NOTES FORMING PART OF FINANCIAL STATEMENTS 1) SIGNIFICANT ACCOUNTING POLICIES: a) BASIS OF ACCOUNTING The financial statements of the company have been brpared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the accounting standards specified under section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act")/ Companies Act,1956 ("the 1956 Act") as applicable. The financial statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in brparation of financial statements are consistent with those followed in the brvious year. The brparation of financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the year. The Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialize. b) REVENUE RECOGNITION Sales are recognised when goods are supplied to customers and are recorded net of sales tax/ value added tax, trade Discounts, Rebate and Returns but includes excise duty. Dividend income on investments is accounted when the right to receive the dividend is established. Interest Income is accounted on accrual basis. Revenue in respect of Insurance/other claims, interest etc. is recognised only when it is reasonably certain that the ultimate collection will be made. c) EXPORT BENEFITS Export benefits under various schemes of Government of India are accounted on accrual basis on the basis of exports made and the value of imports made/ to be made there against. d) FIXED ASSETS Fixed Assets are recorded at Cost of acquisition. They are stated at historical costs including incidental expenses. e) DEbrCIATION / AMORTISATION i) On Tangible Assets: Debrciation has been calculated on straight-line basis in accordance with the provisions of the Companies Act, 2013. Pursuant to the Companies Act, 2013 ("the Act") becoming effective from 1st April, 2014 and read with the Notification No GSR .627 (E) dated 29th August, 2014 issued by the Ministry of Corporate Affairs, the company has reassessed the useful lives of Fixed Assets other than vehicles based on a technical evaluation carried out by an external agency. Considering the nature of the Company's business, past experience of usage of assets and external technical evaluation, Management believes that the revised useful lives of the assets reflect the periods over which the assets are expected to be used. The estimated useful lives that are different from those brscribed under Schedule II are mentioned below :- Description Useful Life Plant and Equipments 21 years Furniture and Fixtures 16 years Office Equipments 21 years Computer 6 years Electrical Installation 21 years Vehicles are debrciated over a period of 8 years as per the useful life defined in Schedule II to the Companies Act, 2013. Assets costing Rs. 5000/- or less individually are fully debrciated over a period of one year. Cost of Leasehold Land is amortised over the period of lease. Cost of Leasehold improvements is amortised over the primary period of lease. However, in cases where the company as a lessee has the right of renewal of lease and it is intended to renew for further periods, then the cost of such leasehold improvements is amortised over such extended period. ii) On Intangible Assets: a) Goodwill At the time of acquisition of the business, the difference between the cost of investments and the fair value of assets as at the date of acquisition is accounted for as goodwill. Goodwill is amortised over a period of 10 years. Goodwill on amalgamation in the nature of merger is amortised over a period of 5 years. b) Computer software is amortised on straight line basis over a period of 6 years. f) IMPAIRMENT OF ASSETS An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the brsent value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impaired loss recognised in prior accounting periods is reversed if there is a change in the estimate of the recoverable value. g) INVESTMENTS Investments are classified into non-current investments and current investments. Investments, which are intended to be held for more than one year, are classified as non-current investments and investments, which are intended to be held for less than one year, are classified as current investments. Non-current investments are accounted at cost and a provision for diminution is made to recognize a decline other than temporary in the value of long term investments. Current investments are valued at cost or fair value whichever is lower. Investments include investments in shares of a company registered outside India. They are stated at cost by converting at the rate of exchange brvalent at the time of acquisition thereof. Any profit or loss on sale of investments is determined on the basis of the average cost of acquisition. h) TRANSACTIONS IN FOREIGN CURRENCY Transactions in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction. Monetary items denominated in foreign currencies are restated at the exchange rate brvailing on the balance sheet date. Exchange differences arising on settlement of the transaction and on account of restatement of monetary items are dealt with in the Statement of Profit and Loss. Forward exchange contracts entered into to hedge the foreign currency risk and outstanding as on balance sheet date are translated at year end exchange rates. The brmium or discount arising at the inception of such forward exchange contracts are amortised as income or expense over the life of the contract. Gains / Losses on settlement of transactions arising on cancellation / renewal of forward exchange contracts are recognized as income or expense. i) HEDGE ACCOUNTING The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. Further, non-derivative financial liabilities in the form of Pre-shipment Export Credit in Foreign Currency (PCFC) borrowings have also been designated as hedging instruments to hedge the highly probable forecast sales in foreign currency. The Company designates these hedging instruments as cash flow hedges applying the recognition and measurement principles set out in the Accounting Standard 30 "Financial Instruments: Recognition and Measurement" (AS-30). The use of hedging instruments is governed by the Company's policies approved by the board of directors, which provide written principles on the use of such financial derivatives consistent with the Company's risk management strategy. Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognised directly in shareholders' funds and the ineffective portion is recognised immediately in the Statement of Profit and Loss. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the Statement of Profit and Loss as they arise. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in shareholders' funds is transferred to the Statement of Profit and Loss for the period. j) INVENTORIES a) Raw materials are valued at cost or net realisable value whichever is lower. The cost includes purchase price as well as incidental expenses. The cost formulae used are First In First Out, Weighted average cost or Specific identification method, as applicable and found appropriate. b) Work -in - progress is valued at cost calculated on the basis of absorption costing or net realisable value whichever is lower. c) Finished goods are valued at cost or net realisable value whichever is lower. Cost is determined on the basis of absorption costing. d) Packing materials and accessories are valued at First in First out cost or net realisable value whichever is lower. e) Stores and spare parts are valued at First in First out cost or net realisable value whichever is lower. k) EMPLOYEE BENEFITS a) The contribution to Provident Fund as required under the statute is made to the Government Provident Fund and is debited to Statement of Profit and Loss. b) Gratuity liability is a defined benefit obligation. The Company has taken Group gratuity- cum-life assurance (cash accumulation) Scheme offered by Life Insurance Corporation of India (LIC). Annual contributions are made on the basis of intimation received from LIC. The company accounts for liability for future gratuity benefits based on actuarial valuation carried out as at the end of each financial year. Actuarial gains and losses are recognized in full in Statement of Profit and Loss for the period in which they occur. c) Benefits in the form of vesting and non-vesting compensated absences are accounted as per actuarial valuation carried out as at the year end. l) EMPLOYEE SHARE BASED PAYMENTS The Company has formulated Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Schemes provide for grant of options to employees of the company to acquire equity shares of the company that vest in a graded manner and that are to be exercised within a specified period. In accordance with the SEBI Guidelines ; the excess, if any, of the closing market price on the day prior to the grant of the options under ESOS over the exercise price is amortised on a straight- line basis over the vesting period. m) TAXES ON INCOME Income Taxes are accounted for in accordance with Accounting Standard (AS 22) - Accounting for Taxes on Income. Income Tax comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the revenue authorities, using applicable tax rates and laws. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company. The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulations as of the Balance Sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed debrciation under tax laws are recognised only if there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realisation. n) BORROWING COST Interest and other costs in connection with the borrowing of the funds to the extent related / attributed to the acquisition / construction of qualifying fixed assets are capitalised up to the date when such assets are ready for its intended use and all other borrowing costs are recognised as an expense in the period in which they are incurred. o) LEASES Assets taken / given on lease by which all significant risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease payment / receipts under operating leases are recognized as expense / income on straight line basis over the lease term. p) PROVISIONS AND CONTINGENCIES Provisions are recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. Contingent liabilities are disclosed when the Company has a possible or brsent obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed. q) 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. 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 are adjusted for the effects of all dilutive potential equity shares. 2) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 23,419,865/- (Previous Year Rs. 18,827,465/- ) 3) The amount of brmium on forward exchange contracts to be recognized in the Statement of Profit and Loss in the next financial year is Rs. 5,522,584/- (Previous Year Rs. 4,910,212/-) 4) Operating Leases: - A) Premises taken on Lease a) The Company has taken various offices / shops under operating lease or leave and licence agreements. These are non-cancelable during a lock in period which ranges between 11 months to 3 years under leave and licence agreements and are renewable by mutual consent on mutually agreeable terms. b) Lease Payments recognized in the Statement of Profit and Loss under Rent in Note 24 includes Rs. 362,355,322/- (Previous Year Rs. 297,743,155/-) in respect of brmises taken on lease. c) The future minimum lease payments under non-cancelable operating lease : (i) not later than one year is Rs. 43,342,600/- (Previous Year Rs. 9,594,719); (ii) later than one year and not later than five years is Rs. 772,352/- (Previous Year Rs. 1,273,638/-) and (iii) Later than five years Nil B) Premises Given On Lease a) The Company has given its brmises under operating lease on leave and licence basis. These are cancelable and the period ranges between 11 months to 3 years under leave and licence agreements and renewable by mutual consent on mutually agreed terms. b) Lease rentals recognized in the Statement of Profit and Loss as Rent income in Note 20 is Rs. 1,835,067/- (Previous Year Rs. 550,550/-) c) Premises given on licence basis:- Gross Carrying amount Rs. 6,967,650/- (Previous Rs. 2,322,550/-) Accumulated Debrciation Rs. 1,359,488/- (Previous Year Rs. 415,640/-) Debrciation for the year Rs. 109,867/- (Previous Year Rs. 37,858/-) 5) Excise duty recovered on sales is included in ‘Revenue from Operations’. Excise duty in respect of Finished Goods lying in stocks is shown separately as an item of expense and included in valuation of finished goods produced. 6) Previous year’s figures have been regrouped /reclassified wherever necessary to correspond with the current year’s classification/disclosures. |