Notes to Financial Statements for year ended March 31, 2011 1. Significant Accounting Policies (a) Basis of brparation The financial statements of BASF India Limited ('the Company') have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has brpared these financial statements to comply in all material respects with the provisions of the Companies Act, 2013 ('the Act') and accounting standards notified under Section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements have been brpared on an accrual basis and under the historical cost convention. The financial statements are brsented in Millions of Indian Rupees. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. The accounting policies adopted in the brparation of the financial statements are consistent with those of the brvious year. (b) Use of estimates The brsentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made by management that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known/materialise. (c) Revenue Recognition Sales of products and Indent commission are recognised when risks and rewards of ownership of the products are passed on to the customers, which is generally on despatch of goods and there is no significant uncertainty regarding amount of the consideration that will be derived. Revenue from technical and service charges are recognised as and when the services are provided. Sales include excise duty but exclude trade discounts, rebates and sales tax. Interest income is recognised on a time proportion basis taking into account the amounts invested and the rate of interest. (d) Fixed assets and debrciation Fixed assets are recorded at cost net of cenvat credit wherever eligible and are stated net of accumulated debrciation and impairment losses, if any. Cost includes all expenses attributable to the construction, acquisition and installation (including eligible borrowing cost) till the date the asset is ready to use. Debrciation on fixed assets is calculated on a straight-line basis considering the following useful lives estimated by the management based on technical evaluation which are different than those indicated in Schedule II of the Act (Also refer note 9(A)) Buildings — 30 years Plant & Machinery — 5 to 20 years Computers — 4 years Vehicles — 4 years Furniture and Fixtures — 8 years Office Equipment — 5 years Assets individually costing Rs. 5,000 or below are fully debrciated in the year of purchase. Debrciation on additions/deletions is calculated on a monthly pro-rata basis. Accelerated debrciation is charged on certain assets based on periodic review of estimated useful life. Leasehold land and Leasehold Improvements are amortised over the period of lease or useful life whichever is lower. (e) Intangible assets and amortization Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over their estimated useful lives. Goodwill arising on acquisition is being amortized over a period of five years. Software is being amortized over a period of four years. (f) Impairment The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal/external factors. Where the carrying value exceeds the estimated recoverable amount, provision for impairment is made to adjust the carrying value to the recoverable amount. The recoverable amount is the greater of the assets estimated net realizable value and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value using an appropriate discounting rate. If at the Balance sheet date there is an indication that a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of debrciable historical cost. (g) Borrowing costs Borrowing costs that are attributable to the acquisition and construction of qualifying assets are capitalised. Other borrowing costs are recognised as an expense in the period in which they are incurred. (h) Inventories Inventories are valued at cost or estimated net realisable value, whichever is lower. The costs are determined on weighted average basis. Fixed production overheads are allocated on the basis of normal capacity of production facilities. Excise duty on goods manufactured by the Company and remaining in inventory is included as a part of valuation of finished goods. (i) Foreign Currency Transactions in foreign currencies are recorded at the exchange rates brvailing on the date of transaction. Monetary items in foreign currencies are stated at the closing exchange rate. Gains/losses on conversion/ translation are recognised in the Statement of Profit and Loss. All forward exchange contracts are backed by underlying transactions and the brmium or discount arising at inception of such a forward exchange contract is amortised as expense or income over the life of the contract and the exchange differences on such contracts are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change. With effect from 1st April 2012, the Company has availed of the option provided under paragraph 46A of AS 11: The Effects of Changes in Foreign Exchange Rates inserted vide Notification dated December 29, 2011. Consequently, the exchange differences arising on long-term foreign currency borrowings attributable to the acquisition of debrciable assets, which were until then being recognized in the Statement of Profit and Loss, are being adjusted in the cost of the debrciable asset with effect from 1 April, 2012, and are being debrciated over the balance life of such assets. In other cases, if any, the foreign exchange difference is accumulated in a Foreign Currency Monetary Item Translation Difference Account, and amortised over the balance period of such long-term monetary asset/liability. Pursuant to this, foreign exchange differences amounting to Rs. 537.9 million (Previous year Rs. 536.0 million) have been adjusted in the cost of the debrciable fixed assets/capital work-in-progress with corresponding increase in profits for the year. (Previous year decrease in loss for the year.) (j) Employee Benefits (A) Short Term Employee Benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and are recognized in the Statement of Profit and Loss as an expense at the undiscounted amount on an accrual basis. (B) Post Employment Employee Benefits Company's contributions to defined contribution plans such as Superannuation Fund, Family Pension Fund, Group Mediclaim Insurance Policy, Employee State Insurance and Labour Welfare Fund are recognized in the Statement of Profit and Loss on an accrual basis. Company's liability towards Gratuity, which is a defined benefit plan, is determined on the basis of valuations, as at balance sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the Statement of Profit and Loss. Eligible employees receive benefits from a provident fund which is a defined benefit/contribution plan. Both the employee and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee's salary. The Company contributes a part of the contributions to the BASF India Limited Provident Fund Trust ('the Trust'). The rate at which the annual interest is payable to the beneficiaries by the Trust is being determined by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate. The remaining portion is contributed to the Government administered pension fund in respect of which the Company has no further obligations. (C) Other Long Term Employee Benefits Company's liabilities towards Compensated Absences and Long Service Awards to employees are determined on the basis of valuations, as at balance sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the Statement of Profit and Loss. (D) Termination Benefits Compensation paid to employees under Voluntary Retirement Scheme/Severance payments are recognised as an expense when employees accept the scheme/payments. (k) Assets taken on lease Lease rentals payable as per agreements for assets taken on operating lease are charged as expenditure on straight line basis over the lease term. (l) Taxation Current tax is determined as the amount of tax payable in respect of taxable income for the year computed in accordance with relevant provisions of Income Tax Act, 1961. In accordance with the guidance note issued by the Institute of Chartered Accountants of India ('ICAI') on accounting for credit available in respect of Minimum Alternate Tax (MAT) under the Income tax Act, 1961, the Company recognises MAT credit as an asset only when and to the extent there is convincing evidence that the Company will be liable to pay normal income tax during the specified period. Deferred tax charge or credit and correspondingly deferred tax liability or asset is recognised using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. In the event of unabsorbed debrciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount i.e. reasonable/virtually certain (as the case may be) to be realised. (m) Provisions, Contingent Liabilities and Contingent Assets Provisions are recognised only when there is a brsent obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are neither recognised nor disclosed in the financial statements. (n) Research & Development Expenditure Research expenditure is recognised as an expense in the period in which it is incurred. (o) Earnings per share The basic earnings per share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period. Diluted earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive. 2. Notes to the financial statements for the year ended March 31, 2016 1. Commitments: Estimated amount of contracts remaining to be executed on capital account and not provided (net of advances) for Rs. 536.7 million (Previous Year Rs. 836.0 million). 2. Exceptional item: During the current year, the Company has sold its non-core assets (i.e. residential properties) and has recognized profit of Rs. 820.6 million (Previous Year Rs. 291.9 million) which is being disclosed as an exceptional item. During the current year, the Company has divested its textile chemical business pursuant to global divestment of textile business and has recognised profit of Rs. 900.5 million (Previous Year Rs. Nil) which is being disclosed as an exceptional item. 3. Transfer pricing regulations: The management is of the opinion that the Company's international and domestic transactions are at an arm's length so that aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation. As per our report of even date attached. For B S R & Co. LLP Chartered Accountants Firm's Registration No.: 101248W/W-100022 Vijay Mathur Partner Membership No.: 046476 For and on behalf of Board of Directors BASF India Limited (CIN No.: L33112MH1943FLC003972) Raman Ramachandran, Ph.D. Chairman & Managing Director DIN: 00200297 Narendranath J. Baliga Chief Financial Officer DIN: 07005484 Pradeep Chandan Company Secretary FCS No.: 2852 R. R. Nair DIN: 00202551 R. A. Shah DIN: 00009851 Pradip P. Shah DIN: 00066242 Arun Bewoor DIN: 00024276 Rajesh Naik DIN: 06935998 Directors Mumbai, 3 rd May, 2016 |