Note 1 Significant Accounting Policies a) Basis of Accounting These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been brpared to comply in all material aspects with the accounting standards notified under section 133 of Companies Act, 2013. All assets and liabilities have been classified as current or non-current as per the Companies operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent classification of assets and liabilities. b) Use of Estimates The brparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the brparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. c) Tangible assets • Tangible Assets are stated at their original cost (net of CENVAT where applicable) including freight, duties, customs and other incidental expenses relating to acquisition and installation. Interest and other finance charges paid on loans for the acquisition of tangible qualifying assets are apportioned to the cost of fixed assets till they are ready for use. • Expenditure incurred during the period of construction is carried as capital work-in-progress and on completion the costs are allocated to the respective fixed assets. • Foreign exchange fluctuations on payment / restatement of long term liabilities related to fixed assets are charged to Statement of Profit and Loss. • Assets held for sale or disposal are stated at the lower of their net book value and net realisable value. d) Intangible assets • Intangible assets comprising of computer software and technical know-how fee are initially measured at cost and amortised so as to reflect the pattern in which the asset's economic benefits are consumed. e) Debrciation / amortization : • Tangible Assets Debrciation on tangible assets is provided on straight line method over the useful life of asset brscribed in Part C of schedule II of the Companies Act, 2013 except in respect of certain assets listed below where useful life is estimated different from the brscribed rate based on internal assessment or independent technical evaluation carried out by external valuers. The management believes that the useful lives as given below rebrsent the period over which management expects to use these assets. f) investments Long term investments are stated at cost. Provision is made for any diminution other than temporary in the value of investments. Current investments are stated at cost or fair value, whichever is lower. g) inventories Inventories are stated at lower of cost or net realizable value. Cost of raw materials, stores and spares and packing materials are determined on weighted average basis. Cost of finished goods and work in progress comprises raw material, direct labour, other direct costs and related production overheads. h) Government Grants and subsidies Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Company will comply with the conditions attached to them, and (ii) the grant/subsidy will be received. When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, they are deducted from gross value of such assets. Government grants of the nature of promoters' contribution are credited to capital reserve and treated as a part of the shareholders' funds. i) Revenue Recognition • Domestic sales are recognised at the point of dispatch/delivery of goods to the customers as per terms of contract, which is, when substantial risks and rewards of ownership passes to the customers, and are stated net of trade discounts, rebates, sales tax, value added tax and excise duty. • Export sales are recognised based on the date of bill of lading except, sales to Nepal which are recognised when the goods cross the Indian territory, which is when substantial risks and rewards of ownership passes to the customers. • Revenue from services is recognised on rendering of services. • Interest and other income are recognised on accrual basis. • Income from export incentives such as brmium on sale of import licences, duty drawback etc. are recognised on accrual basis to the extent the ultimate realisation is reasonably certain. • Dividend income is recognised when right to receive dividend is established. j) Accounting for taxes on income • Provision for current tax is made, based on the tax payable under the Income Tax Act, 1961. Minimum Alternative Tax (MAT) credit, which is equal to the excess of MAT (calculated in accordance with provisions of Section 115JB of the Income tax Act, 1961) over normal income-tax is recognised as an asset by crediting the Statement of Profit and Loss only when and to the extent there is convincing evidence that the Company will be able to avail the said credit against normal tax payable during the period of ten succeeding assessment years. • Deferred tax on timing differences between taxable income and accounting income is accounted for, using the tax rates and the tax laws enacted or substantively enacted as on the balance sheet date. Deferred tax assets on unabsorbed tax losses and unabsorbed tax debrciation are recognised only when there is a virtual certainty of their realisation. Other deferred tax assets are recognised only when there is a reasonable certainty of their realisation. k) Foreign Currency Transactions • Initial recognition : - Transactions in foreign currencies are recognised at the brvailing exchange rates between the reporting currency and a foreign currency on the transaction dates. • Conversion : -Foreign currency monetary assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognised in the Statement of profit and loss. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined. • Exchange differences:- The Company accounts for exchange differences arising on translation/settlement of foreign currency monetary items as below: Realized gains and losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss. Foreign currency monetary assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognised in the Statement of Profit and Loss. • Forward exchange and other derivative contracts entered into to hedge foreign currency risk of an existing assets/ liabilities ? In case of forward contracts with underlying assets or liabilities, the difference between the forward rate and the exchange rate on the date of inception of a forward contract is recognised as income or expense and is amortised over the life of the contract. ? Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the period in which the exchange rate changes. ? Any profit or loss arising on cancellation or renewal of forward exchange contracts are recognised as income or expense for the period. ? Forward contracts entered into by the company to cover its exposure against firm commitment are marked to market as at the year end. The resultant loss is recognized in the Statement of Profit and Loss and gain, if any is ignored. ? Premium or discount on foreign currency forward and option contracts are amortized and recognized in the statement of profit and loss over the period of contract. l) Research and Development Equipment purchased and cost of construction of assets used for research and development is capitalised when commissioned and included in the fixed assets. Revenue expenditure on research and development is charged in the period in which it is incurred. m) Retirement Benefits • Provident Fund:- Contribution towards provident fund is made to the regulatory authorities. Such benefits are classified as defined contribution schemes as the Company does not carry any further obligations, apart from the contribution made on a monthly basis. • Superannuation Fund: - The Company has Defined Contribution plans for Superannuation Fund. Contributions payable to the Superannuation Fund maintained by LIC are charged to the Statement of Profit and Loss. The Company does not carry any further obligations, apart from the contribution made. • Gratuity: - The Company provides for gratuity, a defined Benefit plans (the "Gratuity Plan") covering eligible employees in accordance with the payment of Gratuity Act, 1972. The Gratuity plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the nature of employment. The Company's liability is actuarially determined (using the Projected Unit Credit Method) at the end of each year. Actuarial losses / gains are recognized in the statement of Profit and Loss account in the year in which they arise. The Gratuity Fund is maintained with LIC which is recognized by the income tax authorities. • Compensatory Absence:- The Company provides for the encashment/availment of leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/availment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation. n) Borrowing Cost Borrowing Costs attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of the asset till the asset is ready for use. Interest on other borrowings is charged to Statement of Profit and Loss. o) Leases Lease arrangement where the risks and rewards incidental to the ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rent under operating leases are recognised in the Statement of Profit and Loss as per terms of agreement. Assets acquired under finance leases are recognised at the lower of the fair value of the leased assets at inception and the brsent value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability. p) Warranty Provision The estimated liability for product warranties is recorded at the time of the sale of the products. The provision is based on management's estimate of the future cost of corrective action on product failure considering the claims received in the past. q) Provisions and Contingencies Provisions are recognised when there is a brsent obligation as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a brsent obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. r) Impairment The carrying value of assets/cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life to their brsent value based on an appropriate discount factor. s) Earnings Per Share Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company's earnings per share is the net profit for the period after deducting brference dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods brsented is adjusted for events, such as bonus shares, sub-division of shares etc. that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares. t) Cash and Cash Equivalents In the Cash Flow Statement, cash and cash equivalents includes cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less. Note 1.During the year the Company has incurred CSR expenses of H10.84 mil which rebrsented donations/contributions to Companies which are engaged in CSR activities eligible under section 135 of the Companies Act as specified in Schedule VII. Note 2.The Company has recomputed the debrciation based on the useful life of the assets as per accounting policy (e). This has resulted in additional charge of debrciation of H52.45 million for the year ended 31st March, 2015. Further, as per transitional provision of the Act, the Company has adjusted the written down value of H16.31 million (net of Deferred tax of H8.49 million)in the opening balance of surplus in Profit and Loss in respect of assets whose residual useful life was NIL as of 1st April 2014. Note 3.Previous year figures have been re-grouped/reclassified wherever necessary to conform to current years classification. In terms of our report attached. For B. K. Khare & Co. Chartered Accountants Firm Registration Number: 105102W NARESH KuMAR KATARIA Partner Membership No.:- 037825 For and on behalf of the Board of Directors ANJALI ANAND Chairperson RAJENDRAN A. V.P. Finance & CFO MANOJ KOLHATKAR Managing Director PRANVESH TRIPATHI Company Secretary Place : Pune Date : May 20, 2015 |