The standalone financial statements are presented in Indian
Rupees, which is the Company’s functional and presentation
currency and all amounts are rounded to the nearest lakhs.
3.2 Property, Plant and Equipment
a) Property, Plant and Equipment are carried at cost
less accumulated depreciation and accumulated
impairment losses, if any. Cost includes expenditure that
is directly attributable to the acquisition of the items.
b) Assets are depreciated to the residual values on a
straight-line basis over the estimated useful lives based
on technical estimates. Assets residual values and
useful lives are reviewed at each financial year end
considering the physical condition of the assets and
benchmarking analysis or whenever there are indicators
for review of residual value and useful life. Freehold land
is not depreciated. Estimated useful lives of the assets
are as follows:
3 Significant Accounting Policies
3.1 Basis of Measurement
The financial statements have been prepared on accrual basis
and under the historical cost convention except following
which have been measured at fair value:
• Certain financial assets and liabilities carried at fair
value or amortised cost,
• defined benefit plans - plan assets measured at fair value,
The 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 the Statement of Profit and Loss on the date of
disposal or retirement.
3.3 Intangible Assets
Identifiable intangible assets are recognised:
a) when the Company controls the asset,
b) it is probable that future economic benefits attributed
to the asset will flow to the Company
c) the cost of the asset can be reliably measured.
Computer softwares are capitalised at the amounts paid to
acquire the respective license for use and are amortised over
the period of license, generally not exceeding five years on
straight line basis. The assets’ useful lives are reviewed at
each financial year end.
3.4 Impairment of non-current assets
An asset is considered as impaired when at the date of
Balance Sheet there are indications of impairment and
the carrying amount of the asset, or where applicable the
cash generating unit to which the asset belongs exceeds its
recoverable amount (i.e. the higher of the net asset selling
price and value in use).The carrying amount is reduced to
the recoverable amount and the reduction is recognized
as an impairment loss in the Statement of Profit and Loss.
The impairment loss recognized in the prior accounting
period is reversed if there has been a change in the estimate
of recoverable amount. Post impairment, depreciation is
provided on the revised carrying value of the impaired asset
over its remaining useful life.
3.5 Cash and cash equivalents
Cash and cash equivalents includes Cash on hand and at
bank and other short-term highly liquid investments with
original maturities of three months or less that are readily
convertible to a known amount of cash and are subject to
an insignificant risk of changes in value and are held for the
purpose of meeting short-term cash commitments.
For the purpose of the Statement of Cash Flows, cash and
cash equivalents consists of cash and short term deposits,
as defined above, net of outstanding bank overdraft as
they are considered an integral part of the Company’s
cash management.
3.6 Inventories
Inventories are valued at the lower of cost and net realizable
value except scrap, which is valued at net realizable
value. Net realisable value is the estimated selling price
in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the
sale. The cost of inventories comprises of cost of purchase,
cost of conversion and other costs incurred in bringing the
inventories to their respective present location and condition.
Cost is computed on the weighted average basis.
3.7 Employee benefits
a) Short term employee benefits are recognized as an
expense in the Statement of Profit and Loss of the year
in which the related services are rendered.
b) Leave encashment being a short term benefit is
accounted for using the Projected Unit Credit Method,
on the basis of actuarial valuations carried out by
third party actuaries at each Balance Sheet date.
Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are
charged or credited to profit and loss in the period in
which they arise.
c) Contribution to Provident Fund, a defined contribution
plan, is made in accordance with the statute, and is
recognised as an expense in the year in which employees
have rendered services.
d) The cost of providing gratuity, a defined benefit plans,
is determined using the Projected Unit Credit Method,
on the basis of actuarial valuations carried out by
third party actuaries at each Balance Sheet date.
Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are
charged or credited to Other Comprehensive Income in
the period in which they arise. Other costs are accounted
in statement of profit and loss.
e) Employee Stock Option plan (ESOP)
Fair Value of options granted under this option plan
is recognised as an employee benefit expense with
corresponding increase in equity under the head
Employee Stock Option Reserve Account in accordance
with recognition and measurement principles as
prescribed in Ind AS 102 Share Based Payments.
Total expense is recognised over the vesting period,
which is period over which all of specified vesting
conditions are to be satisfied. At end of the reporting
period, the company revises its estimates of the
number of options that are expected to vest based
on the non-market vesting and service conditions.
It recognises impact of revision to original estimates, if
any, in profit and loss, with corresponding adjustment
to equity. The dilutive effect, if any of the Outstanding
options is reflected as additional share dilution in the
computation of diluted earnings per share .
3.8 Foreign currency reinstatement and translation
(a) Functional and presentation currency
The financial statements have been presented in Indian
Rupees ('rounded to lacs), which is the Company’s
functional and presentation currency.
(b) Transactions and balances
Transactions in foreign currencies are initially recorded
by the Company at rates prevailing at the date of
the transaction. Subsequently monetary items are
translated at closing exchange rates of balance sheet
date and the resulting exchange difference recognised
in profit or loss. Differences arising on settlement of
monetary items are also recognised in profit or loss.
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 transaction.
Non-monetary items carried at fair value that are
denominated in foreign currencies are translated at
the exchange rates prevailing at the date when the fair
value was determined. Exchange component of the gain
or loss arising on fair valuation of non-monetary items is
recognised in line with the gain or loss of the item that
gave rise to such exchange difference.
3.9 Financial instruments - initial recognition, subsequent
measurement and impairment
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial Assets
Financial Assets are measured at amortised cost or fair value
through Other Comprehensive Income or fair value through
Profit or Loss, depending on its business model for managing
those financial assets and liabilities and the assets and
liabilities contractual cash flow characteristics.
Subsequent measurements of financial assets are dependent
on initial categorisation. For impairment purposes significant
financial assets are tested on an individual basis, other
financial assets are assessed collectively in groups that share
similar credit risk characteristics.
Trade receivables
A receivable is classified as a 'trade receivable’ if it is in respect
to the amount due from customers on account of goods
sold or services rendered in the ordinary course of business.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. For some
trade receivables the Company may obtain security in the
form of guarantee, security deposit or letter of credit which
can be called upon if the counterparty is in default under the
terms of the agreement.
Impairment is made on the expected credit losses, which are
the present value of the cash shortfalls over the expected
life of financial assets. The estimated impairment losses are
recognised in a separate provision for impairment and the
impairment losses are recognised in the Statement of Profit
and Loss within other expenses.
Subsequent changes in assessment of impairment are
recognised in provision for impairment and the change in
impairment losses are recognised in the Statement of Profit
and Loss within other expenses.
For foreign currency trade receivable, impairment is assessed
after reinstatement at closing rates.
Individual receivables which are known to be uncollectible
are written off by reducing the carrying amount of trade
receivable and the amount of the loss is recognised in the
Statement of Profit and Loss within other expenses.
Subsequent recoveries of amounts previously written off are
credited to Other Income
Investment in equity shares
Investment in equity securities are initially measured at fair
value. Any subsequent fair value gain or loss is recognized
through Profit or Loss if such investments in equity securities
are held for trading purposes. The fair value gains or
losses of all other equity securities are recognized in Other
Comprehensive Income.
Investment in Subsidiaries
A subsidiary is an entity controlled by the Company.
Control exists when the Company has power over the
entity, is exposed, or has rights to variable returns from
its involvement with the entity and has the ability to affect
those returns by using its power over the entity. Power is
demonstrated through existing rights that give the ability to
direct relevant activities, those which significantly affect the
entity’s returns. Investments in subsidiaries are carried at cost
of acquisition less impairment loss. The cost comprises price
paid to acquire investment and directly attributable cost.
Derivative financial instruments
The Company uses derivative financial instruments, such
as forward currency contracts and interest rate swaps to
hedge its foreign currency risks and interest rate risks.
Derivative financial instruments are initially recognised at
fair value on the date a derivative contract is entered into and
are subsequently re-measured at their fair value at the end
of each period. The method of recognizing the resulting gain
or loss depends on whether the derivative is designated as a
hedging instrument, and if so, on the nature of the item being
hedged. Any gains or losses arising from changes in the fair
value of derivatives are taken directly to profit or loss.
Financial Liabilities
At initial recognition, all financial liabilities other than fair
valued through profit and loss are recognised initially at fair
value less transaction costs that are attributable to the issue
of financial liability. Transaction costs of financial liability
carried at fair value through profit or loss is expensed in profit
or loss. However, borrowings, which is likely to be assigned
or negotiated are initially measured at fair value through
profit and loss account. Other borrowings are measured
at amortised cost using the effective interest rate method.
Amortised cost is calculated by taking into account any
discount or premium on acquisition and fee or costs that are
an integral part of the Effective rate of interest (EIR). The EIR
amortisation is included in finance costs in the Statement of
Profit and Loss.
Trade and other payables
A payable is classified as ’trade payable’ if it is in respect of
the amount due on account of goods purchased or services
received in the normal course of business. These amounts
represent liabilities for goods and services provided to
the Company prior to the end of financial year which are
unpaid. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after
the reporting period. They are recognised initially at their fair
value and subsequently measured at amortised cost using
the effective interest method.
3.10 Borrowing costs
Borrowing costs specifically relating to the acquisition or
construction of qualifying assets that necessarily takes a
substantial period of time to get ready for its intended use
are capitalized (net of income on temporarily deployment
of funds) as part of the cost of such assets. Borrowing costs
consist of interest and other costs that the Company incurs in
connection with the borrowing of funds.
For general borrowing used for the purpose of obtaining a
qualifying asset, the amount of borrowing costs eligible for
capitalization is determined by applying a capitalization rate
to the expenditures on that asset. The capitalization rate is
the weighted average of the borrowing costs applicable to
the borrowings of the Company that are outstanding during
the period, other than borrowings made specifically for
the purpose of obtaining a qualifying asset. The amount of
borrowing costs capitalized during a period does not exceed
the amount of borrowing cost incurred during that period.
All other borrowing costs are expensed in the period in
which they occur.
3.11 Taxation
Income tax expense represents the sum of current and
deferred tax. Tax is recognised in the Statement of Profit and
Loss, except to the extent that it relates to items recognised
directly in equity or other comprehensive income, in such
cases the tax is also recognised directly in equity or in other
comprehensive income. Any subsequent change in direct tax
on items initially recognised in equity or other comprehensive
income is also recognised in equity or other comprehensive
income, such change could be for change in tax rate.
Current tax provision is computed for Income calculated after
considering allowances and exemptions under the provisions
of the applicable Income Tax Laws. Current tax assets and
current tax liabilities are off set, and presented as net.
Deferred tax is recognised on differences between the
carrying amounts of assets and liabilities in the Balance sheet
and the corresponding tax bases used in the computation
of taxable profit and are accounted for using the liability
method. Deferred tax liabilities are generally recognised for
all taxable temporary differences, and deferred tax assets are
generally recognised for all deductible temporary differences,
carry forward tax losses and allowances to the extent that it is
probable that future taxable profits will be available against
which those deductible temporary differences, carry forward
tax losses and allowances can be utilised. Deferred tax assets
and liabilities are measured at the applicable tax rates.
Deferred tax assets are only recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary differences can be utilised.
Deferred tax assets and deferred tax liabilities are off set, and
presented as net.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
against which the temporary differences can be utilised.
3.12 Revenue recognition and Other income
Sale of Goods
Revenue from contracts with customers is recognised
when control of the goods or services are transferred to the
customer. Generally, control is transferred upon shipment of
goods to the customer or when the goods is made available
to the customer, provided transfer of title to the customer
occurs and the Company has not retained any significant
risks of ownership or future obligations with respect to the
goods shipped. Revenue is recognized at the fair value of
consideration received or receivable and represents the
net invoice value of goods supplied to third parties after
deducting discounts, volume rebates and amounts collected
on behalf of third parties (for example taxes and duties
collected on behalf of the government) are recognized either
on delivery or on transfer of significant risk and rewards of
ownership of the goods as per IND AS 115.
Consideration is generally due upon satisfaction of
performance obligations and a receivable is recognised when
it becomes unconditional.
The Company is generally the principal as it typically controls
the goods or services before transferring them to the
customer. Revenue is inclusive of Material returned/ rejected
is accounted for in the year of return/ rejection.
The Company does not adjust short-term advances received
from the customer for the effects of significant financing
component if it is expected at the contract inception that the
promised good or service will be transferred to the customer
within a period of one year.
Revenue from rendering of services is recognised over time
by measuring the progress towards complete satisfaction of
performance obligations at the reporting period.
Interest
Interest income is recognised on a time proportion basis
taking into account the amount outstanding and the
rate applicable.
3.13 Earnings per share
Basic earnings per share are calculated by dividing the net
profit or loss for the year attributable to equity shareholders
(after deducting preference dividends and attributable
taxes) by the weighted average number of equity shares
outstanding during the year. Partly paid equity shares are
treated as a fraction of an equity share to the extent that they
were entitled to participate in dividends relative to a fully
paid equity share during the reporting year.
For the purpose of calculating diluted earnings per share,
the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares
outstanding during the year are adjusted for the effects of all
dilutive potential equity shares, if any.
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