1) MATERIAL ACCOUNTING POLICIES
A) General Information
Siyaram Silk Mills Ltd (“the Company”) is a public
limited company domiciled in India. The address of
registered office is H-3/2, MIDC A Road, Tarapur, Boisar,
Palghar -401506, Maharashtra.
The Company was established in 1978 and is engaged
in manufacturing, branding and marketing of Fabrics,
Readymade Garments and Indigo Dyed yarn.
B) Basis of preparation
(i) Compliance with Ind AS
The standalone financial statements have been
prepared in accordance with the Indian Accounting
Standards (hereinafter referred to as the 'Ind AS')
as notified by Ministry of Corporate Affairs pursuant
to Section 133 of the Companies Act, 2013 (Act')
read with of the Companies (Indian Accounting
Standards) Rules, 2015 as amended and other relevant
provisions of the Act.
(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 and non-current classification
All 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) Rounding of amounts
All amounts disclosed in the financial statements
and notes have been rounded off to the nearest
Lakhs as per the requirement of Schedule III, unless
otherwise stated.
C) Significant accounting judgments, estimates
and assumptions:
The preparation of the Company's financial statements
requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment
This note provides an overview of the areas that involved
a higher degree of judgment or complexity, and of items
which are more likely to be materially adjusted due to
estimates and assumptions turning out to be different than
those originally assessed. Detailed information about each of
these estimates and judgments is included in relevant notes
together with information about the basis of calculation for
each affected line item in the financial statements.
The areas involving critical estimates or judgments are:
1. Estimation of defined benefit obligation -
Refer Note 44
2. Useful lives of fixed assets - Refer Note 2
3. Impairment of trade receivables - Refer Note 12
Estimates and judgments are continually evaluated.
They are based on historical experience and other factors,
including expectations of future events that may have a
financial impact on the Company and that are believed to
be reasonable under the circumstances.
D) Property, plant and equipment
Freehold land is carried at cost. All other items of property,
plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses, if
any. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Capital Work in Progress is stated at Cost net of accumulated
impairment loss.
Subsequent costs are included in the asset's carrying
amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Company and the
cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate
asset is derecognized when replaced. All other repairs and
maintenance are charged to the Statement of Profit and
Loss during the reporting period in which they are incurred.
Gain or losses arising from disposal of property, plant and
equipment are measured as the difference between the net
disposal proceeds and the carrying amount of the assets
and are recognized in the Statement of Profit and Loss
where the asset is disposed.
Depreciation:
a) Depreciation is provided as per the straight line
method based on useful life of the assets as prescribed
in Schedule II to the Companies Act, 2013 except in
case of Leasehold Land as stated in b) below.
b) Premium on leasehold land is amortized over the
residual period of the lease and proportionate amount
of premium written off is being charged to Statement
of Profit & Loss.
Useful life considered for calculation of depreciation
for various assets class are as follows :
Asset Impairment:
The Company reviews the carrying values of tangible assets
for any possible impairment at each balance sheet date.
Impairment loss, if any, is recognized in the year in which
impairment takes place.
E) Intangible Assets:
Intangible assets purchased are measured at cost as of
the date of acquisition less accumulated amortisation and
accumulated impairment, if any.
Amortisation is recognised on a straight-line basis over
their estimated useful lives. The estimated useful life and
amortisation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate
being accounted for on a prospective basis. Estimated useful
life of intangible assets are as follows:
a) Computer Software and Trade Mark are amortised
using straight line method over a period of three years.
b) Goodwill is amortized over a period of five years.
Gains or losses arising from derecognition of an
intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of
the asset and are recognised in the Statement of Profit
and Loss when the asset is derecognised.
F) Investments Properties
Property that is held for long-term rental yields or for capital
appreciation or both, and that is not occupied by the Company,
is classified as investment property. Investment property
is measured at its cost, including related transaction costs
and where applicable borrowing costs less accumulated
depreciation and accumulated impairment, if any.
Depreciation on building is provided over it's useful life
using the straight line method.
Useful life considered for calculation of depreciation for
assets class are as follows-
Non-Factory Building 60 years
G) Financial Instruments
i) Financial Assets
Initial Recognition and Measurement
All financial assets are recognised initially at fair value,
plus in the case of financial assets not recognized at fair
value through profit and loss (FVTPL), transaction costs
that are attributable to the acquisition of the financial
asset. However, trade receivables that do not contain
a significant financing component are measured at
transaction price.
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in four categories:
• Debt instruments at Amortized Cost.
• Debt instruments at Fair Value Through Other
Comprehensive Income (FVTOCI) or Fair Value
Through Profit or Loss (FVTPL).
• Equity Instruments measured at Fair Value
Through Other Comprehensive Income (FVTOCI)
or Fair Value Through Profit or Loss (FVTPL).
• Equity instruments measured at Cost.
Debt Instruments at Amortized Cost
A debt instrument' is measured at the amortized cost
if both the following conditions are met:
(a) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and
(b) Contractual terms of the asset give rise on
specified date to cash flows that are solely
payments of principal and interest (SPPI) on the
outstanding principal amount.
After initial measurement, financial assets are
subsequently measured at amortized cost using the
effective Interest rate (EIR) method. Amortized cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortization is included
in finance income in the Statement of Profit and Loss.
The losses arising from impairment are recognized in
the Statement of Profit and Loss.
Debt Instrument at FVTPL
FVTPL is a residual category for debt instruments.
Any debt instrument, which does not meet the criteria
for categorization as at amortized cost or as FVTOCI,
is classified as at FVTPL.
Debt instruments included within the FVTPL category
are measured at fair value with all changes recognized
in the Statement of Profit and Loss.
Equity Instruments measured at FVTOCI or FVTPL
All equity investments in scope of Ind-AS 109 are
measured at Fair Value. Equity instruments which are
held for trading are classified as at FVTPL. For all other
equity instruments, the Company decides to classify
the same either as at FVTOCI or FVTPL. The Company
makes such election on an instrument-by-instrument
basis. The classification is made on initial recognition
and is irrevocable.
If the Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in
the Other Comprehensive Income (OCI). There is no
recycling of the amounts from OCI to Profit & Loss,
even on sale of investment. However, the Company
may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category
are measured at fair value with all changes recognized
in the Profit and Loss Statement.
Equity Instruments measured at Cost
Equity instruments / Investments in subsidiaries /
Joint Venture/ Associates are accounted at cost
less accumulated impairment loss in accordance
with Ind-AS 27.
Derecognition
The Company derecognizes a financial asset only
when the contractual rights to the cash flows from
the asset expires or it transfers the financial asset and
substantially all the risks and rewards of ownership of
the asset. Continuing involvement that takes the form
of a guarantee over the transferred asset is measured
at the lower of the original carrying amount of the
asset and the maximum amount of consideration that
the Company could be required to repay.
Impairment of Financial Assets
The Company assesses at each reporting date whether
there is any objective evidence that a financial assets
or a group of Financial assets is impaired. A financial
asset or a group of financial assets is deemed to be
impaired if, there is objective evidence of impairment
as a result of one or more events that has occurred
after the initial recognition of the asset (an incurred
'loss event') and that loss event has an impact on the
estimated future cash flows of the financial asset or the
group of financial assets that can be reliably estimated.
ii) Financial Liabilities
Financial liabilities are classified as either Financial
Liabilities at "fair value through profit or loss” or “Other
Financial Liabilities”.
(a) Financial liabilities are classified as “Financial
Liabilities at fair value through profit or loss if they
are held for trading or if they are designated as
financial liabilities at fair value through profit or
loss. These are measured initially at fair value with
subsequent changes recognized in Profit or Loss.
Fair value is determined as per IND-AS 113 'Fair
Value Measurement'.
(b) Other financial liabilities, including loans and
borrowing, are Initially measured at fair value,
net of directly attributable transaction costs.
Subsequent to initial recognition, these are
measured at amortized cost using the EIR method.
iii) Derecognition of Financial Liabilities
A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced
by another from the same lender on substantially
different terms, or the terms of an existing liability
are substantially modified, such an exchange or
modification is treated as the derecognition of the
original liability and the recognition of a new liability.
The difference in the respective carrying amounts is
recognized in the Statement of Profit and Loss.
iv) Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the
net amount is reported in the Balance Sheet if there is a
currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis,
to realize the assets and settle the liabilities simultaneously.
H) Valuation of Inventories
Raw materials and stores, work-in-progress, traded and
finished goods are stated at the lower of cost or net
realizable value. Cost of raw materials and traded goods
comprise of cost of purchase and other costs incurred in
bringing the inventories to their present location and
condition. Cost of work-in-progress and finished goods
comprises direct materials, direct labour and an appropriate
proportion of variable and fixed overhead expenditure,
the later being allocated on the basis of normal operating
capacity. Cost of inventories also includes all other cost
incurred in bringing the inventories to their present location
and condition. Costs are assigned to individual items of
inventory on moving weighted average basis. Costs of
purchased inventory are determined after deducting rebates
and discounts. Due allowance is estimated and made for
defective and obsolete items, wherever necessary, based on
the past experience of the Company.
I) Revenue recognition
The Company derives revenue primarily from sale of
manufactured goods, traded goods and related services.
Revenue towards satisfaction of a performance obligation is
measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation.
The transaction price of goods sold and services rendered
is net of variable consideration on account of various
discounts and schemes offered by the company as part
of the contract.
Sale of goods
Revenue from sale of goods is recognized when control of
the products being sold is transferred to our customers and
when there are no longer any unfulfilled obligations.
The performance obligations in our contract are fulfilled
at the time of dispatch, delivery or upon formal customer
acceptance depending on customer terms.
The Company operates a loyalty programme for
the customers and franchisees for the sale of goods.
The customers accumulate points for purchases made which
entitles them to avail discount on future purchases. A contract
liability for the award points is recognized at the time of the
sale. Revenue is recognised when the points are redeemed
or on expiry liabilities gets reduced. The expenditure of
loyalty programme is netted-off to revenue.
Sales Return-
The Company recognizes provision for sales return, based
on the historical results, measured on net basis of the
margin of the sale.
Revenue from services
Revenue from services is recognized in the accounting
period in which the services are rendered.
Other operating revenue - Export incentives
Export Incentives under various schemes are accounted in
the year of export.
Dividend : Revenue is recognized when the Company's
right to receive payment is established, which is generally
when shareholders approve the dividend.
J) Government grants and subsidies:
i Grants from the Government are recognized at their
fair value where there is reasonable assurance that the
grant will be received and the Company will comply
with all attached conditions.
ii. When the grant or subsidy relates to an expense item,
it is recognized as income over the periods necessary
to match them on a systematic basis to the costs,
which it is intended to compensate.
iii. Government grants relating to the purchase of property,
plant and equipment are included in non-current
liabilities as deferred income and are credited to
Statement of Profit and Loss on a straight-line basis
over the expected lives of related assets and presented
within other income.
K) Foreign Exchange Transaction:
i. Functional and presentation currency
The Company's financial statements are presented
in INR, which is also the Company's functional and
presentation currency.
ii Transactions and balances
Transactions in foreign currencies are initially recorded
in the functional currency, using the spot exchange
rates at the date of the transaction first qualifies
for recognition. Monetary assets and liabilities
denominated in foreign currencies are translated at
the functional currency spot rates of exchange at the
reporting date. Exchange differences that arise on
settlement of monetary items or on reporting at each
balance sheet date of the Company's monetary items at
the closing rate are recognized as income or expenses
in the period which they arise. 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 fair 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 recognized in OCI or Profit or Loss are also
recognized in OCI or Profit or Loss, respectively).
L) Borrowing Costs:
Borrowing costs directly attributable to the acquisition,
construction of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale
are capitalized 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.
M) Segment Reporting :
Operating segments are reported in the manner consistent
with the internal reporting provided to the Chief Operating
Decision Maker (CODM) of the Company. The Board of
Directors of the Company has been identified as the Chief
Operating Decision Maker (CODM) as defined under Ind-AS
108. The CODM of the Company has identified 'TEXTILE' its
only primary reportable segment.
N) Tax Expenses:
The tax expense for the period comprises current and
deferred tax. Tax is recognized in Statement of Profit and Loss,
except to the extent that it relates to items recognized in the
comprehensive income or in equity, in which case, the tax is
also recognized in other comprehensive income or equity.
- Current tax
Current tax assets and liabilities 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 date.
- Deferred tax
Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax
bases used in the computation of taxable profit.
Deferred tax liabilities 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 realized, based on tax rates
(and tax laws) that have been enacted or substantively
enacted by the end of the reporting period. The carrying
amount of Deferred tax liabilities and assets are reviewed at
the end of each reporting period.
O) Leases:
The Company assesses whether a contract contains a
lease, at inception of a 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 of time in exchange from
consideration. To assess whether a contract conveys the
right to control the use of an identified assets, the Company
assesses whether: (i) the contract involves the use of an
identified asset (ii) the Company has substantially all of the
economic benefits from use of the asset through the period
of the lease and (iii) the Company has the right to direct the
use of the assets.
Company as a lessee
As a lessee, the Company recognizes a right-of-use-assets
and a lease liability at the lease commencement date.
The right-of-use-assets is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement
date, plus and initial direct costs incurred and a estimate of
costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located,
less and lease incentives received. The right-of-use-assets
is subsequently depreciated using the straight line method
from the commencement date to the earlier of the end of
the useful life of the right-of-use-assets or the end of the
lease term. The estimated useful lives of right-of-use-assets
are determined on the same basis as those of property and
equipment. In addition, the right-of-use-asset is periodically
reduced by impairment losses, if any, and adjusted for
certain remeasurement of the lease liability.
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 that rate cannot be readily determined, the Company's
incremental borrowing rate. Generally, the Company uses its
incremental borrowing rate as the discount rate.
Lease payment included in the measurement of the lease
liability comprise the fixed payment, including in-substance
fixed payment. Lease liability is measured at amortised cost
using the effective interest method.
The Company has used number of practical expedients
when applying IND-AS 116:- short -term leases, leases of
low-value assets and single discount rate.
The Company has elected not to recognize right-of-
use-assets and lease liability for short term leases that have
a lease term of 12 months or less and leases of low-value
assets. The Company recognizes the lease payment
associated with these leases as an expense on a straight line
basis over the lease term. The Company applied a single
discount rate to a portfolio of leases of similar end date.
The company's leases mainly comprise land and building for
Shops, warehouse facilities.
As a Lessor
Leases for which the Company is a lessor classified as finance
or operating lease.
Lease Income from operating leases where the Company is
a lessor is recognized in income on a straight-line basis over
the lease term unless the receipt are structured to increase
in line with expected general inflation to compensate for
the expected inflationary cost increases. The respective
leased assets are included in the balance sheet based
on their nature.
P) Exceptional Items
When items of income and expense within profit or loss from
ordinary activities are of such size, nature or incidence that
their disclosure is relevant to explain the performance of the
Company for the period, the nature and amount of such
items is disclosed separately under the head exceptional item.
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