Mar 31, 2018
1 SIGNIFICANT ACCOUNTING POLICIES
1.1 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Freehold land is not depreciated.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land & properties under construction) less their residual values over their useful lives, as indicated in the Companies Act, 2013, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. However, in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:
Leasehold Land is amortised over the period of lease.
Depreciation on additions to / deletions from fixed assets made during the period is provided on prorata basis from / up to the month of such addition / deletion as the case may be.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date (except to the extent of any adjustment permissible under other accounting standard).
Intangible Assets
Intangible Assets are stated at cost of acquisition less accumulated amortization and accumulated impairment, if any. Amortization is done over their estimated useful life on straight line basis from the date that they are available for intended use, subjected to impairment test.
Amortisation in respect of Intangible assets is provided on Straight Line basis over the period of under lying contract or estimated period of its economic life.
2.2 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
3.3 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
3.4 Investments in Subsidiary Company
Investments in subsidiary Company is carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiary companies, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.
3.5 Government Grants
Government Grants related to assets are treated as deferred income and are recognized in the statement of profit and loss on a systematic and rationale basis over the useful life of the assets. Government Grants related to revenue are recognized on a systematic basis in a statement of profit and loss over the period necessary to match them with the related cost which they are intended to compensate. Specifically, Government Grants whose primary condition is that the company should purchase, construct or otherwise acquire non current assets are recognized as deferred revenue in the balance sheet and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
3.6 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
Contingent liabilities are not recognised but are disclosed in the notes.
Contingent assets are not recognised but are disclosed in the notes where an inflow of economic benefits is probable.
3.7 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
3.8 Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operation cycles as twelve months for the purpose of classification of assets and liablilities as current and noncurrent.
3.9 Financial Instruments
Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
3.10 Financial assets
Initial recognition and measurement
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, a financial asset is recognized at fair value. In case of financial assets which are recognized at fair value through profit and loss (FVTPL), its transaction costs are recognized in the Statement of Profit and loss. In other cases, the transaction costs are attributed to the acquisition value of the financial asset.
Subsequent measurement
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as a FVTPL. Interest income is recognized in profit or loss and is included in the "Other Income" line item.
Classification of financial assets: Financial assets measured at amortized cost
A financial asset is measured at the amortized cost if both the following conditions are met:
a) The Company''s business model objective for managing the financial asset is to hold financial assets in order to collect contractual cash flows, and
b) The Contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
This category applies to cash and bank balances, trade receivables, loans and other financial assets of the Company. Such financial assets are subsequently measured at amortized cost using the effective interest method.
The amortized cost of a financial asset is also adjusted for loss allowances, if any.
Financial assets measured at FVTOCI
A financial asset is measured at FVTOCI if both of the following conditions are met:
a) The Company''s business model objective for managing the financial asset is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal on the principal amount outstanding.
Financial assets measured at FVTPL
A financial asset is measured at FVTPL unless it is measured at amortized cost or at FVTOCI as explained above.
This is a residual category applied to all other investments of the Company. Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are recognized in the Statement of Profit and Loss. Dividend Income on the investments in equity instruments are recognized as ''other income'' in the Statement of Profit and Loss.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period. For foreign currency denominated financial assets measured at amortized cost and FVTPL, the exchange differences are recognized in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of group of similar financial assets) is derecognised (i.e. removed from the Company''s Balance Sheet) when any of the following occurs:
a) The contractual rights to cash flows from the financial assets expires,
b) The company transfers its contractual rights to receive cash flows of the financial asset and has substantially transferred all the risks and rewards of ownership of the financial asset;
c) The Company retains the contractual rights to receive cash flows but assumes a contractual obligation to pay the cash flows without material delay to one or more recipients under a ''pass through'' arrangement (thereby substantially transferring all the risks and rewards of ownership of the financial asset);
d) The Company neither transfer nor retains substantially all risk and rewards of ownership and does not retain control over the financial assets.
In cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but retains control of the financial asset, the Company continues to recognize such financial asset to the extent of its continuing involvement in the financial asset; in that case, the Company also recognizes an associated liability.
The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On derecognition of a financial asset, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
Impairment of financial assets
The Company applies expected credit losses (ECL) model for recognising impairment loss on financial assets measured at amortised cost and trade receivables. In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognised as loss allowance. For the purpose of measuring lifetime expected credit loss, for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. The expected credit loss allowance is computed based on a provision matrix which takes in to account historical credit loss experience and adjusted for forward looking information. For recognition of impairment loss on other financial assets and risk exposure, the company determines whether there has been a significant increase in the credit risk since initial recognition. If the credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if the credit risk has increased significantly, then the impairment loss is provided based on lifetime ECL. Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognizing impairment loss allowance based on 12-month ECL. ECL impairment loss allowance (or reversal) recognised during the period is recognised as income / expenses in the Statement of profit and loss under the head ''Other expense''.
Financial liabilities and equity instruments
Debt and Equity Instruments:
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instruments.
Equity instruments:
An equity instruments is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities, Equity instruments issued by the Company are recognised at the proceeds received, not of direct issue costs.
Financial Liabilities:
Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at fair value.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
Financial liabilities at FVTPL
A financial liability may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
- the financial liability whose performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management;
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in profit or loss.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the closing rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
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 between the carrying amount of the financial liability derecognized and the consideration paid is recognized in the Statement of Profit and Loss.
3.11 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
In respect of assets taken on operating lease, lease rentals are recognized as an expense in the Statement of Profit and Loss on straight line basis over the lease term unless another systematic basis is more representative of the time pattern in which the benefit is derived from the leased asset; or the payments to the lessor are structured to increase in the line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
3.12 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resources and assessing performance of the operating segments of the Company.
3.13 Fair Value
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either;
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy that categorized into three levels, described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for Identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
Level 1 - quoted (unadjusted) market prices in active markets for identical assets or Liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - inputs that are unobservable for the asset or liability.
For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorized at the end of each reporting period and discloses the same.
3.14 Allowance for doubtful trade receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.
Estimated irrecoverable amounts are derived based on a provision matrix which takes into account various factors such as customer specific risks, geographical region, product type, currency fluctuation risk, repatriation policy of the country, country specific economic risks, customer rating, and type of customer, etc.
Individual trade receivables are written off when the management deems them not to be collectable.
3.15 Revenue recognition
Revenue from sale of goods and services is measured at the fair value of the consideration received or receivable, net of estimated customer returns, rebates and other similar allowances.
Sale of goods
Revenue from the sale of goods is recognised the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods and it is probable that the economic benefits associated with the transaction will flow to the Company.
Rendering of services
Revenue from rendering of services recognised when services are rendered and related cost are incurred.
Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis.
Export benefits
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same
3.16 Foreign currencies
In preparing the financial statements, transactions in currencies other than the entity''s functional currency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.
3.17 Financial Derivatives and Commodity hedging Transactions
In respect of financial derivatives and commodity hedging contracts, premium paid, losses on restatement and gains/losses on settlement are charged to the statement of profit and loss.
3.18 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
3.19 Employee benefits Defined benefit plans
The Company has an obligation towards a defined benefit retirement plan covering eligible employees through Group Gratuity Scheme of Life Insurance Corporation of India. The Company accounts for the liability for the gratuity benefits payable in future based on an independent actuarial valuation carried out using Projected Unit Credit Method considering discounting rate relevant to Government Securities at the Balance Sheet Date.
Defined benefit costs in the nature of current and past service cost and net interest expense or income are recognized in the statement of profit and loss in the period in which they occur. Actuarial gains and losses on measurement is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur and is reflected immediately in retained earnings and not reclassified to profit or loss. Past service cost is recognized in profit and loss in the period of a plan amendment.
Defined Contribution plan
The Company recognize contribution payable to a defined contribution plan as an expenses in the Statement of profit and loss when the employee render services to the Company during the reporting period.
Compensated Absences
Provisions for Compensated Absences and its classifications between current and non-current liabilities are based on independent actuarial valuation. The actuarial valuation is done as per the projected unit credit method as at the reporting date.
Short term employee benefits:
They are recognized at an undiscounted amount in the Statement of Profit and Loss for the year in which the related services are rendered.
3.20 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantially enacted by end of reporting periods.
Deferred tax
Deferred tax is recognised 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 are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
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 realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
3.21 Earnings Per Share
Basic earnings per share are computed by dividing the profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax as adjusted for the effects of dividend interest and other charges relating to the dilutive potential equity shares by weighted average number of shares plus dilutive potential equity shares.
4 Significant accounting judgments, estimates and assumptions
Significant accounting judgements
The application of the Company''s accounting policies in 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. The estimates and assumptions are based on historical experience and other factors that are considered to be relevant. The estimates and underlying assumptions are reviewed on an ongoing basis and any revisions thereto are recognized in the period in which they are revised or in the period of revision and future periods if the revision affects both the current and future periods. Actual results may differ from these estimates which could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and assumptions about future developments may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
(a) Fair value measurement of financial instruments
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using ECL model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
(b) Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
(c) Provisions and Contingent Liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. Contingent liabilities are not recognised in the financial statements. The policy for the same has been explained above in note 3.6.
Mar 31, 2016
Corporate Information
AARVEE DENIMS AND EXPORTS LIMITED ("the company") is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The company is engaged in the manufacturing and selling of denim and non denim Fabrics, Garments. The company caters to both domestic and international markets.
Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention.
1 SIGNIFICANT ACCOUNTING POLICIES
a. Use of Estimates
The preparation of the 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) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
b. Fixed Assets
Tangible and Intangible Assets are carried at cost less accumulated depreciation and impairment losses, if any. The Cost of Fixed Assets comprises of all expenses incurred on making the asset ready for its intended use. Borrowing costs directly attributable to the acquisition of qualifying fixed assets / construction are included in the cost of fixed assets.
The Company has adopted the provisions of para 46 / 46A of AS 11 - The Effects of Changes in Foreign Exchange Rates. Accordingly, exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. In case of new projects / expansion of existing projects, expenditure incurred on making the asset ready for its intended use during construction / preoperative period including interest and finance charges on specific / general purpose loans, prior to commencement of commercial production are capitalized. The same has been allocated to the respective fixed assets on completion of construction / erection of the capital project / fixed assets.
Capital assets (including expenditure incurred during the construction period) under erection / installation are stated in the Balance Sheet as "Capital Work in Progress."
c. Lease
Assets acquired under leases where a significant portion of the risk and rewards of ownership are retained by the lesser are classified as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis.
d. Impairment of Assets
Impairment is recognized if carrying amount exceeds their recoverable amount. At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset.
e. Depreciation /Amortization
All Tangible assets, except freehold land, leasehold land and capital work in progress, are depreciated on a straight line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been
assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:
Depreciation on additions to / deletions from fixed assets made during the period is provided on pro-rata basis from / up to the month of such addition / deletion as the case may be.
Amortization in respect of Intangible assets is provided on Straight Line basis over the period of under lying contract or estimated period of its economic life.
Leasehold land is amortized over the period of lease.
f. Investments
Long term investments are stated at cost. Current investments are carried individually, at lower of cost and market value. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.
g. Inventories
Inventories are measured at lower of cost and net realizable value. Cost of raw materials, stores & spares parts are ascertained on FIFO basis. Cost for finished goods and process stock is ascertained on full absorption cost basis. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their present location & condition.
h. Government Grants:
Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants will be received. Revenue grants are recognized in the statement of profit and loss. Capital grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets.
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
i. Revenue Recognition
Sales are recognized net of trade discounts, rebates and sales tax, on transfer of significant risks and rewards of ownership. It does not include interdivisional sales.
Revenue in respect of other item is recognized when no significant uncertainty as to its determination or realization exists.
j. Borrowing Cost
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
k. Foreign Currency Transactions and Translations
Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost. Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.
Exchange difference on long-term foreign currency monetary items: The exchange differences arising on settlement / restatement of long-term foreign currency monetary items are capitalized as part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets. If such monetary items do not relate to acquisition of depreciable fixed assets, the exchange difference is amortized over the maturity period / up to the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss. The unamortized exchange difference is carried under Reserves and surplus as "Foreign currency monetary item translation difference account" net of the tax effect thereon, where applicable.
l. Accounting for Forward Contracts
Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which such cancellation or renewal is made.
m. Financial Derivatives and Commodity Hedging Transactions
In respect of financial derivatives and commodity hedging contracts, premium paid, losses on restatement and gains/losses on settlement are charged to the statement of profit and loss.
n. Employee Benefits
Short term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
Post employment and other long term employee benefits are recognized as an expense in the statement of profit and loss for the year in which the employee has rendered services. The cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses in respect of post employment and other long term benefits are charged to statement of profit and loss.
o. Taxes on Income
Income tax expenses for the year comprises of current tax and deferred tax. Current tax provision is determined on the basis of taxable income computed as per the provisions of the Income Tax Act. Deferred tax is recognized for all timing differences that are capable of reversal in one or more subsequent periods subject to conditions of prudence and by applying tax rates that have been substantively enacted by the balance sheet date. Deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax in future. Accordingly, MAT is recognized as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the Company and the asset can be measured reliably.
p. Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the notes.
Contingent assets are neither recognized nor disclosed in the financial statements.
q. Cash flow Statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
r. Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operation cycles as twelve months for the purpose of classification of assets and liabilities as current and noncurrent.
s. Insurance Claim
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
Mar 31, 2015
Corporate Information
AARVEE DENIMS AND EXPORTS LIMITED ("the company") is a public company
domiciled in India and incorporated under the provisions of the
Companies Act, 1956. Its shares are listed on two stock exchanges in
India. The company is engaged in the manufacturing and selling of denim
and non denim Fabrics, Garments. The company caters to both domestic
and international markets.
Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in
accordance with the 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 of the Companies Act, 2013 ("the 2013
Act"), as applicable. The financial statements have been prepared on
accrual basis under the historical cost convention.
1 SIGNIFICANT ACCOUNTING POLICIES
a. Use of Estimates
The preparation of the 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) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
b. Fixed Assets
Tangible and Intangible Assets are carried at cost less accumulated
depreciation and impairment losses, if any. the Cost of Fixed Assets
comprises of all expenses incurred on making the asset ready for its
intended use. Borrowing costs directly attributable to the acquisition
of qualifying fixed assets / construction are included in the cost of
fixed assets.
The Company has adopted the provisions of para 46 / 46A of AS 11 The
Effects of Changes in Foreign Exchange Rates, accordingly, exchange
differences arising on restatement / settlement of long-term foreign
currency borrowings relating to acquisition of depreciable fixed assets
are adjusted to the cost of the respective assets and depreciated over
the remaining useful life of such assets.
In case of new projects / expansion of existing projects, expenditure
incurred on making the asset ready for its intended use during
construction / preoperative period including interest and finance
charges on specific / general purpose loans, prior to commencement of
commercial production are capitalized. The same has been allocated to
the respective fixed assets on completion of construction / erection of
the capital project / fixed assets.
Capital assets (including expenditure incurred during the construction
period) under erection / installation are stated in the Balance Sheet
as "Capital Work in Progress."
c. Lease
Assets acquired under leases where a significant portion of the risk
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
d. Impairment of Assets
Impairment is recognised if carrying amount exceeds their recoverable
amount. At each balance sheet date, the Company reviews the carrying
amounts of its fixed assets to determine whether there is any
indication that those assets suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of impairment loss. Recoverable amount
is the higher of an asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows expected from
the continuing use of the asset and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset.
e. Depreciation /Amortization
All Tangible assets, except freehold land, leasehold land and capital
work in progress, are depreciated on a straight line method as per the
useful life prescribed in Schedule II to the Companies Act, 2013 except
in respect of the following categories of assets, in whose case the
life of the assets has been assessed as under based on technical
advice, taking into account the nature of the asset, the estimated
usage of the asset, the operating conditions of the asset, past history
of replacement, anticipated technological changes, manufacturers
warranties and maintenance support, etc.:
Particulars Depreciation
Plant & Machineries Over the period of 30 to 40 years as technically
assessed
Depreciation on additions to / deletions from fixed assets made during
the period is provided on pro-rata basis from / up to the month of such
addition / deletion as the case may be. Amortization in respect of
Intangible assets is provided on Straight Line basis over the period of
under lying contract or estimated period of its economic life.
Leasehold land is amortized over the period of lease.
f. Investments
Long term investments are stated at cost. Current investments are
carried individually, at lower of cost and market value. Provision for
diminution in the value of long term investments is made only if such a
decline is other than temporary.
g. Inventories
Inventories are measured at lower of cost and net realizable value.
Cost of raw materials, stores & spares parts are ascertained on FIFO
basis. Cost for finished goods and process stock is ascertained on full
absorption cost basis. Cost of inventories comprises of cost of
purchase, cost of conversion and other costs incurred in bringing them
to their present location & condition.
h. Government Grants:
Government grants are recognised when there is reasonable assurance
that the Company will comply with the conditions attached to them and
the grants will be received. Revenue grants are recognized in the
statement of profit and loss. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
i. Revenue Recognition
Sales are recognized net of trade discounts, rebates and sales tax, on
transfer of significant risks and rewards of ownership. It does not
include interdivisional sales.
Revenue in respect of other item is recognized when no significant
uncertainty as to its determination or realization exists.
j. Borrowing Cost
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Borrowing costs that are attributable to the
acquisition, construction or production of qualifying assets are
capitalized as part of the cost of such assets. A qualifying asset is
one that necessarily takes a substantial period of time to get ready
for its intended use. All other borrowing costs are charged to revenue.
k. Foreign Currency Transactions and Translations
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date
of the transaction. Foreign currency monetary items (other than
derivative contracts) of the Company, outstanding at the balance sheet
date are restated at the year-end rates. Non-monetary items of the
Company are carried at historical cost. Exchange differences arising on
settlement / restatement of short-term foreign currency monetary assets
and liabilities of the Company are recognised as income or expense in
the Statement of Profit and Loss.
Exchange difference on long-term foreign currency monetary items: The
exchange differences arising on settlement / restatement of long-term
foreign currency monetary items are capitalised as part of the
depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets. If such
monetary items do not relate to acquisition of depreciable fixed
assets, the exchange difference is amortised over the maturity period /
upto the date of settlement of such monetary items, whichever is
earlier, and charged to the Statement of Profit and Loss. The
unamortised exchange difference is carried under Reserves and surplus
as "Foreign currency monetary item translation difference account" net
of the tax effect thereon, where applicable.
l. Accounting for Forward Contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the balance sheet date. Any profit or loss arising on cancellation
or renewal of such a forward exchange contract is recognised as income
or as expense in the period in which such cancellation or renewal is
made.
m. Financial Derivatives and Commodity Hedging Transactions
In respect of financial derivatives and commodity hedging contracts,
premium paid, losses on restatement and gains/losses on settlement are
charged to the statement of profit and loss.
n. Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit and loss of the year in
which the related service is rendered. Post employment and other long
term employee benefits are recognized as an expense in the statement of
profit and loss for the year in which the employee has rendered
services. The cost of providing benefits is determined using the
Projected Unit Credit method, with actuarial valuations being carried
out at each balance sheet date. Actuarial gains and losses in respect
of post employment and other long term benefits are charged to
statement of profit and loss.
o. Taxes on Income
Income tax expenses for the year comprises of current tax and deferred
tax. Current tax provision is determined on the basis of taxable income
computed as per the provisions of the Income Tax Act. Deferred tax is
recognized for all timing differences that are capable of reversal in
one or more subsequent periods subject to conditions of prudence and by
applying tax rates that have been substantively enacted by the balance
sheet date. Deferred tax assets are recognised only if there is virtual
certainty supported by covincing evidence that there will be sufficient
future taxable income available to realise the assets.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax in
future. Accordingly, MAT is recognized as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Company and the asset can be measured reliably.
p. Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes.
Contingent assets are neither recognized nor disclosed in the financial
statements.
S. Insurance Claim
Insurance claims are accounted for on the basis of claims submitted/
admitted / expected to be admitted and to the extent that the amount
recoverable can be measured reliably and it is reasonable to expect
ultimate collection.
Mar 31, 2014
Corporate Information
AARVEE DENIMS AND EXPORTS LIMITED ("the company") is a public company
domiciled in India and incorporated under the provisions of the
Companies Act, 1956. Its shares are listed on two stock exchanges in
India. The company is engaged in the manufacturing and selling of denim
and non denim Fabrics, Garments. The company caters to both domestic
and international markets.
Basis of Preparation
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated
13 September, 2013 of the Ministry of Corporate Affairs) and the
relevant provisions of the 1956 Act/ 2013 Act, as applicable. The
financial statements have been prepared on an accrual basis and under
the historical cost convention.The accounting policies adopted in the
preparation of financial statements are consistent with those of
previous year, except for the change in accounting policy explained
below.
a. Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known / materialized.
b. Fixed Assets
Tangible and Intangible Assets are stated at cost less accumulated
depreciation and impairment losses, if any. Cost comprises of all
expenses incurred on making the asset ready for its intended use.
Borrowing costs directly attributable to the acquisition of qualifying
fixed assets / construction are included in the cost of fixed assets.
The Company has adopted the provisions of para 46 / 46A of AS 11 The
Effects of Changes in Foreign Exchange Rates, accordingly, exchange
differences arising on restatement / settlement of long-term foreign
currency borrowings relating to acquisition of depreciable fixed assets
are adjusted to the cost of the respective assets and depreciated over
the remaining useful life of such assets.
In case of new projects / expansion of existing projects, expenditure
incurred on making the asset ready for its intended use during
construction / preoperative period including interest and finance
charges on specific / general purpose loans, prior to commencement of
commercial production are capitalized. The same has been allocated to
the respective fixed assets on completion of construction / erection of
the capital project / fixed assets.
Capital assets (including expenditure incurred during the construction
period) under erection / installation are stated in the Balance Sheet
as "Capital Work in Progress."
c. Lease
Assets acquired under leases where a significant portion of the risk
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
d. Impairment of Assets
Impairment is recognised if carrying amount exceeds their recoverable
amount. At each balance sheet date, the Company reviews the carrying
amounts of its fixed assets to determine whether there is any
indication that those assets suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of impairment loss. Recoverable amount
is the higher of an asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows expected from
the continuing use of the asset and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset.
e. Depreciation /Amortization
All Tangible assets, except freehold land, leasehold land and capital
work in progress, are depreciated on a straight line method at the
rates and in the manner prescribed in Schedule XIV of the Companies''
Act, 1956.
Depreciation on additions to / deletions from fixed assets made during
the period is provided on pro-rata basis from / up to the month of such
addition / deletion as the case may be.
Amortization in respect of Intangible assets is provided on Straight
Line basis over the period of under lying contract or estimated period
of its economic life.
Leasehold land is amortized over the period of lease.
f. Investments
Long term investments are stated at cost. Current investments are
carried individually, at lower of cost and market value. Provision for
diminution in the value of long term investments is made only if such a
decline is other than temporary in the opinion of the management.
g. Inventories
Inventories are measured at lower of cost and net realizable value.
Cost of raw materials, stores & spares parts are ascertained on FIFO
basis. Cost for finished goods and process stock is ascertained on full
absorption cost basis. Cost of inventories comprises of cost of
purchase, cost of conversion and other costs incurred in bringing them
to their present location & condition.
h. Government Grants:
Government grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
statement of profit and loss. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
i. Revenue Recognition
Sales are recognized net of trade discounts, rebates and sales tax, on
transfer of significant risks and rewards of ownership. It does not
include interdivisional sales.
Revenue in respect of other item is recognized when no significant
uncertainty as to its determination or realization exists.
j. Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
k. Foreign Currency Translation
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate prevailing
at time of transaction. Monetary items denominated in foreign
currencies and outstanding at the year-end are translated at year-end
rates. Exchange differences arising on settlement of short-term
monetary items at rates different from those at which they were
initially recorded are recognized as income or as expenses in the year
in which they arise.
The Company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases accumulated in a "Foreign Currency Monetary Item
Translation Difference Account" in the financial statements and
amortised over the balance period of such long term asset or liability,
by the recognition as income or expense in each of such periods.
l. Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amount in the statement of profit and loss of the year in
which the related service is rendered.
Post employment and other long term employee benefits are recognized as
an expense in the statement of profit and loss for the year in which
the employee has rendered services. The cost of providing benefits is
determined using the Projected Unit Credit method, with actuarial
valuations being carried out at each balance sheet date. Actuarial
gains and losses in respect of post employment and other long term
benefits are charged to statement of profit and loss.
m. Financial Derivatives and Commodity Hedging Transactions
In respect of financial derivatives and commodity hedging contracts,
premium paid, losses on restatement and gains/losses on settlement are
charged to the statement of profit and loss.
n. Taxes on Income
Income tax expenses for the year comprises of current tax and deferred
tax. Current tax provision is determined on the basis of taxable income
computed as per the provisions of the Income Tax Act. Deferred tax is
recognized for all timing differences that are capable of reversal in
one or more subsequent periods subject to conditions of prudence and by
applying tax rates that have been substantively enacted by the balance
sheet date. Deferred tax assets are recognised only if there is virtual
certainty that there will be sufficient future taxable income available
to realise the assets.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Group will pay normal income tax in
future. Accordingly, MAT is recognized as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Group and the asset can be measured reliably.
o. Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes.
Contingent assets are neither recognized nor disclosed in the financial
statements.
Mar 31, 2013
A. Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known / materialized.
b. Fixed Assets
Tangible and Intangible Assets are stated at cost less accumulated
depreciation and impairment losses, if any. Cost comprises of all
expenses incurred to bring the assets to its present location and
condition. Borrowing costs directly attributable to the acquisition /
construction are included in the cost of fixed assets.
Exchange differences arising on restatement / settlement of long-term
foreign currency borrowings relating to acquisition of depreciable
fixed assets are adjusted to the cost of the respective assets and
depreciated over the remaining useful life of such assets.
In case of new projects / expansion of existing projects, expenditure
incurred during construction / preoperative period including interest
and finance charges on specific / general purpose loans, prior to
commencement of commercial production are capitalized. The same has
been allocated to the respective fixed assets on completion of
construction / erection of the capital project / fixed assets.
Capital assets (including expenditure incurred during the construction
period) under erection / installation are stated in the Balance Sheet
as "Capital Work in Progress."
c. Lease
Assets acquired under leases where a significant portion of the risk
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the profit and loss
Account on accrual basis.
d. Impairment of Assets
At each balance sheet date, the Company reviews the carrying amounts of
its fixed assets to determine whether there is any indication that
those assets suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the
higher of an asset''s net selling price and value in use. In assessing
value
in use, the estimated future cash flows expected from the continuing
use of the asset and from its disposal are discounted to their present
value using a pre-tax discount rate that reflects the current market
assessments of time value of money and the risks specific to the asset.
e. Depreciation
All Tangible assets, except freehold land, leasehold land and capital
work in progress, are depreciated on a straight line method at the
rates and in the manner prescribed in Schedule XIV of the Companies''
Act, 1956.
Depreciation on additions to / deletions from fixed assets made during
the period is provided on pro-rata basis from / up to the month of such
addition / deletion as the case may be.
Amortisation in respect of Intangible assets is provided on Straight
Line basis over the period of under lying contract or estimated period
of its economic life.
Leasehold land is amortized over the period of lease.
f. Investments
Long term investments are stated at cost. Current investments are
stated at lower of cost and market price. Provision for diminution in
the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management.
g. Inventories
Inventories are measured at lower of cost and net realizable value.
Cost of raw materials, stores & spares parts are ascertained on FIFO
basis. Cost for finished goods and process stock is ascertained on full
absorption cost basis. Cost of inventories comprises of cost of
purchase, cost of conversion and other costs incurred in bringing them
to their present location & condition.
h. Government Grants :
Government grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
Profit and Loss account. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
i. Revenue Recognition
Sales are recognized when goods are supplied. Sales are net of trade
discounts, rebates and sales tax. It does not include interdivisional
sales.
Revenue in respect of other item is recognized when no significant
uncertainty as to its determination or realization exists.
j. Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
k. Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate prevailing
at time of transaction. Monetary items denominated in foreign
currencies and outstanding at the year-end are translated at year-end
rates. Exchange differences arising
on settlement of short-term monetary items at rates different from
those at which they were initially recorded are recognized as income or
as expenses in the year in which they arise.
The Company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases accumulated in a "Foreign Currency Monetary Item
Translation Difference Account" in the financial statements and
amortised over the balance period of such long term asset or liability,
by the recognition as income or expense in each of such periods.
l. Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
Post employment and other long term employee benefits are recognized as
an expense in the profit and loss account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to profit and loss
account.
m. Financial Derivatives and Commodity Hedging Transactions
In respect of financial derivatives and commodity hedging contracts,
premium paid, losses on restatement and gains/losses on settlement are
charged to the profit and loss account.
n. Taxes on Income
Income tax expenses for the year comprises of current tax and deferred
tax. Current tax provision is determined on the basis of taxable income
computed as per the provisions of the Income Tax Act. Deferred tax is
recognized for all timing differences that are capable of reversal in
one or more subsequent periods subject to conditions of prudence and by
applying tax rates that have been substantively enacted by the balance
sheet date.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Group will pay normal income tax in
future. Accordingly, MAT is recognized as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Group and the asset can be measured reliably.
o. Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes.
Contingent assets are neither recognized nor disclosed in the financial
statements.
p. Premium on Redemption of Bonds
Premium on redemption of Foreign Currency Convertible Bonds are
adjusted against the Securities Premium Account over the life of the
Bonds.
Mar 31, 2012
A. Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known / materialized.
b. Fixed Assets
Tangible and Intangible Assets are stated at cost less accumulated
depreciation and impairment losses, if any. Cost comprises of all
expenses incurred to bring the assets to its present location and
condition. Borrowing costs directly attributable to the acquisition /
construction are included in the cost of fixed assets.
In case of new projects / expansion of existing projects, expenditure
incurred during construction / preoperative period including interest
and finance charges on specific / general purpose loans, prior to
commencement of commercial production are capitalized. The same has
been allocated to the respective fixed assets on completion of
construction / erection of the capital project / fixed assets.
Capital assets (including expenditure incurred during the construction
period) under erection / installation are stated in the Balance Sheet
as "Capital Work in Progress."
c. Lease
Assets acquired under leases where a significant portion of the risk
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the profit and loss
Account on accrual basis.
d Impairment of Assets
At each balance sheet date, the Company reviews the carrying amounts of
its fixed assets to determine whether there is any indication that
those assets suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the
higher of an asset's net selling price and value in use. In assessing
value in use, the estimated future cash flows expected from the
continuing use of the asset and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset.
e. Depreciation
All Tangible assets, except freehold land, leasehold land and capital
work in progress, are depreciated on a straight line method at the
rates and in the manner prescribed in Schedule XIV of the Companies'
Act, 1956.
Depreciation on additions to / deletions from fixed assets made during
the period is provided on pro-rata basis from / up to the month of such
addition / deletion as the case may be.
Amortisation in respect of Intangible assets is provided on Straight
Line basis over the period of under lying contract or estimated period
of its economic life.
Leasehold land is amortized over the period of lease.
f. Investments
Long term investments are stated at cost. Current investments are
stated at lower of cost and market price. Provision for diminution in
the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management.
g. Inventories
Inventories are measured at lower of cost and net realizable value.
Cost of raw materials, stores & spares parts are ascertained on FIFO
basis. Cost for finished goods and process stock is ascertained on full
absorption cost basis. Cost of inventories comprises of cost of
purchase, cost of conversion and other costs incurred in bringing them
to their present location & condition.
h. Government Grants:
Government grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
Profit and Loss account. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
i. Revenue Recognition
Sales are recognized when goods are supplied. Sales are net of trade
discounts, rebates and sales tax. It does not include interdivisional
sales.
Revenue in respect of other item is recognized when no significant
uncertainty as to its determination or realization exists.
j. Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
k. Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate prevailing
at time of transaction. Monetary items denominated in foreign
currencies and outstanding at the year-end are translated at year-end
rates. Exchange differences arising on settlement of short-term
monetary items at rates different from those at which they were
initially recorded are recognized as income or as expenses in the year
in which they arise.
The Company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases accumulated in a "Foreign Currency Monetary Item
Translation Difference Account" in the enterprise's financial
statements and amortised over the balance period of such long term
asset or liability, by the recognition as income or expense in each of
such periods.
l. Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
Post employment and other long term employee benefits are recognized as
an expense in the profit and loss account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to profit and loss
account.
m. Financial Derivatives and Commodity Hedging Transactions
In respect of financial derivatives and commodity hedging contracts,
premium paid, losses on restatement and gains/losses on settlement are
charged to the profit and loss account.
n. Taxes on Income
Income tax expenses for the year comprises of current tax and deferred
tax. Current tax provision is determined on the basis of taxable income
computed as per the provisions of the Income Tax Act. Deferred tax is
recognized for all timing differences that are capable of reversal in
one or more subsequent periods subject to conditions of prudence and by
applying tax rates that have been substantively enacted by the balance
sheet date.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Group will pay normal income tax in
future. Accordingly, MAT is recognized as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Group and the asset can be measured reliably.
o. Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes.
Contingent assets are neither recognized nor disclosed in the financial
statements.
p. Premium on Redemption of Bonds
Premium on redemption of Foreign Currency Convertible Bonds are
adjusted against the Securities Premium Account over the life of the
Bonds.
Mar 31, 2011
1. Accounting Convention
The financial statements are prepared under the historical cost
convention on the "Accrual Concept" of accountancy in accordance with
the accounting principles generally accepted in India and comply with
the accounting standards issued by the Institute of Chartered
Accountants of India to the extent applicable and with the relevant
provisions oftheCompaniesAct,1956.
2. Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known / materialized.
3. Fixed Assets
Tangible and Intangible Assets are stated at cost less accumulated
depreciation and impairment losses, if any. Cost comprises of all
expenses incurred to bring the assets to its present location and
condition. Borrowing costs directly attributable to the acquisition /
construction are included in the cost of fixed assets.
In case of new projects / expansion of existing projects, expenditure
incurred during construction / preoperative period including interest
and finance charges on specific / general purpose loans, prior to
commencement of commercial production are capitalized. The same has
been allocated to the respective fixed assets on completion of
construction / erection of the capital project / fixed assets.
Capital assets (including expenditure incurred during the construction
period) under erection / installation are stated in the Balance Sheet
as "Capital Work in Progress."
4. Lease
Assets acquired under leases where a significant portion of the risk
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the profit and loss
Account on accrual basis.
5. Impairment of Assets
At each balance sheet date, the Company reviews the carrying amounts of
its fixed assets to determine whether there is any indication that
those assets suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the
higher of an asset's net selling price and value in use. In assessing
value in use, the estimated future cash flows expected from the
continuing use of the asset and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset.
6. Depreciation
All Tangible assets, except freehold land, leasehold land and capital
work in progress, are depreciated on a straight line method at the
rates and in the manner prescribed in Schedule XIV of the Companies'
Act, 1956.
Depreciation on additions to /deletions from fixed assets made during
the period is provided on pro-rata basis from / up to the month of such
addition / deletion as the case may be.
Amortisation in respect of Intangible assets is provided on Straight
Line basis over the period of under lying contract or estimated period
of its economic life.
Leasehold land is amortized over the period of lease.
7. Investments
Long term investments are stated at cost. Current investments are
stated at lower of cost and market price. Provision for diminution in
the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management.
8. Inventories
Inventories are measured at lower of cost and net realizable value.
Cost of raw materials, stores & spares parts are ascertained on FIFO
basis. Cost for finished goods and process stock is ascertained on full
absorption cost basis. Cost of inventories comprises of cost of
purchase, cost of conversion and other costs incurred in bringing them
to their present locations condition.
9. Government Grants:
Government grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
Profit and Loss account. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
10. Revenue Recognition
Sales are recognized when goods are supplied. Sales are net of trade
discounts, rebates and sales tax. It does not include interdivisional
sales.
Revenue in respect of other item is recognized when no significant
uncertainty as to its determination or realization exists.
11. Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
12. Foreign Currency Transactions
Foreign Currency Transactions (FCT) and forward exchange contracts used
to hedge FCT (including firm commitments and forecast transactions) are
initially recognised at the spot rate on the date of the transaction/
contract. Monetary assets and liabilities relating to foreign currency
transactions and forward exchange contracts remaining unsettled at the
end of the year are translated at year end rates.
The Company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31 st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases by transfer to " Foreign Currency Monetary Items
Translation Difference Account" to be amortised over the balance period
of the long term monetary items or 31 st March, 2012 whichever is
earlier. Exchange difference recognised in the Profit & Loss Account up
to financial year ended 31 st March, 2008 relating to said long term
monetary items in foreign currency has been adjusted against opening
revenue reserve as provided in the rules.
The differences in translation of FCT and forward exchange contracts
used to hedge FCT (excluding the long term foreign currency monetary
items accounted in line with Companies (Accounting Standards) Amendment
Rules 2009 on Accounting Standard 11 notified by Government of India on
31 st March, 2009) and realised gains and losses are recognised in the
Profit and Loss Account. The outstanding derivative contracts at the
balance sheet date other than forward exchange contracts used to hedge
FCT are valued by marking them to market and losses, if any, are
recognised in the Profit and Loss Account.
13. Employee Benefits
Short -term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
Post employment and other long term employee benefits are recognized as
an expense in the profit and loss account for the year in which the
employee has rendered services.The expense is recognized at the present
value of the amount payable determined using actuarial valuation
techniques. Actuarial gains and losses in respect of post employment
and other long term benefits are charged to profit and loss account.
14. Financial Derivatives and Commodity Hedging Transactions
In respect of financial derivatives and commodity hedging contracts,
premium paid, losses on restatement and gains/losses on settlement are
charged to the profit and loss account.
15. Taxes on Income
Income tax expenses for the year comprises of current tax and deferred
tax. Current tax provision is determined on the basis of taxable income
computed as per the provisions of the Income Tax Act. Deferred tax is
recognized for all timing differences that are capable of reversal in
one or more subsequent periods subject to conditions of prudence and by
applying tax rates that have been substantively enacted by the balance
sheet date. Minimum alternative tax (MAT) paid in accordance to the
tax laws, which gives rise to future economic benefits in the form of
adjustment of future income tax liability, is considered as an asset if
there is convincing evidence that the Group will pay normal income tax
in future. Accordingly, MAT is recognized as an asset in the balance
sheet when it is probable that the future economic benefit associated
with it will flow to the Group and the asset can be measured reliably.
16. Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
financial statements.
17. Premium on Redemption of Bonds
Premium on redemption of Foreign Currency Convertible Bonds are
adjusted against the Securities Premium Account over the life of the
Bonds.
Mar 31, 2010
1. Accounting Convention
The financial statements are prepared under the historical cost
convention on the "Accrual Concept" of accountancy in accordance with
the accounting principles generally accepted in India and comply with
the accounting standards issued by the Institute of Chartered
Accountants of India to the extent applicable and with the relevant
provisions of the Companies Act, 1956.
2. Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known / materialized.
3. Fixed Assets
Tangible and Intangible Assets are stated at cost less accumulated
depreciation and impairment losses, if any. Cost comprises of all
expenses incurred to bring the assets to its present location and
condition. Borrowing costs directly attributable to the acquisition /
construction are included in the cost of fixed assets.
In case of new projects / expansion of existing projects, expenditure
incurred during construction / preoperative period including interest
and finance charges on specific / general purpose loans, prior to
commencement of commercial production are capitalized. The same has
been allocated to the respective fixed assets on completion of
construction / erection of the capital project / fixed assets.
Capital assets (including expenditure incurred during the construction
period) under erection / installation are stated in the Balance Sheet
as ÃCapital Work in Progress.Ã
4. Lease Assets acquired under leases where a significant portion of
the risk and rewards of ownership are retained by the lessor are
classified as operating leases. Lease rentals are charged to the profit
and loss Account on accrual basis.
5. Impairment of Assets At each balance sheet date, the Company reviews
the carrying amounts of its fixed assets to determine whether there is
any indication that those assets suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of impairment loss.
Recoverable amount is the higher of an assetÃs net selling price and
value in use. Of the asset and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset.
6. Depreciation
All Tangible assets, except freehold land, leasehold land and capital
work in progress, are depreciated on a straight line method at the
rates and in the manner prescribed in Schedule XIV of the CompaniesÃ
Act, 1959. Depreciation on additions to / deletions from fixed assets
made during the period is provided on pro-rata basis form / up to the
month of such addition / deletion as the case may be. Amortisation in
respect of Intangible assets is provided on Straight Line basis over
the period of under lying contract or estimated period its economic
life. Leasehold land is amortized over the period of lease.
7. Investments
Long term investments are stated at cost. Current investments are
stated at lower of cost and market price. Provision for diminution in
the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management.
8. Inventories
Inventories are measured at lower of cost and net realizable value.
Cost of raw materials, stores & spares parts are ascertained on FIFO
basis. Cost for finished goods and process stock is ascertained on full
absorption cost basis. Cost of inventories comprises of cost of
purchase, cost of conversion and other costs incurred in bringing them
to their present location & condition.
9. Government Grants:
Government grants are recognized when there is reasonable assurance
that the same will be received. Revenue grants are recognized in the
Profit and Loss account. Capital grants relation to specific fixed
assets are reduced from the gross value of the respective fixed assets.
10. Revenue Recognition
Sales are recognized when goods are supplied. Sales are net of trade
discounts, rebates and sales tax. It does not include interdivisional
sale. Revenue in respect of other item is recognized when no
significant uncertainty as to its determination or realization exists.
11.Borrowing Cast
Borrowing cast that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cast
of such assets. A qualifying asset in one that necessarily takes a
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
12. Foreign Currency
Transactions Foreign Currency Transactions (FCT) an d forward exchange
contracts used to hedge FCT (including firm commitments and forecast
transactions) are initially recognized at the spot rate on the date of
the transaction/contract. Monetary assets and liabilities relating to
foreign currency transactions and forward exchange contracts remaining
unsettled at the End of the year are translated at year end rates. The
Company has opted for accounting the exchange difference arising on
reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases by transfer to ÃForeign Currency Monetary Items
Translation Difference Accountà to be amortised over the balance period
of the long term monetary items or 31st March, 2001 whichever is
earlier. Exchange difference recognized in the Profit & Loss Account up
to financial year ended 31st March, 2008 relating to said long term
monetary items in foreign currency has been adjusted against opening
revenue reserve as provided in the rules.
The differences in translation of FCT and forward exchange contracts
used to hedge FCT (excluding the long term foreign currency monetary
items accounted in line with Companies (Accounting Standards) Amendment
Rules 2009 on Accounting Standard 11 notified by Government of India on
31st March, 2009) and realized gains and losses are recognized in the
Profit and Loss Account. The outstanding derivative contracts at the
balance sheet date other than forward exchange contracts used to hedge
FCT are valued by marking them to market and losses, if any, are
recognized in the Profit and Loss Account.
13. Employee Benefits
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
Post employment and other long term employee benefits are recognized as
an expense in the profit and loss account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to profit and loss
account
14. Financial Derivatives and Commodity Hedging Transactions
In respect of financial derivatives and commodity hedging contracts,
premium paid, losses on restatement and gains/losses on settlement are
charged to the profit and loss account.
15. Taxes on Income
Income tax expenses for the year comprises of current tax and deferred
tax. Current tax provision is determined on the basis of taxable income
computed as per the provisions of the Income Tax Act. Deferred tax is
recognized for all timing differences that are capable of reversal in
one or more subsequent periods subject to conditions of prudence and by
applying tax rates that have been substantively enacted by the balance
sheet date.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Group will pay normal income tax in
future. Accordingly, MAT is recognized as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Group and the asset can be measured reliably.
16. Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes.
Contingent assets are neither recognized nor disclosed in the financial
statements.
17. Premium on Redemption of Bonds
Premium on redemption of Foreign Currency Convertible Bands are
adjusted against the Securities Premium Account over the life of the
Bonds.