of historical cost in a foreign currency
are translated using the exchange rates at
the dates of the initial transactions. Non¬
monetary items measured at fa ir value in
a foreign currency are translated using the
exchange rates at the date when the fair
value is determined. The gain or loss arising
on translation of non-monetary items
measured at fair value is treated in line with
the recognition of the gain or loss on the
change in fair value of the item (i.e., translation
differences on items whose fair value gain or
loss is recognised in statement of profit or loss
are also recognised in OCI or statement of
profit or loss, respectively).
i) Income Taxes
Current tax
Current tax assets and liabilities are measured
at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates
and tax laws used to compute the amount
are those that are enacted or substantively
enacted in India, at the reporting date.
Current tax relating to items recognised
outside statement of profit or loss is recognised
outside statement of profit or loss (either in
other comprehensive income or in equity).
Current tax items are recognised in correlation
to the underlying transaction either in OCI or
directly in equity. Management periodically
evaluates positions taken in the tax returns
with respect to situations in which applicable
tax regulations are subject to interpretation
and establishes provisions where appropriate.
Current tax assets is offset against current tax
liabilities if, and only if, a legally enforceable
right exists to set off the recognised amounts
and there is an intention either to settle on a
net basis, or to realise the asset and settle the
liability simultaneously.
Deferred tax
Deferred tax is provided using the liability
method on temporary differences between
the tax bases of assets and liabilities and
their carrying amounts for financial reporting
purposes at the reporting date.
Deferred tax assets are recognised for all
deductible temporary differences, the carry
forward of unused tax credits and any unused
tax losses. Deferred tax assets are recognised
to the extent that it is probable that taxable
profit will be available against which the
deductible temporary differences, and the
carry forward of unused tax credits and
unused tax losses can be utilised. Deferred tax
liabilities are generally recognised for all the
taxable temporary differences.
The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced
to the extent that it is no longer probable that
sufficient taxable profit will be available to
allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are
re-assessed at each reporting date and are
recognised to the extent that it has become
probable that future taxable profits will allow
the deferred tax asset to be recovered.
Deferred tax assets and liabilities are
measured at the tax rates that are expected
to apply in the year when the asset is realised
or the liability is settled, based on tax rates
(and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities
are offset if a legally enforceable right exists to
set off current tax assets against current tax
liabilities and the deferred taxes relate to the
same taxable entity and the same taxation
authority.
j) Employee benefits
Short-term benefits
The undiscounted amount of short-term
employee benefits expected to be paid
in exchange for the service rendered by
employees are recognised during the period
when the employee renders the services.
Defined contribution plans
Retirement benefit in the form of provident
fund is a defined contribution scheme. The
Company has no obligation, other than
the contribution payable to the provident
fund. The Company recognizes contribution
payable to the provident fund scheme as
an expense, when an employee renders the
related service.
Company's contribution to state defined
contribution plans namely Employee State
Insurance is made in accordance with the
Statute, and are recognised as an expense
when employees have rendered services
entitling them to the contribution.
Defined benefits plans
The Company operates a defined benefit
gratuity plan in India, which requires
contributions to be made to a separately
administered fund. Gratuity is a defined
benefit obligation.
The cost of providing benefits under the
defined benefit plan is determined using the
projected unit credit method. In respect of
post-retirement benefit re-measurements
comprising of actuarial gains and losses, the
effect of the asset ceiling, excluding amounts
included in net interest on the net defined
benefit liability and the return on plan assets,
are recognised immediately in the balance
sheet with a corresponding debit or credit to
retained earnings through OCI in the period in
which they occur. Re-measurements are not
reclassified to statement of profit or loss in
subsequent periods.
Past service cost is recognised as an expense
when the plan amendment or curtailment
occurs or when any related restructuring
costs or termination benefits are recognised,
whichever is earlier.
Other long-term benefits
Accumulated leave, which is expected to
be utilized within the next twelve months, is
treated as short-term employee benefit. The
Company measures the expected cost of
such absences as the additional amount that
it expects to pay as a result of the unused
entitlement that has accumulated at the
balance sheet date. Actuarial gains/ losses on
the compensated absences are immediately
taken to the statement of profit and loss and
are not deferred.
k) Leases
Company as a lessee
The Company assesses if a contract is or
contains a lease at inception of the contract. A
contract is, or contains, a lease if the contract
conveys the right to control the use of an
identified asset for a period time in exchange
for consideration.
The Company recognizes a right-of-use asset
and a lease liability at the commencement
date, except for short-term leases of twelve
months or less and leases for which the
underlying asset is of low value, which are
expensed in the statement of operations on a
straight-line basis over the lease term.
The lease liability is initially measured at the
present value of the lease payments that
are not paid at the commencement date,
discounted using the interest rate implicit in
the lease, or, if not readily determinable, the
incremental borrowing rate specific to the
country, term and currency of the contract.
Lease payments can include fixed payments,
variable payments that depend on an index
or rate known at the commencement date,
as well as any extension or purchase options,
if the Company is reasonably certain to
exercise these options. The lease liability is
subsequently measured at amortized cost
using the effective interest method and
remeasured with a corresponding adjustment
to the related right-of-use asset when there is
a change in future lease payments in case of
renegotiation, changes of an index or rate or
in case of reassessments of options.
The right-of-use asset comprises, at inception,
the initial lease liability, any initial direct
costs and, when applicable, the obligations
to refurbish the asset, less any incentives
granted by the lessors. The right-of-use asset
is subsequently depreciated, on a straight¬
line basis, over the lease term, if the lease
transfers the ownership of the underlying
asset to the Company at the end of the lease
term or, if the cost of the right-of-use asset
reflects that the lessee will exercise a purchase
option, over the estimated useful life of the
underlying asset. other are also subject to
testing for impairment if there is an indicator
for impairment. Variable lease payments not
included in the measurement of the lease
liabilities are expensed to the statement of
operations in the period in which the events
or conditions which trigger those payments
occur. In the statement of financial position
right-of-use assets and lease liabilities are
classified respectively as part of property,
plant and equipment and short-term/long-
term debt.
l) Government grant and subsidies
Grants from the Government are recognised
at their fair value where there is a reasonable
assurance that the grant will be received and
the Company will comply with all attached
conditions. Government grants relating to the
purchase of property, plant and equipment are
included in noncurrent liabilities as deferred
income and are credited to statement of
profit and loss on a systematic basis over
the expected lives of the related assets to
match them with the costs for which they
are intended to compensate and presented
within other income.
Government grants that compensate
the Company for expenses incurred are
recognised in the Statement of Profit and Loss,
as income or deduction from the relevant
expense, on a systematic basis in the periods
in which the expense is recognised.
m) Cash and cash equivalents
Cash and cash equivalent comprise cash at
banks and on hand, cheques on hand and
short-term deposits with an original maturity
of three months or less, which are subject to
an insignificant risk of changes in value.
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