Amber Enterprises (India) Private Limited
Summary of significant accounting policies and other explanatory information for the year ended
31 March 2016
1. Background and nature of operations
Amber Enterprises (India) Private Limited (the “Company”) incorporated in 1994, under the Companies Act 1956, is engaged in the business of manufacturing a versatile range of products i.e. Air conditioners, microwave ovens, washing machines, refrigerators, heat exchangers, sheet metal components etc. Currently, the Company has nine manufacturing facilities in India out of which three manufacturing facilities are operating in tax exemption zone.
2. Significant accounting policies
(a) Basis of brparation
These financial statements have been brpared under the historical cost convention on a going concern basis, on the accrual basis of accounting in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). Indian GAAP comprises mandatory accounting standards as specified under Section 133 of the Companies Act, 2013 (‘the Act’), read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and other accounting pronouncements of The Institute of Chartered Accountants of India.
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 Revised Schedule III to the Companies Act, 2013. Based on the nature of services and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of its assets and liabilities.
b) Use of estimates
In brparing the Company’s financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.
c) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
i) Revenue from operations
a) Revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred to the buyer and there do not exist significant uncertainty regarding the amount of the consideration that will be derived from the sale of goods. It is stated inclusive of excise duty and net of trade discounts, sales returns and sales tax wherever applicable.
b) Revenue in respect of tool development and job charges is recognized as per the terms of the contract with the customers.
Amber Enterprises (India) Private Limited
Summary of significant accounting policies and other explanatory information for the year ended
31 March 2016
ii) Other income
a) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable.
b) Lease rentals on assets given on operating lease are recognized as income in the statement of profit and loss on accrual basis in accordance with the respective lease terms.
d) Revenue in respect of insurance claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.
d) Employee benefits
Short term employee benefits
All employee benefits payable/available within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, bonus, etc are recognized in the statement of profit and loss in the period in which the employee renders the related service.
Post-employment benefits
Defined contribution plan
The Company makes contribution to statutory provident fund in accordance with Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. The plan is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
Defined benefit plan
Gratuity
Gratuity is a post-employment defined benefit plan. The liability recognized in the balance sheet in respect of gratuity is the brsent value of the defined benefit obligation at the balance sheet date together with adjustments for past service costs not yet recognised and actuarial gains or losses. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from adjustments and changes in actuarial assumptions are credited or charged to the statement of profit and loss in the year in which such gains or losses arise.
Other long term liability
Leave encashment
Provision for leave encashment when determined to be a long term benefit is made on the basis of actuarial valuation using projected unit credit method as at the end of the year. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise. Provision related to short term compensated absences of workers is recognised on full cost basis. Full cost basis, measures the liability of all the accumulated leaves outstanding as of the balance sheet date as a product of basic salary of the employees.
Amber Enterprises (India) Private Limited
Summary of significant accounting policies and other explanatory information for the year ended
31 March 2016
Actuarial Gains/Losses
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise.
e) Fixed assets
Tangibles
Tangible assets are stated at cost less accumulated debrciation and impairment losses if any. Cost comprises the purchase price and any attributable costs of bringing the asset to its working condition for its intended use. When an asset is scrapped or otherwise disposed off, the cost and related debrciation are removed from the books of account and resultant profit or loss, if any, is reflected in the statement of profit and loss. Project under commissioning and other assets under erection/installation are shown under capital work in progress and are carried at cost, comprising of direct cost and related incidental expenses.
Intangibles
Intangible assets include goodwill, development cost and software licenses.
Goodwill is recognised as the excess of business consideration paid over the share of net assets acquired and liabilities assumed in case of business purchase arrangement.
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised as an expense when it is incurred.
Expenditure on development activities, where research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Company has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct personnel cost and an appropriate proportion of overheads. Other development expenditure is recognised in the income statement as an expense is incurred.
Software licenses are recognised if and only if it is probable that the future economic benefits will flow to the Company.
Intangible assets are stated at cost less accumulated amortization and impairment losses (if any).
f) Debrciation and amortization expense
Tangibles
Debrciation on fixed assets is provided on straight line method based on life brscribed as per Schedule II of the Companies Act, 2013.
Amber Enterprises (India) Private Limited
Summary of significant accounting policies and other explanatory information for the year ended
31 March 2016
Block of asset Useful life as per Companies Act, 2013 (in years)
Building
30-60
Plant and machinery
15
Computer
3
Furniture and fixture
10
Office equipment
5
Vehicles
8 – 10
Leasehold land under perpetual leases is not amortised.
Intangibles
i) Goodwill is charged to the statement of profit and loss over a period of five years.
ii) Expenditure on development activities is amortised over a period of seven years.
iii) Computer softwares are amortised over a period of six years.
g) Research and development
Revenue expenditure on research is expensed off under the respective heads of accounts in the year in which it is incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalized, if the cost can be reliably measured, the product or process is technically and commercially feasible and the company has sufficient resources to complete the development and to use and sell the asset. The expenditure capitalized includes cost of material, direct labour and an appropriate proportion of overheads that are directly attributable to brparing the assets for its intended use. Other development expenditure is recognized in the statement of profit and loss as an expense as incurred.
Fixed assets used for research and development are debrciated in accordance with the Company’s policy on fixed assets as stated above.
h) Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as non-current investments.
Current investments are stated at lower of cost and fair value determined on an individual investment basis.
Non-current investments are stated at cost. Provision is made for diminution in the value of non-current investments to recognise decline, if any, other than temporary in nature.
Profit/loss on sale of investments is computed with reference to their cost determined on first in first out basis.
Amber Enterprises (India) Private Limited
Summary of significant accounting policies and other explanatory information for the year ended
31 March 2016
i) Inventories
Inventories are valued at cost and net realizable value, whichever is lower. The cost in respect of the various items of inventory is computed as under:
? Raw material cost includes direct expenses and is determined on the basis of first in first out method.
? Stores and spares, consumables and packing materials cost includes direct expenses and is determined on the basis of first in first out method.
? In case of work in process - at raw material cost plus conversion costs depending upon the stage of completion.
? In case of finished goods - at raw material cost plus conversion costs, packing cost and other overheads incurred to bring the goods to their brsent location and condition. Excise duty in respect of goods manufactured by the Company is accounted for at the time of removal of goods from factory for sale and/or captive consumption and provision for excise duty is made for finished goods lying in the factory at year end.
? Scrap: At estimated net realisable value.
j) Subsidy
Government grants available to the Company is recognised only when there is reasonable assurance that the Company will comply with the conditions attached to them and where such benefits have been earned by the Company and it is reasonably certain that the ultimate collection will be made.
Where the assistance from the government is in the nature of promoter’s contribution, it is credited to capital reserve.
Where the grant or subsidy relates to revenue 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.
Where the grant or subsidy relates to an asset, it is treated as deferred income which is recognised in the statement of profit and loss on a systematic and rational basis over the useful life of assets. Such allocation to income is usually made over the periods and in proportions in which debrciation on related assets is charged.
k) Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.
l) Leases
i) Operating leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Amber Enterprises (India) Private Limited
Summary of significant accounting policies and other explanatory information for the year ended
31 March 2016
ii) Finance leases
Assets acquired on lease where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalized at the inception of the lease at the lower of fair value or the brsent value of minimum lease payments and a liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period. The resultant interest cost is charged to the Statement of profit and loss on accrual basis.
m) Impairment of assets
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date there is an indication that a brviously assessed impairment loss no longer exists then the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of debrciated historical cost.
n) Foreign currency transactions
i) Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
iii) Exchange differences
Exchange differences arising on the settlement of monetary items or on restatement of the Company's monetary items at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognized as income or as expenses in the year in which they arise except to the extent permitted by the transitional provision contained in Companies (Accounting Standards) Amendments Rules, 2009 in respect of long term foreign currency monetary items, in which case the cost of assets are adjusted by the translation differences and amortised over the remaining useful life of the related assets.
o) Accounting for taxes on income
Tax expense comprises of current tax and deferred income tax.
Current tax is determined as the amount of tax payable in respect of taxable income for the year, computed in terms with the provision for Income Tax Act, 1961 and rules made thereunder.
Amber Enterprises (India) Private Limited
Summary of significant accounting policies and other explanatory information for the year ended
31 March 2016
Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. In respect of carry forward losses and unabsorbed debrciation, deferred tax assets are recognized only to the extent there is virtual certainty that sufficient future taxable income will be available against which such losses can be realised.
Minimum Alternate tax (‘MAT’) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
p) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue and share split.
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.
q) Provision and contingent liabilities
The Company makes a provision when there is a brsent obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of the obligation can be made.
A disclosure is made for a contingent liability when there is a
(i) Possible obligation, the existence of which will be confirmed by the occurrence/non-occurrence of one or more uncertain events, not fully with in the control of the Company;
(ii) Present obligation, where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
(iii) Present obligation, where a reliable estimate cannot be made.
r) Derivative instruments
The exchange differences arising on forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions are recognised in the year in which they arise based on the difference between i) foreign currency amount of the contract translated at the exchange rate on the reporting date and ii) the same foreign currency amount translated at the later of the date of inception of the forward exchange contract or the last reporting date.
Amber Enterprises (India) Private Limited
Summary of significant accounting policies and other explanatory information for the year ended
31 March 2016
The brmium or discount arising at the inception of the forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions is amortised as expense or income over the life of the contract.
Any profit or loss arising on cancellation or renewal of forward exchange contracts is recognised as income or expense for the year.
As per the Institute of Chartered Accountants of India Announcement, accounting for derivative contracts, other than those covered under Accounting Standard-11, “The Effects of Changes in Foreign Exchange Rates”, are marked to market on individual portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge item is charged to the statement of profit and loss. Net gains are ignored.
s) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short term investments with an original maturity of three months or less.

8 (a) Provision for employee benefits
(i) Defined benefit plan/ other long term benefit plans

a. Defined benefit plan - Gratuity
b. Other long term benefits - Leave encashment

The following table set out the status of the plan for gratuity and leave encashment as required under Accounting Standard (AS) - 15 (R) - Employee benefits and the reconciliation of opening and closing balances of the brsent value of the defined benefit obligation:

		As at 31 March 2016	As at 31 March 2015
Particulars	Leave encashment	Gratuity	Gratuity
Actuarial assumptions
Discount rate	8.00%	8.00%	8.00%
Rate of increase in compensation levels	5.00%	5.00%	5.00%
Rate of return of plan assets		8.00%	9.00%

Demographic assumptions
Mortality rate		IALM 2006-08 Ultimate	IALM 2006-08 Ultimate
Retirement age		60	60
Withdrawal rates		4%	4%
Change in the brsent value of obligation :
Present value of obligation as at the beginning of the year		15,246,257	10,160,566
Interest cost		1,221,387	913,184
Current service cost		3,302,500	2,844,927
Prior period cost (refer note 30)		(29,152)	1,254,249
Benefits paid		(1,100,579)	(1,008,402)
Actuarial (gain)/loss		388,726	1,081,733
Present value of obligation as at the end of the year		19,029,139	15,246,257
Change in the fair value of plan assets:
Fair value of plan assets at the beginning of the year		527,050	-
Expected return on plan assets		17,223	65,752
Prior period income (refer note 30)		888,060	-
Contributions		968,783	1,311,386
Benefits paid		(351,157)	(850,088)
Fair value of plan assets at the end of the year		2,049,959	527,050
Reconciliation of brsent value of defined benefit obligation and the fair value of assets:
Present value of funded obligation as at the end of the year		19,029,139	15,246,257
Fair value of plan assets as at the end of the period funded status		2,049,959	527,050
Unfunded/funded net liability recognized in balance sheet*		16,979,180	14,719,207
	*includes short term portion of Rs 1,778,702 (Previous year Rs 1,513,634)
Expenses recognised in the statement of profit and loss:
Current service cost		3,302,500	2,844,927
Interest cost		1,221,387	913,184
Prior period cost (refer note 30)		(917,212)	1,254,249
Expected return on plan assets		(17,223)	(65,752)
Net actuarial loss recognized in the year		388,726	1,081,733
Total expenses recognized in the statement of profit and loss		3,978,178	6,028,341

Notes :
1) The discount rate is based on the brvailing market yield of Indian Government bonds as at the balance sheet date for the estimated terms of obligations.
2) The expected return is based on the expectation of the average long term rate of return on investments of the fund during the estimated terms of obligations.
3) The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.
4) Plan assets comprise funds managed by the insurer i.e. Life Insurance Corporation of India ('LIC').
5) For Gratuity of Rajpura unit, the Company makes annual contributions to the LIC of an amount advised by them.
6) The best expected expense for the next year is Rs. 4,149,200.

Amounts for the current and brvious four years are as follows:
	2015-16	2014-15	2012-13 2011-12
Gratuity
Defined benefit obligation	19,029,139	15,246,257	7,610,785 5,355,947
Plan assets	2,049,959	527,050	- -
Net liability	16,979,180	14,719,207	7,610,785 5,355,947
Experience adjustment arising on the gratuity benefits	388,726	1,081,733	(641,739) (979,763)