Mar 31, 2023
1.3 Functional and Presentation Currency:
The financial statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates, and all values are rounded to the nearest crores, utpo 2 decimal places except as otherwise indicated.
1.4 Business Combination and Goodwill/Capital Reserve:
The Company uses the acquisition method of accounting to account for business combinations. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. Control exists when the Company is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. In assessing control, potential voting rights are considered only if the rights are substantive.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in Other Comprehensive Income (OCI) and accumulated in other equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain directly in other equity as capital reserve, without routing the same through OCI.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Company to the previous owners of the acquiree, and equity interests issued by the Company. Consideration transferred also includes the fair value of any contingent consideration. Consideration transferred does not include amounts related to the settlement of pre-existing relationships. Any goodwill that arises on account of such business combination is tested annually for impairment.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent
Grasim Industries Limited ("the Company") is a limited Company incorporated and domiciled in India. The registered office is at Birlagram, Nagda - 456 331, Dist. Ujjain (M.P.), India. The Company is a public limited Company, and its shares are listed on the BSE Limited, India, and the National Stock Exchange of India Limited, India, and the Company''s Global Depository Receipts are listed on the Luxembourg Stock Exchange.
The Company is engaged primarily in Viscose (Pulp, Fibre and Yarn), Chemicals (Caustic Soda, Speciality and allied Chemicals) and others (Insulators, Textiles, Paints, B2B E-Commerce and Solar Power Designing).
1. SIGNIFICANT ACCOUNTING POLICIES1.1 Statement of Compliance:
These financial statements are prepared and presented in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time as notified under section 133 of Companies Act, 2013, the relevant provisions of the Companies Act, 2013 ("the Act") and the guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable. The accounting policies have been consistently applied for all the periods presented in the financial statements.
The financial statements have been prepared and presented on the going concern basis and at historical cost, except for the following assets and liabilities, which have been measured as indicated below:
⢠Derivative Financial Instruments at fair value (covered under para 1.20)
⢠Certain financial assets and liabilities at fair value [refer accounting policy regarding financial instruments (covered under para 1.22)]
⢠Assets held for disposal - measured at the lower of its carrying amount and fair value less cost to sell;
⢠Employee''s Defined Benefit Plan measured as per actuarial valuation;
⢠Employee Stock Option Plans measured at fair value; and
⢠Assets and Liabilities acquired under Business Combination measured at fair value.
consideration that meets the definition of a financial instrument is classified as equity, then it is not re-measured and the settlement is accounted for within other equity. Otherwise, other contingent consideration is re-measured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recorded in the Statement of Profit and Loss.
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably. On an acquisition-by-acquisition basis, the Company recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest''s proportionate share of the acquiree''s identifiable net assets. Transaction costs that the Company incurs in connection with a business combination, such as Stamp Duty for title transfer in the name of the Company, finder''s fees, legal fees, due diligence fees and other professional and consulting fees, are expensed as incurred.
1.5 Classification of Assets and Liabilities as Current and Non-Current:
All assets and liabilities are classified as current or non-current as per the Company''s normal operating cycle, Ind AS-1 and other criteria set out in the Division II of Schedule III of the Companies Act, 2013. Based on the nature of products and the time lag between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12-month period has been considered by the Company as its normal operating cycle.
1.6 Property, Plant and Equipment (PPE):
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property plant and equipment recognised as at 1st April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Property, plant and equipment are stated at acquisition or construction cost less accumulated depreciation and impairment loss. Freehold land is stated at cost less impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use, including relevant borrowing costs and any expected costs of decommissioning.
I f significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
The cost of an item of PPE is recognised as an asset if, and only if, it is probable that the economic benefits associated with the item will flow to the Company in future periods and the cost of the item can be measured reliably. Expenditure incurred after the PPE have been put into operations, such as repairs and maintenance expenses, are charged to the Standalone Statement of Profit and Loss during the year in which they are incurred.
Items such as spare parts, standby equipment and servicing equipment are recognised as PPE when these are held for use in the production or supply of goods or services, or for administrative purpose, and are expected to be used for more than one year. Otherwise, such items are classified as inventory.
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of PPE, is determined as the difference between the sales proceeds and the carrying amount of the asset, and is recognised in Statement of Profit and Loss.
Capital work-in-progress includes cost of property, plant and equipment under installation/under development as at the reporting date.
1.7 Treatment of Expenditure during Construction Period:
Expenditure, net of income earned, during construction (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE) period is included under capital work-in-progress, and the same is allocated to the respective PPE on the completion of construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under "Other Non-Current Assets".
1.8 Depreciation:
Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight-line basis, except for Viscose Staple Fibre Division
A. Major assets class where useful life considered as provided in Schedule II: |
||
S. No. |
Nature of Assets |
Estimated Useful Life of the Assets |
1. |
Plant and Machinery - Continuous Process Plant |
25 years |
2. |
Reactors |
3 years |
3. |
Vessel / Storage Tanks |
20 years |
4. |
Factory Buildings |
30 years |
5. |
Building (other than Factory Buildings) RCC Frame Structure |
60 years |
6. |
Electric Installations and Equipment (at Factory) |
10 years |
7. |
Computer and other Hardwares |
3 years |
8. |
General Laboratory Equipment |
10 years |
9. |
Railway Sidings |
15 years |
10. |
- Carpeted Roads-Reinforced Cement Concrete (RCC) |
10 years |
- Carpeted Roads-otherthan RCC |
5 years |
|
- Non-Carpeted Roads |
3 Years |
|
11. |
Fences, wells, tube wells |
5 years |
In case of certain class of assets, the Company uses different useful life than those prescribed in Schedule II of the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of the management''s best estimation of getting economic benefits from those classes of assets. The Company uses its technical expertise along with historical and industry trends for arriving at the economic life of an asset.
Also, useful life of the part of PPE which is significant to the total cost of PPE, has been separately assessed and depreciation has been provided accordingly.
B. Assets where useful life differs from Schedule II:
S. No. |
Nature of Assets |
Useful Life as Prescribed by Schedule II of the Companies Act, 2013 |
Estimated Useful Life of the Assets |
1. |
Plant & Machinery :- |
||
1.1 |
Other Than Continuous Process Plant (Single Shift) |
15 Years |
15-20 years |
1.2 |
Other Than Continuous Process Plant (Double Shift) |
Additional 50% depreciation over single shift (10 Years) |
20 years |
1.3 |
Other Than Continuous Process Plant (Triple Shift) |
Additional 100% depreciation over single shift (7.5 Years) |
7.5-15 years |
2. |
Motor Vehicles |
6-10 Years |
4-5 years |
3. |
Electronic Office Equipment |
5 Years |
4 years |
4. |
Furniture, Fixtures and Electrical Fittings |
10 Years |
5-7 years |
5. |
Building (other than Factory Buildings) other than RCC Frame Structures |
30 Years |
60 years |
6. |
Power Plant |
40 Years |
25 years |
7. |
Servers and Networks |
6 Years |
3 years |
S. No. Nature of Assets |
Useful Life as Prescribed by Schedule II of the Companies Act, 2013 |
Estimated Useful Life of the Assets |
8. Spares in the nature of PPE |
10 years |
|
9 Assets individually costing less than or equal to '' 10,000/- |
Fully depreciated in the year of purchase |
|
10. Separately identified Component of Plant and Machinery |
2-25 years |
(excluding Power Plants), Nagda, and Corporate Finance Division, Mumbai for which it is provided on written down value method, over the useful lives as prescribed in Schedule II of the Companies Act, 2013, or as per technical assessment.
Depreciable amount for PPE is the cost of PPE less its estimated residual value. The useful life of PPE is the period
over which PPE is expected to be available for use by the Company, or the number of production or similar units expected to be obtained from the asset by the Company.
The Company has used the following useful lives of the property, plant and equipment to provide depreciation.
The estimated useful lives, residual values and the 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.
Continuous process plant, as defined in Schedule II of the Companies Act, 2013, have been classified on the basis of technical assessment and depreciation is provided accordingly.
Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition, and in case of a new Project, from the date of commencement of commercial production. Depreciation on deductions/ disposals is provided on a pro-rata basis up to the month preceding the month of deduction/disposal.
1.9 Intangible Assets acquired separately and Amortisation:
On transition to Ind AS, the Company has elected to continue with the carrying value of all its Intangible Assets recognised as at 1 April 2015, measured as per the previous GAAP and use that carrying value as the deemed cost of the Intangible Assets.
Intangible assets, acquired separately, are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset. Intangible assets are amortised on a straight-line basis over their estimated useful lives.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is de-recognised.
Intangible Assets and their useful lives are as under:
S. No. |
Nature of Assets |
Estimated Useful Life of the Assets |
1. |
Computer Software |
3 years |
2. |
Trademarks, Technical Know-how |
10 years |
3. |
Value of License/Right to use infrastructure |
10 years |
4. |
Customer Relationship |
15-25 years |
5. |
Brands |
10 years |
6. |
Production Formula |
10 years |
7. |
Distribution Network |
5-25 years |
8. |
Right to Manage and Operate Manufacturing Facility |
15 years |
9. |
Non-compete fees |
3 years |
10. |
Order Backlog |
3 months - 1 year |
1.10 Internally Generated Intangible Assets - Research and Development Expenditure:
Revenue expenditure on research is expensed under the respective heads of the account in the period in which it is incurred. Development expenditure is capitalised as an asset, if the following conditions can be demonstrated:
a) The technical feasibility of completing the asset so that it can be made available for use or sell.
b) The Company has intention to complete the asset and use or sell it.
c) In case of intention to sell, the Company has the ability to sell the asset.
d) The future economic benefits are probable.
e) The Company has ability to measure the expenditure attributable to the asset during its development reliably.
Other development costs, which do not meet the above criteria, are expensed out during the period in which they are incurred.
PPE procured for research and development activities are capitalised.
1.11 Discontinued operations and non-current assets held for sale:
Discontinued operation is a component of the Company that has been disposed of or classified as held for sale and represents a major line of business.
Non-current assets and disposal groups are classified as held for sale if their carrying amount is intended to be recovered principally through a sale (rather than through continuing use) when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset (or disposal group) and the sale is highly probable and is expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at lower of their carrying amount and fair value less costs to sell.
1.12 Impairment of Non-Financial Assets:
At the end of each reporting period, the Company reviews the carrying amounts of non-financial 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.
I ntangible 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 then the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing the 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.
Ifthe 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 the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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 cashgenerating unit) in prior years. A reversal of an impairment
loss is recognised immediately in the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Inventories are valued at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Raw materials, stores and spare parts, and packing materials are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. The cost is computed on weighted-average basis which includes expenditure incurred for acquiring inventories like purchase price, import duties, taxes (net of tax credit) and other costs incurred in bringing the inventories to their present location and condition.
Cost of finished goods and work-in-progress includes the cost of conversion based on normal capacity and other costs incurred in bringing the inventories to their present location and condition. The cost of finished goods and work-inprogress is computed on weighted-average basis.
In the absence of cost, waste/scrap is valued at estimated net realisable value.
Obsolete, defective, slow moving and unserviceable inventories, if any, are duly provided for.
Proceeds in respect of sale of raw materials/stores are credited to the respective heads.
1.14 Cash and Cash Equivalents
Cash and Cash Equivalents comprise cash on hand and cash at banks, including fixed deposit with original maturity period of three months or less and short-term highly liquid investments with an original maturity of three months or less.
Cash flows are reported using the indirect method, whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item
of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
1.16 Employee Benefits:Short-Term Employee Benefits:
Short-term employee benefits are recognised as an expense on accrual basis.
Contribution payable to the recognised provident fund and approved superannuation scheme, which are substantially defined contribution plans, is recognised as expense in the Standalone Statement of Profit and Loss, when employees have rendered the service entitling them to the contribution.
The provident fund contribution as specified under the law is paid to the Regional Provident Fund Commissioner.
The obligation in respect of defined benefit plans, which covers Gratuity, Pension and other post-employment medical benefits, are provided for on the basis of an actuarial valuation at the end of each financial year using projected unit credit method. Gratuity is funded with an approved trust.
In respect of certain employees, Provident Fund contributions are made to a Trust, administered by the Company. The interest rate payable to the members of the Trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, and shortfall, if any, shall be made good by the Company. The Company''s liability is actuarially determined (using the Projected Unit Credit Method) at the end of the year, and any shortfall in the Fund size maintained by the Trust set-up by the Company is additionally provided for.
Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in Other Comprehensive Income in the period in which they occur.
Re-measurement recognised in Other Comprehensive Income is reflected immediately in retained earnings and will
not be reclassified to profit or loss in the Statement of Profit and Loss. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠re-measurement.
The Company presents the first two components of defined benefit costs in Statement of Profit and Loss in the line item ''Employee Benefits Expense''.
The present value of the Defined Benefit Plan liability is calculated using a discount rate, which is determined by reference to market yields at the end of the reporting period on government bonds.
The retirement benefit obligation, recognised in the Balance Sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in the future contribution to the plans.
Other Long-term Benefits:
Long-term compensated absences are provided for on the basis of an actuarial valuation at the end of each financial year. Actuarial gains/losses, if any, are recognised immediately in the Standalone Statement of Profit and Loss.
1.17 Employee Share-Based Payments:
Equity-settled Transactions
Equity-settled share-based payments to employees are measured by reference to the fair value of the equity instruments at the grant date using Black-Scholes Model and Binomial Model.
The fair value, determined at the grant date of the equity-settled share-based payments, is charged to Standalone Statement of Profit and Loss on a systematic basis over the vesting period of the option, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in other equity.
Exchange differences on monetary items are recognised in the Standalone Statement of Profit and Loss in the period in which these arise except for:
⢠exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and
⢠exchange differences relating to qualifying effective cash flow hedges.
1.20 Derivative Financial Instruments and Hedge Accounting:
The Company enters into forward contracts to hedge the foreign currency risk of firm commitments and highly probable forecast transactions. Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Standalone Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Standalone Statement of Profit and Loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company enters into derivative financial instruments viz. foreign exchange forward contracts, interest rate swaps and cross currency swaps to manage its exposure to interest rate, foreign exchange rate risks and commodity prices. The Company does not hold derivative financial instruments for speculative purposes.
Hedge Accounting:
The Company designates certain hedging instruments in respect of foreign currency risk, interest rate risk and commodity price risk as cash flow hedges. At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company''s risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging
In case of forfeiture/lapse stock option, which is not vested, amortised portion is reversed by credit to employee compensation expense. In a situation where the stock option expires unexercised, the related balance standing to the credit of the Employee Stock Options Outstanding Account is transferred within other equity.
The cost of cash-settled transactions is measured initially at fair value at the grant date using a Black-Scholes Merton Formula. This fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The liability is re-measured to fair value at each reporting date up to, and including the settlement date, with changes in fair value recognised in employee benefits expense.
The Company has created an Employee Benefit Trust (EBT) for providing share-based payment to its employees. The Company uses EBT as a vehicle for distributing shares to employees under the Employee Stock Option Scheme. The EBT purchase shares of the Company from the market, for giving shares to employees. The Company treats EBT as its extension and shares held by EBT are treated as treasury shares.
Own equity instruments that are re-acquired (treasury shares) are recognised at cost and deducted from other equity. No gain or loss is recognised in the Standalone statement of profit and loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Share options whenever exercised, would be settled from such treasury shares.
1.19 Foreign Currency Transactions:
In preparing the financial statements of the Company, transactions in foreign currencies, other than the Company''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 assets and liabilities denominated in foreign currencies are translated at the rate prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.
instrument''s fair value in offsetting the exposure to changes in the hedged item''s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows, and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognised in Other Comprehensive Income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Standalone Statement of Profit and Loss.
Amounts previously recognised in Other Comprehensive Income and accumulated in other equity relating to (effective portion as described above) are re-classified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a nonfinancial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in Other Comprehensive Income and accumulated in other equity at that time remains in other equity and is recognised when the forecast transaction is ultimately recognised in Standalone Statement of Profit and Loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in other equity is recognised immediately in Standalone Statement of Profit and Loss.
The Company measures financial instruments, such as investments (other than equity investments in Subsidiaries, Joint Ventures and Associates) and derivatives at fair values at each Balance Sheet date.
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.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use, or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities (for which fair value is measured or disclosed in the financial statements) are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable other than quoted prices included in Level 1.
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for disposal in discontinued operations.
At each reporting date, management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company''s accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial AssetsInitial Recognition and Measurement
All financial assets are recognised initially at fair value. However, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset are added to the fair value. However, trade receivables that do not contain a significant financing component are measured at transaction price (net of variable consideration). Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
For purposes of subsequent measurement, financial assets are classified in four categories:
⢠Debt instruments at amortised cost
⢠Debt instruments at fair value through Other Comprehensive Income (FVTOCI)
⢠Debt instruments, derivatives and equity instruments, mutual funds at fair value through profit or loss (FVTPL)
⢠Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt Instruments at Amortised Cost
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.
A ''debt instrument'' is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The asset''s contractual cash flows represent SPPI on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On de-recognition of the asset, cumulative gain or loss previously recognised in OCI is re-classified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL.
I n addition, the Company may elect to designate a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''Accounting Mismatch'').
Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in the Standalone Statement of Profit and Loss.
I nvestment in Subsidiaries, Associates and Joint ventures are out of scope of Ind AS 109 and hence, the Company has accounted for its investment in Subsidiaries, Associates and Joint venture at cost.
All other equity investments are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For equity instruments other than held for trading, the Company has irrevocable option to present in Other Comprehensive Income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Where the Company classifies equity instruments as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts of profit or loss from OCI to Statement of Profit and Loss, even on sale of investment.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Standalone Statement of Profit and Loss.
Impairment of Financial Assets:
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. In case of financial assets, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments -for recognition of impairment loss allowance. The application
Financial Guarantee Contracts:
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs, because the specified debtor fails to make a payment when due, in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109, and the amount recognised less cumulative amortisation.
De-recognition of Financial Liabilities:
The Company de-recognises financial liabilities when and only when, the Company''s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability de-recognised and the consideration paid and payable is recognised in Standalone Statement of Profit and Loss.
Embedded Derivatives:
An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a standalone derivative. An embedded derivative causes some or all of the cash flows that would otherwise be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable, that the variable is not specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a re-classification of a financial asset out of the fair value through profit or loss. If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109, to the entire hybrid contract. Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value, if their economic characteristics and risks are not closely related to those of the host contracts, and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at
of simplified approach does not require the Company to track changes in credit risk of trade receivable. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
De-recognition of Financial Assets:
The Company de-recognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises an associated liability.
On de-recognition 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 recognised in Other Comprehensive Income and accumulated in other equity is recognised in Standalone Statement of Profit and Loss.
Financial Liabilities and Equity Instruments: Classification as Debt or Equity:
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 instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Financial liabilities are classified, at initial recognition as fair value through profit or loss:
⢠Loans and borrowings,
⢠Payables, or
⢠as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings and payables, are recognised net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities at FVTPL:
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading, if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading, unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the Standalone Statement of Profit and Loss.
Financial liabilities, designated upon initial recognition at FVTPL, are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are de-recognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Standalone Statement of Profit and Loss.
fair value with changes in fair value recognised in profit or loss, unless designated as effective hedging instruments.
Offsetting of Financial Instruments:
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(a) Revenue from contracts with customers;
⢠Revenue is recognised when the Company satisfies a performance obligation on the basis of approved contracts regarding the transfer of goods or services to a customer. This is achieved when control of the product has been transferred to the customer.
⢠The Company considers the terms of the contract in determining the transaction price. The transaction price is based upon the amount the Company expects to be entitled to in exchange for transferring of promised goods and services to the customer after deducting incentive programs, including but not limited to discounts, volume rebates etc. The transaction price of goods sold and services rendered is net of variable consideration and excludes taxes and duties collected on behalf of the Government.
⢠Variable consideration - This includes incentives, volume rebates, discounts etc. It is estimated at contract inception considering the terms of various schemes with customers and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. It is reassessed at end of each reporting period.
⢠Significant financing component - Generally, the Company receives short-term advances from its customers. Using the practical expedient in Ind AS 115, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less.
(b) Dividend income is accounted for when the right to receive the income is established.
(c) For all financial instruments measured at amortised cost or at fair value through Other Comprehensive Income, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.
(d) I nsurance, railway and other claims, where quantum of accruals cannot
Mar 31, 2022
CORPORATE INFORMATION
Grasim Industries Limited ("the Company") is a limited Company incorporated and domiciled in India. The registered office is at Birlagram, Nagda - 456 331, Dist. Ujjain (M.P.), India. The Company is a public limited Company and its shares are listed on the BSE Limited, India, and the National Stock Exchange of India Limited, India, and the Company''s Global Depository Receipts are listed on the Luxembourg Stock Exchange.
The Company is engaged primarily in Viscose (Pulp, Fibre and Yarn), Chemicals (Caustic Soda, Epoxy and allied Chemicals) and others (Insulators, Textiles and Solar Power Designing, Engineering Procurement and Commissioning).
1. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared and presented in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time as notified under section 133 of Companies Act, 2013, the relevant provisions of the Companies Act, 2013 ("the Act") and the guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
The financial statements have been prepared and presented on the going concern basis and at historical cost, except for the following assets and liabilities, which have been measured as indicated below:
⢠Derivative Financial Instruments at fair value (covered under para 1.20)
⢠Certain financial assets and liabilities at fair value [refer accounting policy regarding financial instruments (covered under para 1.22)]
⢠Assets held for disposal - measured at the lower of its carrying amount and fair value less cost to sell;
⢠Employee''s Defined Benefit Plan measured as per actuarial valuation.
⢠Employee Stock Option Plans measured at fair value and
⢠Assets and Liabilities acquired under Business Combination measured at fair value.
1.3 Functional and Presentation Currency:
The financial statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates, and all values are rounded to the
nearest Crores, utpo 2 decimal places except as otherwise indicated.
1.4 Business Combination and Goodwill/Capital Reserve:
The Company uses the acquisition method of accounting to account for business combinations. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. Control exists when the Company is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. In assessing control, potential voting rights are considered only if the rights are substantive.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in Other Comprehensive Income (OCI) and accumulated in other equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain directly in other equity as capital reserve, without routing the same through OCI.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Company to the previous owners of the acquiree, and equity interests issued by the Company. Consideration transferred also includes the fair value of any contingent consideration. Consideration transferred does not include amounts related to the settlement of pre-existing relationships. Any goodwill that arises on account of such business combination is tested annually for impairment.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not re-measured and the settlement is accounted for within other equity. Otherwise, other contingent consideration is re-measured at fair value at each reporting date and
subsequent changes in the fair value of the contingent consideration are recorded in the Statement of Profit and Loss.
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably. On an acquisition-by-acquisition basis, the Company recognises any noncontrolling interest in the acquiree either at fair value or at the non-controlling interest''s proportionate share of the acquiree''s identifiable net assets. Transaction costs that the Company incurs in connection with a business combination, such as Stamp Duty for title transfer in the name of the Company, finder''s fees, legal fees, due diligence fees and other professional and consulting fees, are expensed as incurred.
1.5 Classification of Assets and Liabilities as Current and Non-Current:
All assets and liabilities are classified as current or noncurrent as per the Company''s normal operating cycle, and other criteria set out in Schedule III of the Companies Act, 2013. Based on the nature of products and the time lag between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 month period has been considered by the Company as its normal operating cycle.
1.6 Property, Plant and Equipment (PPE):
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property plant and equipment recognized as at 1st April, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Property, plant and equipment are stated at acquisition or construction cost less accumulated depreciation and impairment loss. Freehold land is stated at cost less impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use, including relevant borrowing costs and any expected costs of de-commissioning.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
The cost of an item of PPE is recognised as an asset if, and only if, it is probable that the economic benefits associated with the item will flow to the Company in future periods and the cost of the item can be measured reliably.
Expenditure incurred after the PPE have been put into operations, such as repairs and maintenance expenses, are charged to the Standalone Statement of Profit and Loss during the year in which they are incurred.
I tems such as spare parts, standby equipment and servicing equipment are recognised as PPE when these are held for use in the production or supply of goods or services, or for administrative purpose, and are expected to be used for more than one year. Otherwise, such items are classified as inventory.
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of PPE, is determined as the difference between the sales proceeds and the carrying amount of the asset, and is recognised in Statement of Profit and Loss.
Capital work-in-progress includes cost of property, plant and equipment under installation/under development as at the reporting date.
1.7 Treatment of Expenditure during Construction Period:
Expenditure, net of income earned, during construction (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE) period is included under capital work-in-progress, and the same is allocated to the respective PPE on the completion of construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under "Other NonCurrent Assets".
1.8 Depreciation:
Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight-line basis, except for Viscose Staple Fibre Division (excluding Power Plants), Nagda, and Corporate Finance Division, Mumbai for which it is provided on written down value method, over the useful lives as prescribed in Schedule II of the Companies Act, 2013, or as per technical assessment.
Depreciable amount for PPE is the cost of PPE less its estimated residual value. The useful life of PPE is the period over which PPE is expected to be available for use by the Company, or the number of production or similar units expected to be obtained from the asset by the Company.
The Company has used the following useful lives of the property, plant and equipment to provide depreciation. A. Major assets class where useful life considered as provided in Schedule II:
S. No. |
Nature of Assets |
Estimated Useful Life of the Assets |
1. |
Plant and Machinery - Continuous Process Plant |
25 years |
2. |
Reactors |
3 years |
3. |
Vessel / Storage Tanks |
20 years |
4. |
Factory Buildings |
30 years |
5. |
Building (other than Factory Buildings) RCC Frame Structure |
60 years |
6. |
Electric Installations and Equipment (at Factory) |
10 years |
7. |
Computer and other Hardwares |
3 years |
8. |
General Laboratory Equipment |
10 years |
9. |
Railway Sidings |
15 years |
10. |
- Carpeted Roads- Reinforced Cement Concrete (RCC) |
10 years |
- Carpeted Roads- other than RCC |
5 years |
|
- Non Carpeted Roads |
3 Years |
|
11. |
Fences, wells, tube wells |
5 years |
In case of certain class of assets, the Company uses different useful life than those prescribed in Schedule II of the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of the management''s best estimation of getting economic benefits from those classes of assets. The Company uses its technical expertise along with historical and industry trends for arriving at the economic life of an asset.
Also, useful life of the part of PPE which is significant to the total cost of PPE, has been separately assessed and depreciation has been provided accordingly.
B. Assets where useful life differs from Schedule II:
S. No. |
Nature of Assets |
Useful Life as Prescribed by Schedule II of the Companies Act, 2013 |
Estimated Useful Life of the Assets |
1. |
Plant & Machinery:- |
||
1.1 |
Other Than Continuous Process Plant (Single Shift) |
15 Years |
15-20 years |
1.2 |
Other Than Continuous Process Plant (Double Shift) |
Additional 50% depreciation over single shift (10 Years) |
20 years |
1.3 |
Other Than Continuous Process Plant (Triple Shift) |
Additional 100% depreciation over single shift (7.5 Years) |
7.5-15 years |
2. |
Motor Vehicles |
6-10 Years |
4-5 years |
3. |
Electronic Office Equipment |
5 Years |
4 years |
4. |
Furniture, Fixtures and Electrical Fittings |
10 Years |
5-7 years |
5. |
Building (other than Factory Buildings) other than RCC Frame Structures |
30 Years |
60 years |
6. |
Power Plant |
40 Years |
25 years |
7. |
Servers and Networks |
6 Years |
3 years |
8. |
Spares in the nature of PPE |
10 years |
|
9. |
Assets individually costing less than or equal to '' 10,000/- |
Fully depreciated in the year of purchase |
|
10. |
Separately identified Component of Plant and Machinery |
2-25 years |
The estimated useful lives, residual values and the 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.
Continuous process plant, as defined in Schedule II of the Companies Act, 2013, have been classified on the basis of technical assessment and depreciation is provided accordingly.
Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition, and in case of a new Project, from the date of commencement of commercial production. Depreciation on deductions/ disposals is provided on a pro-rata basis up to the month preceding the month of deduction/disposal.
1.9 Intangible Assets acquired separately and Amortisation:
On transition to Ind AS, the Company has elected to continue with the carrying value of all its Intangible Assets recognized as at 1 April, 2015, measured as per the previous GAAP and use that carrying value as the deemed cost of the Intangible Assets.
I ntangible assets, acquired separately, are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
I ntangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset. Intangible assets are amortised on a straight-line basis over their estimated useful lives.
I ntangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is de-recognised.
Intangible Assets and their useful lives are as under:
S. No. |
Nature of Assets |
Estimated Useful Life of the Assets |
1. |
Computer Software |
3 years |
2. |
Trademarks, Technical Know-how |
10 years |
3. |
Value of License/Right to use infrastructure |
10 years |
4. |
Customer Relationship |
15-25 years |
5. |
Brands |
10 years |
6. |
Production Formula |
10 years |
7. |
Distribution Network |
5-25 years |
8. |
Right to Manage and Operate Manufacturing Facility |
15 years |
9. |
Non-compete fees |
3 years |
10. |
Order Backlog |
3 months - 1 year |
1.10 Internally Generated Intangible Assets - Research and Development Expenditure:
Revenue expenditure on research is expensed under the respective heads of the account in the period in which it is incurred. Development expenditure is capitalized as an asset, if the following conditions can be demonstrated:
a) The technical feasibility of completing the asset so that it can be made available for use or sell.
b) The Company has intention to complete the asset and use or sell it.
c) I n case of intention to sell, the Company has the ability to sell the asset.
d) The future economic benefits are probable.
e) The Company has ability to measure the expenditure attributable to the asset during its development reliably.
Other development costs, which do not meet the above criteria, are expensed out during the period in which they are incurred.
PPE procured for research and development activities are capitalised.
1.11 Discontinued operations and non-current assets held for sale:
Discontinued operation is a component of the Company that has been disposed of or classified as held for sale and represents a major line of business.
Non-current assets and disposal groups are classified as held for sale if their carrying amount is intended to be recovered principally through a sale (rather than through continuing use) when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset (or disposal group) and the sale is highly probable and is expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at lower of their carrying amount and fair value less costs to sell.
1.12 Impairment of Non-Financial Assets:
At the end of each reporting period, the Company reviews the carrying amounts of non-financial 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 then the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing the 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 the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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 the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
I nventories are valued at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Raw materials, stores and spare parts, and packing materials are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. The cost is computed on weighted-average basis which includes expenditure incurred for acquiring inventories like purchase price, import duties, taxes (net of tax credit) and other costs incurred in bringing the inventories to their present location and condition.
Cost of finished goods and work-in-progress includes the cost of conversion based on normal capacity and other costs incurred in bringing the inventories to their present location and condition. The cost of finished goods and work-in-progress is computed on weighted-average basis.
In the absence of cost, waste/scrap is valued at estimated net realisable value.
Obsolete, defective, slow moving and unserviceable inventories, if any, are duly provided for.
Proceeds in respect of sale of raw materials/stores are credited to the respective heads.
1.14 Cash and Cash Equivalents
Cash and Cash Equivalents comprise cash on hand and cash at banks, including fixed deposit with original maturity period of three months or less and short-term highly liquid investments with an original maturity of three months or less.
Cash flows are reported using the indirect method, whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
Short-Term Employee Benefits:
Short-term employee benefits are recognised as an expense on accrual basis.
Contribution payable to the recognised provident fund and approved superannuation scheme, which are substantially defined contribution plans, is recognised as expense in the Standalone Statement of Profit and Loss, when employees have rendered the service entitling them to the contribution.
The provident fund contribution as specified under the law is paid to the Regional Provident Fund Commissioner.
The obligation in respect of defined benefit plans, which covers Gratuity, Pension and other post-employment medical benefits, are provided for on the basis of an actuarial valuation at the end of each financial year using projected unit credit method. Gratuity is funded with an approved trust.
In respect of certain employees, Provident Fund contributions are made to a Trust, administered by the Company. The interest rate payable to the members of the Trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, and shortfall, if any, shall be made good by the Company. The Company''s liability is actuarially determined (using the Projected Unit Credit Method) at the end of the year,
and any shortfall in the Fund size maintained by the Trust set-up by the Company is additionally provided for.
Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in Other Comprehensive Income in the period in which they occur.
Re-measurement recognised in Other Comprehensive Income is reflected immediately in retained earnings and will not be reclassified to profit or loss in the Statement of Profit and Loss. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠re-measurement.
The Company presents the first two components of defined benefit costs in Statement of Profit and Loss in the line item ''Employee Benefits Expense''.
The present value of the Defined Benefit Plan liability is calculated using a discount rate, which is determined by reference to market yields at the end of the reporting period on government bonds.
The retirement benefit obligation, recognised in the Balance Sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in the future contribution to the plans.
Other Long-Term Benefits:
Long-term compensated absences are provided for on the basis of an actuarial valuation at the end of each financial year. Actuarial gains/losses, if any, are recognised immediately in the Standalone Statement of Profit and Loss.
1.17 Employee Share Based Payments:
Equity-settled Transactions
Equity-settled share-based payments to employees are measured by reference to the fair value of the equity instruments at the grant date using Black-Scholes Model and Binomial Model.
The fair value, determined at the grant date of the equity-settled share-based payments, is charged to Standalone Statement of Profit and Loss on a systematic basis over the vesting period of the option, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in other equity.
In case of forfeiture/lapse stock option, which is not vested, amortised portion is reversed by credit to employee compensation expense. In a situation where the stock option expires unexercised, the related balance standing to the credit of the Employee Stock Options Outstanding Account is transferred within other equity.
The cost of cash-settled transactions is measured initially at fair value at the grant date using a Black-Scholes Merton Formula. This fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The liability is re-measured to fair value at each reporting date up to, and including the settlement date, with changes in fair value recognised in employee benefits expense.
The Company has created an Employee Benefit Trust (ebt) for providing share-based payment to its employees. The Company uses ebt as a vehicle for distributing shares to employees under the Employee Stock Option Scheme. The ebt purchase shares of the Company from the market, for giving shares to employees. The Company treats ebt as its extension and shares held by ebt are treated as treasury shares.
Own equity instruments that are re-acquired (treasury shares) are recognised at cost and deducted from other equity. No gain or loss is recognised in the Standalone statement of profit and loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Share options whenever exercised, would be settled from such treasury shares.
1.19 Foreign Currency Transactions:
I n preparing the financial statements of the Company, transactions in foreign currencies, other than the Company''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 assets and liabilities denominated in foreign currencies are translated at the rate prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.
Exchange differences on monetary items are recognised in the Standalone Statement of Profit and Loss in the period in which these arise except for:
⢠exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and
⢠exchange differences relating to qualifying effective cash flow hedges.
1.20 Derivative Financial Instruments and Hedge Accounting:
The Company enters into forward contracts to hedge the foreign currency risk of firm commitments and highly probable forecast transactions. Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Standalone Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Standalone Statement of Profit and Loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company enters into derivative financial instruments viz. foreign exchange forward contracts, interest rate swaps and cross currency swaps to manage its exposure to interest rate, foreign exchange rate risks and commodity prices. The Company does not hold derivative financial instruments for speculative purposes.
Hedge Accounting:
The Company designates certain hedging instruments in respect of foreign currency risk, interest rate risk and commodity price risk as cash flow hedges. At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company''s risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument''s fair value in offsetting the exposure to changes in the hedged item''s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting
changes in fair value or cash flows, and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognised in Other Comprehensive Income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Standalone Statement of Profit and Loss.
Amounts previously recognised in Other Comprehensive Income and accumulated in other equity relating to (effective portion as described above) are re-classified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in Other Comprehensive Income and accumulated in other equity at that time remains in other equity and is recognised when the forecast transaction is ultimately recognised in Standalone Statement of Profit and Loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in other equity is recognised immediately in Standalone Statement of Profit and Loss.
The Company measures financial instruments, such as investments (other than equity investments in Subsidiaries, Joint Ventures and Associates) and derivatives at fair values at each Balance Sheet date.
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.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use, or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities (for which fair value is measured or disclosed in the financial statements) are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable other than quoted prices included in Level 1.
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for disposal in discontinued operations.
At each reporting date, management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company''s accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial Recognition and Measurement
All financial assets are recognised initially at fair value. However, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset are added to the fair value. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
For purposes of subsequent measurement, financial assets are classified in four categories:
⢠Debt instruments at amortised cost
⢠Debt instruments at fair value through Other Comprehensive Income (FVTOCI)
⢠Debt instruments, derivatives and equity instruments, mutual funds at fair value through profit or loss (FVTPL)
⢠Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt Instruments at Amortised Cost
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.
Debt Instrument at FVTOCI
A ''debt instrument'' is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The asset''s contractual cash flows represent SPPI on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On de-recognition of the asset, cumulative gain or loss previously recognised in OCI is re-classified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Debt Instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
I n addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''Accounting Mismatch'').
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Standalone Statement of Profit and Loss.
Investment in Subsidiaries, Associates and Joint ventures are out of scope of Ind AS 109 and hence, the Company has accounted for its investment in Subsidiaries, Associates and Joint venture at cost.
All other equity investments are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For equity instruments other than held for trading, the Company has irrevocable option to present in Other Comprehensive Income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Where the Company classifies equity instruments as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts of profit or loss from OCI to Statement of Profit and Loss, even on sale of investment.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Standalone Statement of Profit and Loss.
Impairment of Financial Assets:
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. In case of financial assets, the Company follows the simplified approach permitted by Ind AS 109 -Financial Instruments - for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk of trade receivable. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
De-recognition of Financial Assets:
The Company de-recognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises an associated liability.
On de-recognition 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 recognised in Other Comprehensive Income and accumulated in other equity is recognised in Standalone Statement of Profit and Loss.
Financial Liabilities and Equity Instruments:
Classification as Debt or Equity:
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 instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Financial Liabilities:
Financial liabilities are classified, at initial recognition as fair value through profit or loss:
⢠Loans and borrowings,
⢠Payables, or
⢠as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings and payables, are recognised net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities at FVTPL:
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading, if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading, unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the Standalone Statement of Profit and Loss.
Financial liabilities, designated upon initial recognition at FVTPL, are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are de-recognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Standalone Statement of Profit and Loss.
Financial Guarantee Contracts:
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs, because the specified debtor fails to make a payment when due, in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the
amount of loss allowance determined as per impairment requirements of Ind AS 109, and the amount recognised less cumulative amortisation.
De-recognition of Financial Liabilities:
The Company de-recognises financial liabilities when and only when, the Company''s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability de-recognised and the consideration paid and payable is recognised in Standalone Statement of Profit and Loss.
Embedded Derivatives:
An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a standalone derivative. An embedded derivative causes some or all of the cash flows that would otherwise be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable, that the variable is not specific to a party to the contract. Re-assessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a re-classification of a financial asset out of the fair value through profit or loss. If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109, to the entire hybrid contract. Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value, if their economic characteristics and risks are not closely related to those of the host contracts, and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss, unless designated as effective hedging instruments.
Offsetting of Financial Instruments:
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(a) Revenue from contracts with customers;
⢠Revenue is recognized on the basis of approved contracts regarding the transfer of goods or services to a customer for an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.
⢠Revenue is measured at the fair value of consideration received or receivable taking into account the amount of discounts, incentives, volume rebates, outgoing taxes on sales. Any amounts receivable from the customer are recognised as revenue after the control over the goods sold are transferred to the customer which is generally on dispatch of goods.
⢠Variable consideration - This includes incentives, volume rebates, discounts etc. It is estimated at contract inception considering the terms of various schemes with customers and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. It is reassessed at end of each reporting period.
⢠Significant financing component - Generally, the Company receives short-term advances from its customers. Using the practical expedient in Ind AS 115, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less.
(b) Dividend income is accounted for when the right to receive the income is established.
(c) For all financial instruments measured at amortised cost or at fair value through Other Comprehensive Income, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.
(d) I nsurance, railway and other claims, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis.
1.24 Leases:
The Company assesses whether a contract contains a lease, at the inception of the contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration, To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether
- the contract involves the use of identified asset;
- the Company has substantially all of the economic benefits from the use of the asset through the period of leas
Mar 31, 2019
1.1 Statement of Compliance:
These financial statements are prepared and presented in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time as notified under Section 133 of the Companies Act, 2013, the relevant provisions of the Companies Act, 2013 (âthe Actâ) and the guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
The financial statements are authorised for issue by the Board of Directors of the Company at their meeting held on 24th May 2019.
1.2 Basis of Preparation:
The financial statements have been prepared and presented on the going concern basis and at historical cost, except for the following assets and liabilities, which have been measured as indicated below:
- Derivative Financial Instruments at fair value (covered under para 1.20)
- Certain financial assets and liabilities at fair value [refer accounting policy regarding financial instruments (covered under para 1.22)]
- Assets held for disposal-measured at the lower of its carrying amount and fair value less cost to sell; and
- Employeeâs Defined Benefit Plans measured as per actuarial valuation.
- Employee Stock Option Plans measured at fair value.
- Assets and Liabilities acquired under Business Combination measured at fair value.
1.3 Functional and Presentation Currency:
The financial statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates, and all values are rounded to the nearest Crore, except as otherwise indicated.
1.4 Business Combination and Goodwill/Capital Reserve:
The Company uses the acquisition method of accounting to account for business combinations. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. Control exists when the Company is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. In assessing control, potential voting rights are considered only if the rights are substantive.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in Other Comprehensive Income (OCI) and accumulated in other equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain directly in other equity as capital reserve, without routing the same through OCI.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Company to the previous owners of the acquiree, and equity interests issued by the Company. Consideration transferred also includes the fair value of any contingent consideration. Consideration transferred does not include amounts related to the settlement of pre-existing relationships. Any goodwill that arises on account of such business combination is tested annually for impairment.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not re-measured and the settlement is accounted for within other equity. Otherwise, other contingent consideration is re-measured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recorded in the Statement of Profit and Loss.
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably. On an acquisition-by-acquisition basis, the Company recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interestâs proportionate share of the acquireeâs identifiable net assets. Transaction costs that the Company incurs in connection with a business combination, such as Stamp Duty for title transfer in the name of the Company, finderâs fees, legal fees, due diligence fees and other professional and consulting fees, are expensed as incurred.
1.5 Classification of Assets and Liabilities as Current and Non-Current:
All assets and liabilities are classified as current or non-current as per the Companyâs normal operating cycle, and other criteria set out in Schedule III of the Companies Act, 2013. Based on the nature of products and the time lag between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 month period has been considered by the Company as its normal operating cycle.
1.6 Property, Plant and Equipment (PPE):
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property plant and equipment recognized as at 1st April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Property, plant and equipment are stated at acquisition or construction cost less accumulated depreciation and impairment loss. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use, including relevant borrowing costs and any expected costs of de-commissioning.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
The cost of an item of PPE is recognised as an asset if, and only if, it is probable that the economic benefits associated with the item will flow to the Company in future periods and the cost of the item can be measured reliably. Expenditure incurred after the PPE have been put into operations, such as repairs and maintenance expenses, are charged to the Statement of Profit and Loss during the period in which they are incurred.
Items such as spare parts, standby equipment and servicing equipment are recognised as PPE when these are held for use in the production or supply of goods or services, or for administrative purpose, and are expected to be used for more than one year. Otherwise, such items are classified as inventory.
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of PPE, is determined as the difference between the sales proceeds and the carrying amount of the asset, and is recognised in the Statement of Profit and Loss.
Capital work-in-progress includes cost of property, plant and equipment under installation/under development as at the reporting date.
1.7 Treatment of Expenditure during Construction Period:
Expenditure, net of income earned, during construction (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE) period is included under capital work-in-progress, and the same is allocated to the respective PPE on the completion of construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under âOther Non-Current Assetsâ
1.8 Depreciation:
Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight-line basis, except for Viscose Staple Fibre Division (excluding Power Plants), Nagda, and Corporate Finance Division, Mumbai for which it is provided on written down value method, over the useful lives as prescribed in Schedule II of the Companies Act, 2013, or as per technical assessment.
Depreciable amount for PPE is the cost of PPE less its estimated residual value. The useful life of PPE is the period over which PPE is expected to be available for use by the Company, or the number of production or similar units expected to be obtained from the asset by the Company.
The Company has used the following useful lives of the property, plant and equipment to provide depreciation.
A. Major assets class where useful life considered as provided in Schedule II:
In case of certain class of assets, the Company uses different useful life than those prescribed in Schedule II of the Companies Act, 2013.The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of the managementâs best estimation of getting economic benefits from those classes of assets. The Company uses its technical expertise along with historical and industry trends for arriving at the economic life of an asset.
Also, useful life of the part of PPE which is significant to the total cost of PPE, has been separately assessed and depreciation has been provided accordingly.
B. Assets where useful life differs from Schedule II:
The estimated useful lives, residual values and the 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.
Continuous process plant, as defined in Schedule II of the Companies Act, 2013, have been classified on the basis of technical assessment and depreciation is provided accordingly.
Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition, and in case of a new Project, from the date of commencement of commercial production. Depreciation on deductions/disposals is provided on a pro-rata basis up to the month preceding the month of deduction/disposal.
1.9 Intangible Assets acquired separately and Amortisation:
On transition to Ind AS, the Company has elected to continue with the carrying value of all its Intangible Assets recognized as at 1 April 2015, measured as per the previous GAAP and use that carrying value as the deemed cost of the Intangible Assets.
Intangible assets, acquired separately, are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset. Intangible assets are amortised on a straight-line basis over their estimated useful lives.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is de-recognised.
Intangible Assets and their useful lives are as under:
1.10 Internally Generated Intangible Assets - Research and Development Expenditure:
Revenue expenditure on research is expensed under the respective heads of the account in the period in which it is incurred. Development expenditure is capitalized as an asset, if the following conditions can be demonstrated:
a) The technical feasibility of completing the asset so that it can be made available for use or sell.
b) The Company has intention to complete the asset and use or sell it.
c) In case of intention to sell, the Company has the ability to sell the asset.
d) The future economic benefits are probable.
e) The Company has ability to measure the expenditure attributable to the asset during its development reliably.
Other development costs, which do not meet the above criteria, are expensed out during the period in which they are incurred.
PPE procured for research and development activities are capitalised.
1.11 Non-Current Assets Classified as Held for Disposal:
Assets are classified as held for disposal and stated at the lower of carrying amount and fair value less costs to sell.
To classify any Asset as âAsset Held for Disposalâ the asset must be available for immediate sale and its sale must be highly probable. Such assets or group of assets are presented separately in the Balance Sheet, in the line âAssets Held for Disposalâ Once classified as held for disposal, intangible assets and property, plant and equipment are no longer amortised or depreciated.
The management must be committed to the sale/ distribution expected within one year from the date of classification.
1.12 Impairment of Non-Financial Assets:
At the end of each reporting period, the Company reviews the carrying amounts of non-financial 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 then the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing the 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 the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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 the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.13 Inventories:
Inventories are valued at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Raw materials, stores and spare parts, and packing materials are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. The cost is computed on weighted-average basis which includes expenditure incurred for acquiring inventories like purchase price, import duties, taxes (net of tax credit) and other costs incurred in bringing the inventories to their present location and condition.
Cost of finished goods and work-in-progress includes the cost of conversion based on normal capacity and other costs incurred in bringing the inventories to their present location and condition. The cost of finished goods and work-in-progress is computed on weighted-average basis.
In the absence of cost, waste/scrap is valued at estimated net realisable value.
Obsolete, defective, slow moving and unserviceable inventories, if any, are duly provided for.
Proceeds in respect of sale of raw materials/stores are credited to the respective heads.
1.14 Leases:
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset, or assets and the arrangement conveys a right to use the asset, or assets even if that right is not explicitly specified in an arrangement.
Finance Lease:
As a Lessee:
Leases, where substantially all the risks and benefits incidental to ownership of the leased item are transferred to the Lessee, are classified as finance lease. The assets acquired under finance lease are capitalised at lower of fair value and present value of the minimum lease payments at the inception of the lease and disclosed as leased assets. Such assets are amortised over the period of lease or estimated life of such asset, whichever is less. Lease payments are apportioned between the finance charges and reduction of the lease liability based on implicit rate of return. Lease management fees, lease charges and other initial direct costs are capitalised.
Operating Lease:
As a Lessee:
Leases, where significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases and lease rentals thereon are charged to the Statement of Profit and Loss on a straight-line basis over the lease term, unless the lease agreement explicitly states that the increase is on account of inflation.
As a Lessor:
The Company has leased certain tangible assets, and such leases, where the Company has substantially retained all the risks and rewards of ownership, are classified as operating leases. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over lease term, unless the lease agreement explicitly states that the increase is on account of inflation.
1.15 Cash and Cash Equivalents:
Cash and Cash Equivalents comprise cash on hand and cash at banks, including fixed deposit with original maturity period of three months or less and short-term highly liquid investments with an original maturity of three months or less.
1.16 Cash Flow Statement:
Cash flows are reported using the indirect method, whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows.The cash flows from operating, investing and financing activities of the Company are segregated.
1.17 Employee Benefits:
Short-Term Employee Benefits:
Short-term employee benefits are recognised as an expense on accrual basis.
Defined Contribution Plans:
Contribution payable to the recognised provident fund and approved superannuation scheme, which are substantially defined contribution plans, is recognised as expense in the Statement of Profit and Loss, when employees have rendered the service entitling them to the contribution.
The provident fund contribution as specified under the law is paid to the Regional Provident Fund Commissioner.
Defined Benefit Plans:
The obligation in respect of defined benefit plans, which covers Gratuity, Pension and other post-employment medical benefits, are provided for on the basis of an actuarial valuation at the end of each financial year using project unit credit method. Gratuity is funded with an approved trust.
In respect of certain employees, Provident Fund contributions are made to a Trust, administered by the Company. The interest rate payable to the members of the Trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952, and shortfall, if any, shall be made good by the Company. The Companyâs liability is actuarially determined (using the Projected Unit Credit Method) at the end of the year, and any shortfall in the Fund size maintained by the Trust set-up by the Company is additionally provided for.
Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in Other Comprehensive Income in the period in which they occur.
Re-measurement recognised in Other Comprehensive Income is reflected immediately in retained earnings and will not be reclassified to profit or loss in the Statement of Profit and Loss. Defined benefit costs are categorised as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- re-measurement.
The Company presents the first two components of defined benefit costs in the Statement of Profit and Loss in the line item âEmployee Benefits Expenseâ.
The present value of the Defined Benefit Plan liability is calculated using a discount rate, which is determined by reference to market yields at the end of the reporting period on government bonds.
The retirement benefit obligation, recognised in the Balance Sheet represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in the future contribution to the plans.
Other Long-Term Benefits:
Long-term compensated absences are provided for on the basis of an actuarial valuation at the end of each financial year. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profit and Loss.
1.18 Employee Share Based Payments:
Equity-settled Transactions:
Equity-settled share-based payments to employees are measured by reference to the fair value of the equity instruments at the grant date using Black-Scholes Model and Binomial Model.
The fair value, determined at the grant date of the equity-settled share-based payments, is charged to Statement of Profit and Loss on a systematic basis over the vesting period of the option, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in other equity.
In case of forfeiture/lapse stock option, which is not vested, amortised portion is reversed by credit to employee compensation expense. In a situation where the stock option expires unexercised, the related balance standing to the credit of the Employee Stock Options Outstanding Account is transferred within other equity.
Cash-settled Transactions:
The cost of cash-settled transactions is measured initially at fair value at the grant date using a Black-Scholes Merton Formula. This fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The liability is re-measured to fair value at each reporting date up to, and including the settlement date, with changes in fair value recognised in employee benefits expense.
1.19 Treasury Shares:
The Company has created an Employee Benefit Trust (EBT) for providing share-based payment to its employees. The Company uses EBT as a vehicle for distributing shares to employees under the Employee Stock Option Scheme. The EBT purchase shares of the Company from the market, for giving shares to employees. The Company treats EBT as its extension and shares held by EBT are treated as treasury shares.
Own equity instruments that are re-acquired (treasury shares) are recognised at cost and deducted from other equity. No gain or loss is recognised in the statement of profit and loss on the purchase, sale, issue or cancellation of the companyâs own equity instruments. Any difference between the carrying amount and the consideration, if reissued or sold, is recognised in capital reserve. Share options exercised during the reporting period are settled with treasury shares.
1.20 Foreign Currency Transactions:
I n preparing the financial statements of the Company, transactions in foreign currencies, other than the Companyâs functional currency, are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the rate prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.
Exchange differences on monetary items are recognised in the Statement of Profit and Loss in the period in which these arise except for:
- exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and
- exchange differences relation to qualifying effective cash flow hedges.
1.21 Derivative Financial Instruments and Hedge Accounting:
The Company enters into forward contracts to hedge the foreign currency risk of firm commitments and highly probable forecast transactions. Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Statement of Profit and Loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company enters into derivative financial instruments viz. foreign exchange forward contracts, interest rate swaps and cross currency swaps to manage its exposure to interest rate, foreign exchange rate risks and commodity prices. The Company does not hold derivative financial instruments for speculative purposes.
Hedge Accounting:
The Company designates certain hedging instruments in respect of foreign currency risk, interest rate risk and commodity price risk as cash flow hedges. At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Companyâs risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrumentâs fair value in offsetting the exposure to changes in the hedged itemâs fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows, and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognised in Other Comprehensive Income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Profit and Loss.
Amounts previously recognised in Other Comprehensive Income and accumulated in other equity relating to (effective portion as described above) are re-classified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in Other Comprehensive Income and accumulated in other equity at that time remains in other equity and is recognised when the forecast transaction is ultimately recognised in Statement of Profit and Loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in other equity is recognised immediately in the Statement of Profit and Loss.
1.22 Fair Value Measurement:
The Company measures financial instruments, such as investments (other than equity investments in Subsidiaries, Joint Ventures and Associates) and derivatives at fair values at each Balance Sheet date.
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.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use, or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities (for which fair value is measured or disclosed in the financial statements) are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable other than quoted prices included in Level 1.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for disposal in discontinued operations.
At each reporting date, management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Companyâs accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
1.23 Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Assets:
Initial Recognition and Measurement
All financial assets are recognised initially at fair value. However, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset are added to the fair value. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Debt instruments at amortised cost
- Debt instruments at fair value through Other Comprehensive Income (FVTOCI)
- Debt instruments, derivatives and equity instruments, mutual funds at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt Instruments at Amortised Cost:
A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.
Debt Instruments at FVTOCI:
A âdebt instrumentâ is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The assetâs contractual cash flows represent SPPI on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the Other Comprehensive Income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On de-recognition of the asset, cumulative gain or loss previously recognised in OCI is re-classified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Debt Instruments at FVTPL:
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortised cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âAccounting Mismatchâ).
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
Equity Investments:
I nvestment in Subsidiaries, Associates and Joint ventures are out of scope of Ind AS 109 and hence, the Company has accounted for its investment in Subsidiaries, Associates and Joint venture at cost.
All other equity investments are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For equity instruments other than held for trading, the Company has irrevocable option to present in Other Comprehensive Income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Where the Company classifies equity instruments as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts of profit or loss from OCI to Statement of Profit and Loss, even on sale of investment.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
Impairment of Financial Assets:
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. In case of financial assets, the Company follows the simplified approach permitted by Ind AS 109-Financial Instruments-for recognition of impairment loss allowance.The application of simplified approach does not require the Company to track changes in credit risk of trade receivable. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
De-recognition of Financial Assets:
The Company de-recognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises an associated liability.
On de-recognition of a financial asset, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in Other Comprehensive Income and accumulated in other equity is recognised in Statement of Profit and Loss.
Financial Liabilities and Equity Instruments:
Classification as Debt or Equity:
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 instrument.
Equity Instruments:
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Financial Liabilities:
Financial liabilities are classified, at initial recognition as fair value through profit or loss:
- Loans and borrowings,
- Payables, or
- as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings and payables, are recognised net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent Measurement:
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities at FVTPL:
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading, if they are incurred for the purpose of repurchasing in the near term.This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading, unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
Financial liabilities, designated upon initial recognition at FVTPL, are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
Loans and Borrowings:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are de-recognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
Financial Guarantee Contracts:
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs, because the specified debtor fails to make a payment when due, in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109, and the amount recognised less cumulative amortisation.
De-recognition of Financial Liabilities:
The Company de-recognises financial liabilities when and only when, the Companyâs obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability de-recognised and the consideration paid and payable is recognised in Statement of Profit and Loss.
Embedded Derivatives:
An embedded derivative is a component of a hybrid (combined) instrument that also includes a nonderivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a standalone derivative. An embedded derivative causes some or all of the cash flows that would otherwise be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable, that the variable is not specific to a party to the contract. Re-assessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a re-classification of a financial asset out of the fair value through profit or loss. If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109, to the entire hybrid contract. Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value, if their economic characteristics and risks are not closely related to those of the host contracts, and the host contracts are not held for trading or designated at fair value though profit or loss.These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss, unless designated as effective hedging instruments.
Offsetting of Financial Instruments:
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.24 Revenue Recognition:
(a) Revenue from contracts with customers;
- Revenue is recognized on the basis of approved contracts regarding the transfer of goods or services to a customer for an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.
- Revenue is measured at the fair value of consideration received or receivable taking into account the amount of discounts, incentives, volume rebates, outgoing taxes on sales. Any amounts receivable from the customer are recognised as revenue after the control over the goods sold are transferred to the customer which is generally on dispatch of goods.
- Variable consideration - This includes incentives, volume rebates, discounts etc. It is estimated at contract inception considering the terms of various schemes with customers and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. It is reassessed at the end of each reporting period.
- Significant financing component - Generally, the Company receives short-term advances from its customers. Using the practical expedient in Ind AS 115, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised goods or services to the customer and when the customer pays for that goods or services will be one year or less.
(b) Dividend income is accounted for when the right to receive the income is established.
(c) For all financial instruments measured at amortised cost or at fair value through Other Comprehensive Income, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.
(d) Insurance, railway and other claims, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis.
1.25 Borrowing Costs:
Borrowing cost includes interest expense, amortisation of discounts, hedge related cost incurred in connection with foreign currency borrowings, ancillary costs incurred in connection with borrowing of funds and exchange difference, 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 or construction or production of a qualifying asset, are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.
Investment 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 recognized in the Statement of Profit and Loss in the period in which they are incurred.
1.26 Government Grants and Subsidies:
Government grants are recognised when there is a reasonable assurance that the same will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised in the Statement of Profit and Loss by way of a deduction to the related expense on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income on a systematic basis over the expected useful life of the related asset.
Government grants, that are receivable towards capital investments under State Investment Promotion Scheme, are recognised in the Statement of Profit and Loss in the period in which they become receivable.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and is being recognised in the Statement of Profit and Loss.
When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
1.27 Exceptional Item:
Exception items include income or expense that are considered to be part of ordinary activities, however, are of such significance and nature that separate disclosure enables the user of the Financial Statements to understand the impact in a more meaningful manner Exceptional items are identified by virtue of either their size or nature so as to facilitate comparison with prior periods and to assess underlying trends in the financial performance of the Company.
1.28 Provision for Current and Deferred Tax:
Current Income Tax:
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities.The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and generates taxable income.
Current income tax, relating to items recognised outside of the Statement of Profit and Loss, is recognised outside of the Statement of Profit and Loss (either in Other Comprehensive Income or in other equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in other equity. The management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and established provisions, where appropriate.
Deferred Tax:
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities, and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available, against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date, and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws), that have been enacted or substantively enacted at the reporting date.
Deferred tax, relating to items recognised outside profit or loss, is recognised outside profit or loss (either in Other Comprehensive Income or in other equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in other equity. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities, and the deferred taxes relate to the same taxable entity and the same taxation authority.
1.29 Minimum Alternate Tax (MAT):
MAT is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal Income Tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised, it is credited to the Statement of Profit and Loss and is considered as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period. Minimum Alternate Tax (MAT) Credit are in the form of unused tax credits that are carried forward by the Company for a specified period of time, hence, it is presented with Deferred Tax Asset.
1.30 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 the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
A present obligation that arises from past events, where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Claims against the Company, where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
Warranty Provisions:
Provisions for warranty-related costs are recognised as an expense in the Statement of Profit and Loss when the product is sold or service provided to the customer. Initial recognition is based on historical experience. The initial estimate of warranty-related costs is revised annually.
1.31 Earnings Per Share (EPS):
Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted-average number of equity shares outstanding during the period. The weighted-average number of equity shares outstanding during the period and for all periods presented is adjusted for events such as bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted-average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
1.32 Significant Accounting Judgements, Estimates and Assumptions:
The preparation of financial statements, in conformity with the Ind AS requires judgements, estimates and assumptions to be made, that affect the reported amounts of assets and liabilities on the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures relating to contingent liabilities as of the date of the financial statements. Although these estimates are based on the managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in outcomes different from the estimates. Difference between actual results and estimates are recognized in the period in which the results are known or materialised. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in the current and future periods.
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 asset and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, 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.
- Litigation and contingencies:
The Company has ongoing litigations with various regulatory authorities. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on managementâs assessment of specific circumstances of each dispute and relevant external advice, the management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in notes to the Financial Statements.
- Assessment of Impairment of investments in Subsidiaries, Associates and Joint Ventures:
The Company reviews its carrying value of investments in subsidiaries, associates and joint ventures annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for. Determining whether the investments in subsidiaries, associates and joint ventures is impaired requires an estimate in the value in use of investments. The management carries out impairment assessment for each investment by comparing the carrying value of each investment with the net worth of each company based on audited financials and comparing the performance of the investee companies with projections used for valuations, in particular those relating to the cash flows, sales growth rate, pre-tax discount rate and growth rates used and approved business plans.
- Useful Lives of Property, Plant and Equipment and Intangible Assets:
The Company uses its technical expertise along with historical and industry trends for determining the economic life of an asset/component of an asset. The useful lives are reviewed by the management periodically and revised, if appropriate. In case of a revision, the unamortised depreciable amount is charged over the remaining useful life of the assets.
- Measurement of Defined Benefit Obligations:
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 d
Mar 31, 2018
CORPORATE INFORMATION
Grasim Industries Limited ("the Company") is a limited company incorporated and domiciled in India. The registered office is at Birlagram, Nagda - 456 331, Dist. Ujjain (M.P), India. The Company is a public limited company, and its shares are listed on the Bombay Stock Exchange (BSE), India, and the National Stock Exchange (NSE), India, and the Company''s Global Depository Receipts are listed on the Luxembourg Stock Exchange.
The Company is engaged primarily in Viscose (Pulp, Fibre and Yarn), Chemicals (Caustic Soda and allied Chemicals) and others (Insulators, Textiles, Fertilizers and Solar Power Designing, Engineering Procurement and Commissioning).
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Statement of Compliance:
These financial statements are prepared and presented in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time as notified under Section 133 of Companies Act, 2013, the relevant provisions of the Companies Act, 2013 ("the Act"), and the guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
The financial statements are authorized for issue by the Board of Directors of the Company at their meeting held on 23rd May, 2018.
1.2 Basis of Preparation:
The financial statements have been prepared and presented on the going concern basis and at historical cost, except for the following assets and liabilities, which have been measured as indicated below:
- Derivative Financial Instruments at fair value (covered under para 1.21);
- Certain financial assets and liabilities at fair value (refer accounting policy regarding financial instruments (covered under para 1.22 and para 1.23);
- Assets held for sale - measured at the lower of its carrying amount and fair value less cost to sell;
- Employee''s Defined Benefit Plans measured as per actuarial valuation and
- Assets and liabilities acquired under Business Combination measured at fair value.
1.3 Functional and Presentation Currency:
The financial statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates, and all values are rounded to the nearest Crores, except as otherwise indicated.
1.4 Business Combination and Goodwill/Capital Reserve:
The Company uses the acquisition method of accounting to account for business combinations. The acquisition date is the date on which control is transferred to the acquirer. Judgment is applied in determining the acquisition date and determining whether control is transferred from one party to another. Control exists when the Company is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. In assessing control, potential voting rights are considered only if the rights are substantive.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed, and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in Other Comprehensive Income (OCI) and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognizes the gain directly in equity as capital reserve, without routing the same through OCI.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Company to the previous owners of the acquire, and equity interests issued by the Company. Consideration transferred also includes the fair value of any contingent consideration. Consideration transferred does not include amounts related to the settlement of pre-existing relationships. Any goodwill that arises on account of such business combination is tested annually for impairment.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not re-measured and the settlement is accounted for within equity. Otherwise, other contingent consideration is re-measured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recorded in the Statement of Profit and Loss.
A contingent liability of the acquire is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably. On an acquisition-by-acquisition basis, the Company recognizes any non-controlling interest in the acquire either at fair value or at the non-controlling interest''s proportionate share of the acquirerâs identifiable net assets. Transaction costs that the Company incurs in connection with a business combination, such as Stamp Duty for title transfer in the name of the Company, finder''s fees, legal fees, due diligence fees, and other professional and consulting fees, are expensed as incurred.
1.5 Classification of Assets and Liabilities as Current and Non-Current:
All assets and liabilities are classified as current or non-current as per the Company''s normal operating cycle, and other criteria set out in Schedule III of the Companies Act, 2013. Based on the nature of products and the time lag between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months period has been considered by the Company as its normal operating cycle.
1.6 Property, Plant and Equipment (PPE):
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognized as at 1st April, 2015, measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Property, plant and equipment are stated at acquisition or construction cost less accumulated depreciation and impairment loss. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use, including relevant borrowing costs and any expected costs of decommissioning.
I f significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
The cost of an item of PPE is recognized as an asset if, and only if, it is probable that the economic benefits associated with the item will flow to the Company in future periods, and the cost of the item can be measured reliably. Expenditure incurred after the PPE have been put into operations, such as repairs and maintenance expenses, are charged to the Statement of Profit and Loss during the period in which they are incurred.
Items such as spare parts, standby equipment and servicing equipment are recognized as PPE when it is held for use in the production or supply of goods or services, or for administrative purpose, and are expected to be used for more than one year. Otherwise, such items are classified as inventory.
An item of PPE is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset, and is recognized in the Statement of Profit and Loss.
Capital work-in-progress includes cost of property, plant and equipment under installation/under development as at the reporting date.
1.7 Treatment of Expenditure during Construction Period:
Expenditure, net of income earned, during construction (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE) period, is included under capital work-in-progress, and the same is allocated to the respective PPE on the completion of construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under "Other Noncurrent Assets".
1.8 Depreciation:
Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight-line basis, except for Viscose Staple Fibre Division (excluding Power Plants), Nagda, and Corporate Finance Division, Mumbai, for which it is provided on written down value method, over the useful lives as prescribed in Schedule II of the Companies Act, 2013, or as per technical assessment.
Depreciable amount for PPE is the cost of PPE less its estimated residual value. The useful life of PPE is the period over which PPE is expected to be available for use by the Company, or the number of production or similar units expected to be obtained from the asset by the Company.
The Company has used the following useful lives of the property, plant and equipment to provide depreciation.
In case of certain class of assets, the Company uses different useful life than those prescribed in Schedule II of the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of the management''s best estimation of getting economic benefits from those classes of assets. The Company uses its technical expertise along with historical and industry trends for arriving the economic life of an asset.
Also, useful life of the part of PPE which is significant to the total cost of PPE, has been separately assessed and depreciation has been provided accordingly.
The estimated useful lives, residual values and the 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.
Continuous process plant, as defined in Schedule II of the Companies Act, 2013, have been classified on the basis of technical assessment, and depreciation is provided accordingly.
Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition and, in case of a new Project, from the date of commencement of commercial production. Depreciation on deductions/ disposals is provided on a pro-rata basis upto the month preceding the month of deduction/disposal.
1.9 Intangible Assets acquired separately and Amortization:
On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognized as at 1st April, 2015, measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Intangible assets, acquired separately, are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset. Intangible assets are amortized on a straight-line basis over their estimated useful lives.
Intangible assets with indefinite useful lives are not amortized , but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognized in the Statement of Profit or Loss when the asset is derecognized.
1.10 Internally Generated Intangible Assets - Research and Development Expenditure:
Revenue expenditure on research is expensed under the respective heads of the account in the period in which it is incurred. Development expenditure is capitalized as an asset, if the following conditions can be demonstrated:
a) The technical feasibility of completing the asset so that it can be made available for use or sell.
b) The Company has intention to complete the asset and use or sell it.
c) The Company has the ability to sell the asset.
d) The future economic benefits are probable.
e) The Company has ability to measure the expenditure attributable to the asset during its development reliably.
Other development costs, which do not meet the above criteria, are expensed out during the period in which they are incurred.
PPE procured for research and development activities are capitalized.
1.11 Non-Current Assets Classified as Held for Disposal:
Assets are classified as held for disposal and stated at the lower of carrying amount and fair value less costs to sell.
To classify any Asset as "Asset held for disposal" the asset must be available for immediate sale and its sale must be highly probable. Such assets or group of assets are presented separately in the Balance Sheet, in the line "Assets held for disposal" Once classified as held for disposal, intangible assets and property, plant and equipment are no longer amortized or depreciated.
Management must be committed to the sale/ distribution expected within one year from the date of classification.
1.12 Impairment of Non-Financial Assets:
At the end of each reporting period, the Company reviews the carrying amounts of non-financial 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 then the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing the 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 recognized immediately in the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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 recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.13 Inventories:
Inventories are valued at the lower of cost and net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Raw materials, stores and spare parts, and packing materials are considered to be realizable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. The cost is computed on weighted-average basis which includes expenditure incurred for acquiring inventories like purchase price, import duties, taxes (net of tax credit) and other costs incurred in bringing the inventories to their present location and condition.
Cost of finished goods and work-in-progress includes the cost of conversion based on normal capacity and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion, and the estimated costs necessary to make the sale. The cost is computed on weighted-average basis.
In the absence of cost, waste/scrap is valued at estimated net realizable value.
Obsolete, defective, slow moving and unserviceable inventories, if any, are duly provided for.
Proceeds in respect of sale of raw materials/stores are credited to the respective heads.
1.14 Leases:
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset, or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Finance Lease:
As a Lessee:
Leases, where substantially all the risks and benefits incidental to ownership of the leased item are transferred to the Lessee, are classified as finance lease. The assets acquired under finance lease are capitalized at lower of fair value and present value of the minimum lease payments at the inception of the lease and disclosed as leased assets. Such assets are amortized over the period of lease or estimated life of such asset, whichever is less. Lease payments are apportioned between the finance charges and reduction of the lease liability based on implicit rate of return. Lease management fees, lease charges and other initial direct costs are capitalized.
Operating Lease:
As a Lessee:
Leases, where significant portion of the risks and rewards of ownership are retained by the less or, are classified as operating leases and lease rentals thereon are charged to the Statement of Profit and Loss on a straight-line basis over the lease term, unless the lease agreement explicitly states that the increase is on account of inflation.
As a Less or:
The Company has leased certain tangible assets, and such leases, where the Company has substantially retained all the risks and rewards of ownership, are classified as operating leases. Lease income is recognized in the Statement of Profit and Loss on a straight-line basis over lease term, unless the lease agreement explicitly states that the increase is on account of inflation.
1.15 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and cash at banks, including fixed deposit with original maturity period of three months or less and short-term highly liquid investments with an original maturity of three months or less.
1.16 Cash Flow Statement
Cash flows are reported using the indirect method, whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
1.17 Employee Benefits:
Short-term Employee Benefits:
Short-term employee benefits are recognized as an expense on accrual basis.
Defined Contribution Plans:
Contribution payable to the recognized provident fund and approved superannuation scheme, which are substantially defined contribution plans, is recognized as expense in the Statement of Profit and Loss, when employees have rendered the service entitling them to the contribution.
Mar 31, 2017
1.1 Statement of compliance:
These financial statements are prepared and presented in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 notified under section 133 of the Companies Act, 2013, the relevant provisions of the Companies Act, 2013 (âthe Actââ) and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
These are Companyâs first Ind AS financial statements. The date of transition to Ind AS is 1st April, 2015. The Company has availed first time adoption exemption as per Ind AS 101(Refer Note 4.11 for details).
Upto the year ended 31st March, 2016, the Company prepared its financial statements in accordance with previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006, the relevant provisions of the Companies Act, 2013 (âthe 2013 Actââ), as applicable and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable. In these financial statements for the year ended 31st March, 2017, the financial statements for previous year ended 31st March, 2016 and Balance Sheet as at 1st April, 2015, have been prepared and presented as per Ind AS for like- to- like comparison.
The financial statements are authorised for issue by the Board of Directors of the Company at their meeting held on 19th May, 2017.
1.2 Basis of preparation:
The financial statements have been prepared and presented on the going concern basis and at historical cost, except for the following assets and liabilities which have been measured at fair value:
- Derivative Financial Instruments (covered under para 1.16)
- Certain financial assets and liabilities at fair value (refer accounting policy regarding financial instruments (covered under para 1.17 and para 1.18)
- Assets held for sale - measured at the lower of its carrying amount and fair value less cost to sell; and
- Employeeâs Defined Benefit Plan as per actuarial valuation
1.3 Functional and presentation currency:
The financial statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates.
1.4 classification of Assets and Liabilities as current and Non-current:
All assets and liabilities are classified as current or non-current as per the Companyâs normal operating cycle, and other criteria set out in Schedule III of the Companies Act, 2013. Based on the nature of products and the time lag between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months period has been considered by the Company as its normal operating cycle.
1.5 Property, Plant and Equipment (PPE):
Property, plant and equipment are stated at acquisition or construction cost less accumulated depreciation and impairment loss. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use, including relevant borrowing costs and any expected costs of decommissioning.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
The cost of an item of PPE is recognised as an asset if, and only if, it is probable that the economic benefits associated with the item will flow to the Company in future periods and the cost of the item can be measured reliably. Expenditure incurred after the PPE have been put into operations, such as repairs and maintenance expenses are charged to the Statement of Profit and Loss during the period in which they are incurred.
Items such as spare parts, standby equipment and servicing equipment are recognised as PPE when it is held for use in the production or supply of goods or services, or for administrative purpose, and are expected to be used for more than one year. Otherwise such items are classified as inventory.
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of PPE, is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
1.6 Treatment of expenditure during construction Period:
Expenditure, net of income earned, during construction (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE) period is included under capital work-in-progress, and the same is allocated to the respective PPE on the completion of construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under âOther Non Current Assetsâ
1.7 Depreciation:
Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight-line basis, except for Viscose Staple Fibre Division (excluding Power Plants), Nagda, and Corporate Finance Division, Mumbai for which it is provided on written down value method, over the useful lives as prescribed in Schedule II of the Companies Act, 2013 or as per technical assessment.
Depreciable amount for PPE is the cost of PPE less its estimated residual value. The useful life of PPE is the period over which PPE is expected to be available for use by the Company, or the number of production or similar units expected to be obtained from the asset by the Company.
The Company has used the following useful lives of the property, plant and equipment to provide depreciation.
In case of certain class of assets, the Company uses different useful life than those prescribed in Schedule II of the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of the managementâs best estimation of getting economic benefits from those class of assets. The Company uses its technical expertise along with historical and industry trends for arriving the economic life of an asset.
Also, useful life of the part of PPE, which is significant to total cost of PPE, has been separately assessed and depreciation has been provided accordingly.
The estimated useful lives, residual values and the 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.
Continuous process plant, as defined in Schedule II of the Companies Act, 2013, have been classified on the basis of technical assessment and depreciation is provided accordingly.
Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition and in case of a new Project from the date of commencement of commercial production. Depreciation on deductions/ disposals is provided on a pro-rata basis upto the month preceding the month of deduction/disposal.
1.8 Intangible Assets Acquired Separately and Amortisation:
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Internally Generated Intangible Assets - Research and Development Expenditure:
Expenditure incurred on development is capitalised if such expenditure leads to creation of any intangible asset, otherwise, such expenditure is charged to the Statement of Profit and Loss. PPE procured for research and development activities are capitalised.
1.9 Non-current Assets classified as held for Disposal:
Assets which are available for immediate sale and its sale must be highly probable are classified as âAssets held for Disposalâ Such assets or group of assets are presented separately in the Balance Sheet, in the line âAssets held for Disposalâ Once classified as held for disposal, such assets are no longer amortised or depreciated. Such assets are stated at the lower of carrying amount and fair value less costs to sell.
1.10 Impairment of Non-Financial Assets:
At the end of each reporting period, the Company reviews the carrying amounts of non-financial 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.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the 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 the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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 the Statement of Profit and Loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.11 Inventories:
Inventories are valued at the lower of cost and net realisable value.
Raw material, stores and spare parts and packing materials are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. The cost is computed on weighted-average basis.
Cost of finished goods and work- in- progress includes cost of conversion based on normal capacity, and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion, and the estimated costs necessary to make the sale.
In the absence of cost, waste/scrap is valued at estimated net realisable value.
Obsolete, defective, slow moving and unserviceable inventories, if any, are duly provided for.
1.12 leases:
Finance Lease:
As a lessee:
Leases, where substantially all the risks and benefits incidental to ownership of the leased item are transferred to the Lessee, are classified as finance lease. The assets acquired under finance lease are capitalised at lower of fair value and present value of the minimum lease payments at the inception of the lease and disclosed as leased assets. Such assets are amortised over the period of lease or estimated life of such asset, whichever is lower. Lease payments are apportioned between the finance charges and reduction of the lease liability based on implicit rate of return. Lease management fees, lease charges and other initial direct costs are capitalised.
Operating lease:
As a Lessee:
Leases, where significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases and lease rentals thereon are charged to the Statement of Profit and Loss on a straight-line basis over the lease term.
As a Lessor:
The Company has leased certain tangible assets, and such leases, where the Company has substantially retained all the risks and rewards of ownership, are classified as operating leases. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over lease term.
1.13 employee Benefits:
Short-term employee benefits:
Short-term employee benefits are recognised as an expense on accrual basis. defined contribution Plan:
Contribution payable to recognised provident fund and approved superannuation scheme, which are substantially defined contribution plans, is recognised as expense in the Statement of Profit and Loss, as they are incurred.
The provident fund contribution as specified under the law is paid to the Provident Fund set-up as an irrevocable trust by the Company or to the Regional Provident Fund Commissioner. In case of Company managed trust, the Company is liable for any shortfall in the fund assets based on the Government specified minimum rates of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year of incurring the same. Having regard to the assets of fund and the return on investments, the Company does not expect any deficiency as at the year end.
Defined benefit Plan
The obligation in respect of defined benefit plans, which covers Gratuity and Pension, is provided for on the basis of an actuarial valuation at the end of each financial year. Gratuity is funded with an approved trust.
Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in other comprehensive income in the period in which they occur.
Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to Statement of profit and loss. Defined benefit costs are categorised as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- re-measurement
The Company presents the first two components of defined benefit costs in statement of profit and loss in the line item âEmployee Benefits Expenseâ.
The present value of the defined benefit plan liability is calculated using a discount rate, which is determined by reference to market yields, at the end of the reporting period on government bonds.
The retirement benefit obligation recognised in the Balance Sheet represents the actual deficit or surplus in the companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in the future contribution to the plans.
Other Long-Term benefits:
Long-term compensated absences are provided for on the basis of an actuarial valuation at the end of each financial year. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profit and Loss.
1.14 Foreign currency Transactions:
In preparing the financial statements of the Company, transactions in foreign currencies, other than the Companyâs functional currency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the rate prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency, are not retranslated.
Exchange differences on monetary items are recognised in the Statement of Profit and Loss in the period in which these arise except for:
- exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and
- exchange differences on transactions entered into in order to hedge certain foreign currency risks.
1.15 derivative Financial Instruments and hedge Accounting:
The Company enters into forward contracts to hedge the foreign currency risk of firm commitments and highly probable forecast transactions. Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Statement of Profit and Loss depends on the nature of the hedging relationship and the nature of the hedged item. The Company does not hold financial instruments for speculative purpose.
Hedge Accounting:
The Company designates certain hedging instruments in respect of foreign currency risk as cash flow hedges. At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve.The gain or loss relating to the ineffective portion is recognised immediately in the statement of profit and loss.
Amounts previously recognised in other comprehensive income and accumulated in equity relating to (effective portion as described above) are reclassified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the statement of profit and loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the statement of profit and loss.
1.16 Fair value Measurement:
The Company measures financial instruments, such as investments (other than equity investments in Subsidiaries, Joint Ventures and Associates) and derivatives at fair values at each Balance Sheet date.
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.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for disposal in discontinued operations.
1.17 Financial Instruments:
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Initial Recognition and Measurement:
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 the statement of profit and loss.
Classification and Subsequent Measurement:
- Financial Assets:
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL) on the basis of both:
(a) business model for managing the financial assets, and
(b) the contractual cash flow characteristics of the financial asset.
A Financial Asset is measured at amortised cost if both of the following conditions are met:
(i) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and
(ii) 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.
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
(i) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
(ii) 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.
A Financial Asset shall be classified and measured at fair value through profit or loss (FVTPL) unless it is measured at amortised cost or at fair value through OCI.
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.
Equity Investments:
Equity investments in Subsidiaries, Associates and Joint ventures are out of scope of Ind AS 109 and hence, the Company has accounted for its investment in Subsidiaries, Associates and Joint Ventures at cost.
All other equity investments are measured at fair value. Equity instruments, which are held for trading are classified as at FVTPL. For equity instruments other than held for trading, the company has exercised irrevocable option to recognise in other comprehensive income subsequent changes in the fair value.
Where the Company classifies equity instruments as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to profit and loss, even on sale of investment.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
Cash and cash Equivalents:
Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand and short-term deposits with banks that are readily convertible into cash, which are subject to insignificant risk of changes in value and are held for the purpose of meeting short-term cash commitments.
Impairment of Financial Assets:
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments- for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk of trade receivable. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
Derecognition of financial assets:
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises an associated liability.
On derecognition of a financial asset , the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in the Statement of profit and loss.
- Financial Liabilities and Equity Instruments: classification as debt or Equity:
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 instrument.
Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Financial liabilities:
Financial liabilities are classified, at initial recognition:
- at fair value through profit or loss,
- Loans and borrowings,
- Payables, or
- as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings and payables, they are recognised net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings, including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent Measurement:
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities at FVTPL:
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading, if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognition at FVTPL are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
Loans and borrowings:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
Derecognition of Financial Liabilities:
The Company de-recognises financial liabilities when and only when, the Companyâs obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability de-recognised and the consideration paid and payable is recognised in the statement of profit and loss.
1.18 Revenue Recognition:
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the Company and the revenue can be reliably measured.
(a) Sales are recognised on transfer of significant risks and rewards of ownership of the goods to the buyer as per the terms of contract and no uncertainty exists regarding the amount of consideration that will be derived from sales of goods . It also includes excise duty (as it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not) and price variation based on the contractual agreement. It is measured at fair value of the consideration received net of sales tax/value added tax and discounts. Sales exclude self-consumption of finished goods.
(b) Income from services is recognised (net of service tax as applicable) as they are rendered, based on agreement/ arrangement with the concerned customers.
(c) Dividend income is accounted for when the right to receive the income is established.
(d) For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.
(e) Interest income for all financial instruments measured at fair value through other comprehensive income is recognised in the statement of profit and loss.
(f) Export incentives, insurance, railway and other claims, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis.
1.19 employee Share based payments:
Equity-settled share-based payments to employees are measured by reference to the fair value of the equity instruments at the grant date using Black Scholes Model.
The fair value determined at the grant date of the equity-settled share-based payments, is charged to Profit and Loss on the straight-line basis over the vesting period of the option, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity. The employee stock option outstanding account is shown net of unamortised deferred employee compensation expenses.
1.20 borrowing costs:
Borrowing cost includes interest expense, amortisation of discounts, ancillary costs incurred in connection with borrowing of funds and exchange difference, 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 or construction or production of a qualifying asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.
Investment 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 cost are recognised in the Statement of Profit and Loss in the period in which they are incurred.
1.21 Government Grants and Subsidies:
Government Grants are recognised when there is a reasonable assurance that the same will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised in the Statement of Profit and Loss by way of a deduction to the related expense on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income on a systematic basis over the expected useful life of the related asset.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates, and is recognised in the Statement of Profit and Loss.
1.22 Provision for current and deferred tax:
Current tax is measured on the basis of estimated taxable income for the current accounting period in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961, and the rules framed thereunder.
Deferred tax is recognised using the Balance Sheet approach on the temporary differences between the carrying amounts of assets and liabilities in the financial statements and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset, if there is a legally enforceable right to offset current tax liabilities and assets, and these relate to income taxes levied by the same tax authority and are intended to settle current tax liabilities, and assets on a net basis or such tax assets and liabilities will be realized simultaneously.
In the event of unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets are recognised to the extent that it is probable that sufficient future taxable income will be available to realise such assets.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable.
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 assets to be recovered.
Current and deferred tax are recognised in the statement of profit and loss, except when the same relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax relating to such items are also recognised in other comprehensive income or directly in equity respectively.
1.23 minimum Alternate Tax (Mat):
MAT is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised, it is credited to the Statement of Profit and Loss and is considered as (MAT Credit Entitlement). The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period. Minimum Alternate Tax (MAT) Credit are in the form of unused tax credits that are carried forward by the Company for a specified period of time, hence, it is presented as Deferred Tax Asset.
1.24 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 the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
A present obligation that arises from past events, where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the Company.
Claims against the Company, where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
1.25 Segment Reporting:
- Identification of Segments:
Operating Segments are identified based on monitoring of operating results by the chief operating decision maker (CODM) separately for the purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss of the Company.
Operating Segments are identified based on the nature of products and services, the different risks and returns and the internal business reporting system. Geographical segment is identified based on geography in which major operating divisions of the Company operate.
- Segment Policies:
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
Further, inter-segment revenue has been accounted for based on the transaction price agreed to between segments which is primarily market based.
Unallocated Corporate Items include general corporate income and expenses which are not attributable to segments.
1.26 Earnings per Share (EPS):
The basic EPS is computed by dividing the profit after tax for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted EPS, profit after tax for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
1.27 Significant Accounting Judgements, Estimates and Assumptions:
The preparation of financial statements in conformity with the Ind AS requires judgements, estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures relating to contingent liabilities as of the date of the financial statements. Although these estimates are based on the managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in outcomes different from the estimates. Difference between actual results and estimates are recognised in the period in which the results are known or materialise. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in the current and future periods.
(a) Judgements:
In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amount recognised in the financial statements.
Classification of Idea cellular Limited as an Associate:
The Company has 4.74% equity ownership of Idea Cellular limited (Idea), which has been considered as an Associate of the Company. By virtue of a memorandum of understanding among certain promoter Companies (including the Company) of Idea, the Company has right to participate in the decision making process of the key policies of Idea which creates significant influence over Idea.
(b) 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 asset and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, 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.
- Useful lives of Property, Plant and equipment:
The Company uses its technical expertise along with historical and industry trends for determining the economic life of an asset/component of an asset. The useful lives are reviewed by the management periodically and revised, if appropriate. In case of a revision, the unamortised depreciable amount is charged over the remaining useful life of the assets.
- Measurement of defined benefit obligation:
The cost of the defined benefit gratuity plan and other Long term employee benefits (Pension and Compensated Absences) 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.
- Recognition and measurement of provisions and contingencies:
Key assumptions about the likelihood and magnitude of an outflow of resources.
- 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 valuation techniques including the Discounted cash flow (DCF) model. The inputs to these models are taken from observable market where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgement include consideration of input such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
- Share-based Payments:
The Company measures the cost of equity-settled transactions with employees using Black-Scholes model to determine the fair value of the liability incurred on the grant date. Estimating fair value for share-based payment transactions require determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant.
This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.
The assumptions and models used for estimating the fair value for share-based payment transactions are disclosed in Note 4.8.
1.28 cash dividend to equity Holders of the company:
The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
Mar 31, 2016
1.1 Basis of Preparation:
The financial statements have been prepared and presented in accordance
with the Generally Accepted Accounting Principles (GAAP) in India under
the historical cost convention on accrual basis and complied in all
material aspects with the Accounting Standards (AS) and the relevant
provisions of the Companies Act, 1956, and the Companies Act, 2013, as
applicable, besides the pronouncements/guidelines of the Institute of
Chartered Accountants of India (ICAI) and of the Securities and
Exchange Board of India (SEBI)
1.2 Classification of Assets and Liabilities as Current and
Non-Current:
All assets and liabilities are classified as current or non-current as
per the Company''s normal operating cycle, and other criteria set out in
Schedule III of the Companies Act, 2013. Based on the nature of
products and the time between the acquisition of assets for processing
and their realisation in cash and cash equivalents, 12 months period
has been considered by the Company as its normal operating cycle for
the purpose of classification of assets and liabilities as current and
non-current
1.3 Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of the financial statements and reported amount
of revenues and expenses during the reporting period and the
disclosures relating to contingent liabilities as of the date of the
financial statements. Although these estimates are based on the
management''s best knowledge of current events and actions, the actual
outcome may be different from the estimates. Differences between actual
results and estimates are recognised in the period in which the results
are known or materialise
1.4 Government Grants:
Any Government Grant is recognised when there is reasonable assurance
of its receipt. A capital grant relating to specific assets is reduced
from the gross value of the fixed assets, and capital grant for project
capital subsidy is credited to Capital Reserve. Revenue grant is
recognised in the Statement of Profit and Loss
1.5 General Reserve:
General Reserve, a free reserve, is created by appropriation from
profits of the current year and/or undistributed profits of previous
years, before declaration of dividend duly complying with any
regulations in this regard
1.6 Fixed Assets:
Fixed Assets (Tangible and Intangible) are stated at cost, less
accumulated depreciation/amortisation Cost comprises the purchase price
and any attributable cost of bringing the asset to its location and
working condition for its intended use. Fixed assets, retired from
active use and held for sale, are stated at lower of their net book
value and net realisable value, and are disclosed separately in the
financial statements under Current Assets
Spares, which can be used only in connection with a particular Plant
and Equipment of the Company and use is expected to be irregular, are
capitalised at cost
Gains/Losses arising from retirement or disposal of fixed assets, which
are carried at cost, are recognised in the Statement of Profit and Loss
1.7 Treatment of Expenditure during Construction Period:
Expenditure, net of income earned, during construction period is
included under capital work-in-progress, and the same is allocated to
the respective fixed assets on the completion of construction
1.8 Impairment of Assets:
Carrying amount of assets is reviewed at the Balance Sheet date to
ascertain if there is any indication of impairment based on the
internal and external factors. The assets are treated as impaired when
the carrying amount of the asset exceeds its recoverable amount.
An impairment loss, if any, is charged to the Statement of Profit and
Loss as and when it arises. Impairment loss recognised in prior years
is reversed when there is an indication that impairment loss recognised
for the asset no longer exists or may have decreased
1.9 Investments:
Long-term investments are stated at cost. However, provision for
diminution is made to recognise a decline, other than temporary, in the
value of the investments. Such reduction is determined and made for
each investment individually
Current investments, other than Long-term investments classified as
current based on maturity in next 12 months, are stated at lower of
cost and fair value determined for each category of investments
On disposal or sale of an investment, the difference between its
carrying amount and net disposal proceeds is recognised in the
Statement of Profit and Loss as Profit/Loss on sale of investments.
1.10 Inventories:
Inventories are valued at the lower of cost and net realisable value.
The cost is computed on weighted-average basis
Cost of finished goods and process stock include cost of conversion,
and other costs incurred in bringing the inventories to their present
location and condition. Net realisable value is the estimated selling
price in the ordinary course of business, ess the estimated costs of
completion, and the estimated costs necessary to make the sale. In the
absence of cost, waste/scrap is valued at estimated net realisable
value
Obsolete, defective, slow moving and unserviceable inventories, if any,
are duly provided for.
1.11 Financial Derivatives:
Derivative instruments are used to hedge risk associated with foreign
currency fluctuations, interest rates and commodity prices. The
derivative contracts are closely linked with the underlying
transactions and are intended to be held till maturity. The Company
does not enter into any derivative contracts for speculations or
trading purposes
The Company follows Accounting Standard-30 - "Financial Instrument:
Recognition and Measurement" - to the extent it does not conflict with
other accounting standards and regulatory requirements. Accordingly,
the Company tests each contract entered on the basis of highly probable
forecast transaction and decide whether to designate the same as an
effective hedging instrument for an underlying transaction
To designate a forward or options contract as an effective hedging
instrument, the management objectively evaluates and evidences with
appropriate supporting documents at the inception of each contract
whether the contract is effective in achieving offsetting cash flows
attributable to the hedged risk.
The gains or losses on designated hedging contracts that qualify as an
effective hedge are recorded in the hedging reserve account until the
transactions are completed. Upon completion or cessation of effective
hedging relationship, net cumulative gains/losses are transferred to
the Statement of Profit and Loss. The gains or losses on designated
hedging contracts, which are considered as ineffective hedge
transactions, are charged to the Statement of Profit and Loss
Forward exchange contracts, which are not designated for hedge
accounting, are mark-to-market and losses, if any, are charged to
Profit and Loss, while gains are ignored in accordance with the
announcement by the Institute of Chartered Accountants of India on
Accounting for Derivatives''.
The premium or discount on forward exchange contracts entered into to
hedge an existing asset/liability is amortised as expense or income
over the life of the contract. Any gain or loss, arising on
cancellation or renewal of such forward exchange contract, is
recognised as income or expense, as the case may be, on such occurrence
1.12 Revenue Recognition:
Sales revenue is recognised on transfer of the significant risks and
rewards of ownership of the goods to the buyer, and stated net of sales
tax, VAX trade discounts and rebates but includes excise duty.
Income from services is recognised as they are rendered (based on
agreement/arrangement with the concerned customers)
Proceeds from sale of raw materials/stores are credited to their
respective heads.
Dividend income on investments is accounted for as and when the right
to receive the payment is established
Interest income is recognised on time-proportion basis
Export incentives and other government incentives, insurance claims and
other claims, where quantum of accruals cannot be ascertained with
reasonable certainty, are accounted on acceptance basis
Profit/(Loss) on sale of investments is recorded on transfer of title
from the Company, and is determined as the difference between the sale
price and the carrying value of investments and other incidental
expenses
1.13 Employee Benefits: Short-Term Employee Benefits
Short-term employee benefits are recognised as an expense on accrual
basis
Defined Contribution Plan
Contributions payable to recognised provident fund and approved
superannuation scheme, which are substantially defined contribution
plans, are recognised as expense in the Statement of Profit and Loss,
as they are incurred
The Provident Fund contribution, as specified under the law, is paid to
the Provident Fund set-up as an irrevocable trust by the Company or to
the Regional Provident Fund Commissioner. The Company is liable for any
shortfall in the fund assets based on the Government specified minimum
rates of return. Such shortfall, if any, is recognised in the Statement
of Profit and Loss as an expense in the year of incurring the same
Defined Benefit Plan
The obligations in respect of defined benefit plans, which covers
Gratuity and Pension, are provided for on the basis of an actuarial
valuation at the end of each financial year. Gratuity is funded with an
approved fund. Actuarial gains/losses, if any, are recognised
immediately in the Statement of Profit and Loss
Other Long-Term Benefits
Long-term compensated absences are provided for on the basis of an
actuarial valuation at the end of each financial year. Actuarial
gains/losses, if any, are recognised immediately in the Statement of
Profit and Loss.
Share-Based Payments to Employees
The stock options granted to employees of the Company are accounted for
as per the accounting treatment prescribed by the Securities and
Exchange Board of India, whereby the intrinsic value of options is
recognised as deferred employee compensation. The deferred employee
compensation is charged to the Statement of Profit and Loss on the
straight- line basis over the vesting period of the option. The
employee stock option outstanding account is shown net of any
unamortised deferred employee compensation
1.14 Foreign Currency Transactions and Translation:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and iabilities
in foreign currency, existing at the Balance Sheet date, are translated
at the year-end exchange rates
Exchange differences, including premium or discount on forward exchange
contracts, arising till the commissioning of fixed assets, relating to
borrowed funds and liabilities in foreign currency for acquisition of
the fixed assets, are adjusted to the cost of fixed assets. All other
exchange differences are recognised in the Statement of Profit and Loss
Investments in Share Capital of companies, registered outside India,
are carried in the Balance Sheet at the rates at which the transactions
have been executed
Exchange difference, arising on restatement of long-term monetary items
that in substance forms part of the Company''s net investment in
non-integral foreign operations, is accumulated in Foreign Currency
Translation Reserve until the disposal of the investment, at which time
such exchange difference is recognised in the Statement of Profit and
Loss
1.15 Research and Development Expenditure:
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development expenditure is capitalised if such
expenditure leads to creation of any intangible asset, otherwise, such
expenditure is charged to the Statement of Profit and Loss. Fixed
assets which are procured for research and development activities are
capitalised
1.16 Operating Leases:
Leases, where risk and reward of ownership are significantly retained
by the lessor, are classified as operating leases, and ease rentals
thereon are charged to the Statement of Profit and Loss on
straight-line basis over the period of the lease
1.17 Borrowing Costs:
Borrowing costs include interest and ancillary costs incurred in
connection with the borrowings. Borrowing costs in connection with the
borrowing of funds, to the extent attributable to the acquisition or
construction of a qualifying asset, are capitalised as part of the cost
of such asset till such time the asset is ready for its intended use.
All other borrowing costs are recognised in the Statement of Profit and
Loss in the period in which they are incurred
1.18 Depreciation/Amortisation:
Depreciation is the systematic allocation of the depreciable amount of
an asset over its useful life and is provided on a straight-line basis
or written-down-value method basis over the useful lives as prescribed
in Schedule II of the Companies Act, 2013.
Depreciable amount for assets is the cost of an asset less its
estimated residual value
Depreciation/Amortisation charge is provided on fixed assets on
written-down-value method in respect of fixed assets of Viscose Staple
Fibre Division (excluding Power Plants), Nagda, Engineering Division,
Nagda, and Corporate Finance Division, Mumbai, and on straight-line
method in respect of other assets
The useful life of an asset is the period over which an asset is
expected to be available for use by an entity, or the number of
production or similar units expected to be obtained from the asset by
the entity
Useful life of part of the assets which is significant to the total
cost of assets has been determined separately; and the depreciation has
been provided accordingly
In case of certain class of assets, the Company uses different useful
life than those prescribed in Schedule II of the Companies Act, 2013.
The useful life has been assessed based on technical advice, taking
into account the nature of the asset, the estimated usage of the asset
on the basis of management''s best estimation of getting economic
benefits from those class of assets. The Company uses its technical
expertise along with historical and industry trends for arriving the
economic life of an asset. Such class of assets and their estimated
useful lives are as under:
Continuous process plants, as defined in Schedule II of the Companies
Act, 2013, have been classified on the basis of technical assessment,
and depreciation is provided accordingly.
Individual assets costing less than Rs. 10,000 are depreciated in full
in the year of acquisition
Cost of Leasehold Land is amortised over the period of lease
In respect of fixed assets added/disposed of during the year,
depreciation is provided on pro-rata basis with reference to the month
of addition/deduction. In case of a new project, the depreciation from
the date of commissioning of such project is charged to the Statement
of Profit and Loss
1.19 Provision for Current and Deferred Tax:
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting period in accordance with the
provisions of the Income-tax Act, 1961
Deferred Tax, resulting from timing difference between book and taxable
profit for the year, is accounted for using the Tax rates and laws
enacted or substantively enacted as on the Balance Sheet date. The
Deferred Tax asset is recognised and carried forward only to the extent
there is a reasonable certainty of its realisation in future
In the event of unabsorbed depreciation or carry forward of losses
under tax laws, deferred tax assets are recognised to the extent of
virtual certainty that sufficient future taxable income will be
available to realise such assets
1.20 Minimum Alternate Tax (MAT):
MAT is recognised as an asset only when and to the extent there is
convincing evidence based on projections that the Company will pay
normal Income Tax during the specified period. In the year, in which
the MAT credit becomes eligible to be recognised as an asset in
accordance with the recommendations contained in the Guidance Note
issued by the ICAI, the said asset is created by way of a credit to the
Statement of Profit and Loss and is shown as MAT Credit Entitlement.
The Company reviews the same at each Balance Sheet date and writes down
the carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that the Company will pay
normal Income Tax during the specified period
1.21 Provisions/Contingencies:
A provision is recognised when there is a present obligation as a
result of past event, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are determined (as
provided/charged to the Statement of Profit and Loss) based on the
estimate of the amount required to settle the obligation at the Balance
Sheet date and are not discounted to the present value
Contingent liabilities are not recognised but are disclosed in the
financial statements. Claims against the Company, where the possibility
of materialisation is remote, are not considered as contingent
liabilities
Contingent assets are neither recognised nor disclosed, in the
financial statements
1.22 Segment Reporting:
Segments are identified based on the nature of products and services,
the different risks and returns, and the internal reporting structure
Further, inter-segment revenues have been accounted for based on the
transaction price agreed to between segments, which is primarily market
based
"Unallocated Corporate Expenses" revenue and expenses, which relate to
initiatives/costs attributable to the enterprise as a whole, are not
attributable to segments
1A. Amalgamation of Aditya Birla Chemicals (India) Ltd.
The Hon''ble High Courts of Madhya Pradesh and Jharkhand have, by their
respective orders, approved the Scheme of Amalgamation of Aditya Birla
Chemicals (India) Limited (ABCIL), a leading manufacturer of Chlor
Alkali and allied chemicals, with Grasim Industries Limited and their
respective Shareholders and Creditors. ABCIL has been amalgamated with
the Company on 4th January, 2016, w.e.f. the appointed date of 1st
April, 2015
All the assets and liabilities have been accounted for in the books of
account of the Company at the value appearing in the books of account
of ABCIL as on 1 st April, 2015, under the "Pooling of Interest" method
as prescribed by Accounting Standard-14 on "Accounting for
Amalgamations"
In terms of the Scheme, the Company has issued 14.62 lakh Equity Shares
to the shareholders of the erstwhile ABCIL in the ratio of 1 (one)
share of Rs. 10/- each fully paid-up against 16 (sixteen) shares of Rs.
10/- each fully paid-up of ABCIL held by them. As a result, Issued and
Paid-up Equity Share Capital of the Company has increased by Rs. 1.46
Crore to Rs. 93.33 Crore
Difference between Share Capital of ABCIL of Rs. 23.39 Crore and Equity
Share Capital issued by the Company of Rs. 1.46 Crore to ABCIL
shareholders amounting to Rs. 21.93 Crore has been disclosed as
"Capital Reserve".
Further, Chlor Alkali plant and related assets of Ganjam, Odisha and
Salt works at Pundi, Andhra Pradesh, were acquired during the year at a
total consideration of Rs. 212 Crore as per the Business Transfer
Agreement between ABCIL and Jayshree Chemicals Ltd
In view of amalgamation of ABCIL with the Company with effect from 1 st
April, 2015, and above acquisition, the figures for the current year
are not strictly comparable with those of the previous year.
Mar 31, 2015
1.1 Basis of Preparation:
The fi nancial statements have been prepared and presented in
accordance with the Generally Accepted Accounting Principles (GAAP) in
India under historical cost convention on accrual basis and comply in
all material aspects with the Accounting Standards (AS) and the
relevant provisions of the Companies Act, 1956 and Companies Act, 2013
as applicable, besides the pronouncements/guidelines of the Institute
of Chartered Accountants of India (ICAI) and of the Securities and
Exchange Board of India (SEBI).
1.2 Classifi cation of Assets and Liabilities as Current and
Non-Current:
All assets and liabilities are classifi ed as current or non-current as
per the Company''s normal operating cycle, and other criteria set out in
Schedule III to the Companies Act, 2013. Based on the nature of
products and the time between the acquisition of assets for processing
and their realisation in cash and cash equivalents, 12 months period
has been considered by the Company as its normal operating cycle for
the purpose of classifi cation of assets and liabilities as current and
non-current.
1.3 Use of Estimates:
The preparation of fi nancial statements requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of the fi nancial statements and reported
amount of revenues and expenses during the reporting period and the
disclosures relating to contingent liabilities as of the date of the fi
nancial statements. Although these estimates are based on the
management''s best knowledge of current events and actions, the actual
outcome may be different from the estimates. Difference between actual
results and estimates are recognised in the period in which the results
are known or materialise.
1.4 Government Grants:
Any government grant is recognised when there is reasonable assurance
of its receipt. A capital grant relating to specifi c assets is reduced
from the gross value of the fi xed assets, and capital grant for
Project Capital Subsidy is credited to Capital Reserve. Revenue grant
is recognised in the Statement of Profi t and Loss.
1.5 General Reserve:
General Reserve, a free reserve, is created by appropriation from profi
ts of the current year and/or undistributed profi ts of previous years,
before declaration of dividend duly complying with any regulations in
this regard.
1.6 Fixed Assets:
Fixed assets (Tangible and Intangible) are stated at cost, less
accumulated depreciation/amortisation. Cost comprises the purchase
price and any attributable cost of bringing the asset to its location
and working condition for its intended use. Fixed assets, retired from
active use and held for sale, are stated at lower of their net book
value and net realisable value, and are disclosed separately in the fi
nancial statements under Current Assets.
Spares which can be used only in connection with a particular Plant and
Equipment of the Company and use is expected to be irregular, are
capitalised at cost.
Gains/losses arising from retirement or disposal of fi xed assets which
are carried at cost are recognised in the Statement of Profi t and
Loss.
1.7 Treatment of Expenditure during Construction Period:
Expenditure net of income earned during construction period is included
under capital work-in-progress and the same is allocated to the
respective fi xed assets on the completion of construction.
1.8 Impairment of Assets:
Carrying amount of assets is reviewed at the Balance Sheet date to
ascertain if there is any indication of impairment based on the
internal and external factors. The assets are treated as impaired when
the carrying amount of the asset exceeds its recoverable amount.
An impairment loss, if any, is charged to the Statement of Profi t and
Loss as and when it arises. Impairment loss recognised in prior years
is reversed when there is an indication that impairment loss recognised
for the asset no longer exists or may have decreased.
1.9 Investments:
Long-term investments are stated at cost. However, provision for
diminution is made to recognise a decline, other than temporary, in the
value of the investments. Such reduction is determined and made for
each investment individually.
Current investments, except current maturities of Long-term
investments, are stated at lower of cost and fair value determined for
each category of investments.
1.10 Inventories:
Inventories are valued at the lower of cost and net realisable value.
The cost is computed on weighted-average basis. In case of sale of raw
material/stores, the proceeds are credited to their respective heads.
Cost of fi nished goods and process stock include cost of conversion,
and other costs incurred in bringing the inventories to their present
location and condition. Net realisable value is the estimated selling
price in the ordinary course of business, less the estimated costs of
completion, and the estimated costs necessary to make the sale. In the
absence of cost, waste/scrap is valued at estimated net realisable
value.
Obsolete, defective, slow moving and unserviceable inventories, if any,
are duly provided for.
1.11 Financial Derivatives:
Derivative instrument are used to hedge risk associated with foreign
currency fl uctuations, interest rates and commodity prices. The
derivative contracts are closely linked with underlying transactions
and are intended to be held till maturity. The Company does not enter
into any derivative contracts for speculations or trading purposes.
With effect from current year, the Company has adopted AS 30 Â
"Financial Instrument  Recognition and Measurement", to the extent
that adoption did not confl ict with existing accounting standards and
other regulatory requirements. Accordingly the Company test each
contract which are entered on the basis of highly probable forecast
transaction and decide whether to designate the same as an underlying
for the effective hedge relationship.
To designate a forward or options contract as an effective hedging
instrument, the management objectively evaluates and evidences with
appropriate supporting documents at the inception of each contract
whether the contract is effective in achieving offsetting cash fl ows
attributable to the hedged risk.
The gain or losses on designated hedging contract that qualify as an
effective hedge is recorded in the hedging reserve account until the
transactions are completed. Upon completion or cessation of hedging
relationship as an effective, net cumulative gain / losses are
transferred to Statement of Profi t & Loss. The gain or losses on
designated hedging contracts which are considered as ineffective hedge
transactions are charged to the Statement of Profi t and Loss.
Forward exchange contracts which are not designated for hedge
accounting are marked to market and losses, if any, are charged to
Profi t and Loss while gains are ignored in accordance with the
announcement by the Institute of Chartered Accountants of India on
''Accounting for Derivatives''.
The premium or discount on forward exchange contracts entered into to
hedge an existing asset/liability is amortised as expense or income
over the life of the contract. Any gain or loss arising on cancellation
or renewal of such forward exchange contract is recognised as income or
expense, as the case may be on such occurrence.
1.12 Revenue Recognition:
Sales revenue is recognised on transfer of the signifi cant risks and
rewards of ownership of the goods to the buyer, and stated net of sales
tax, VAT, trade discounts and rebates but includes excise duty.
Income from services is recognised as they are rendered (based on
agreement/arrangement with the concerned customers).
Dividend income on investments is accounted for as and when the right
to receive the payment is established.
Interest income is recognised on time-proportion basis.
Export incentives and other government incentives, insurance claims and
other claims, where quantum of accruals cannot be ascertained with
reasonable certainty, are accounted on acceptance basis.
Profit/(Loss) on sale of investments is recorded on transfer of title
from the Company, and is determined as the difference between the sale
price and carrying value of investment and other incidental expenses.
1.13 Employee Benefi ts:
Short-Term Employee Benefi ts
Short-term employee benefi ts are recognised as an expense on accrual
basis.
Defi ned Contribution Plan
Contribution payable to recognised provident fund and approved
superannuation scheme, which are substantially defi ned contribution
plans, are recognised as expense in the Statement of Profi t and Loss,
as they are incurred.
The Provident Fund contribution as specifi ed under the law is paid to
the Provident Fund set-up as an irrevocable trust by the Company or to
the Regional Provident Fund Commissioner. The Company is liable for any
shortfall in the fund assets based on the Government specifi ed minimum
rates of return. Such shortfall, if any, is recognised in the Statement
of Profi t and Loss as an expense in the year incurred.
Defi ned Benefi t Plan
The obligation in respect of defi ned benefi t plans, which covers
Gratuity and Pension, are provided for on the basis of an actuarial
valuation at the end of each fi nancial year. Gratuity is funded with
an approved fund. Actuarial gains/losses, if any, are recognised
immediately in the Statement of Profi t and Loss.
Other Long-Term Benefi ts
Long-term compensated absences are provided for on the basis of an
actuarial valuation at the end of each fi nancial year. Actuarial
gains/losses, if any, are recognised immediately in the Statement of
Profi t and Loss.
Share-Based Payments to Employees
The stock options granted under Employee Stock Option Scheme-2006 and
Employee Stock Option Scheme-2013 to employees of the Company are
accounted for as per the accounting treatment prescribed by the
Securities and Exchange Board of India, whereby the intrinsic value of
options is recognised as deferred employee compensation. The deferred
employee compensation is charged to the Statement of Profi t and Loss
on the straight-line basis over the vesting period of the option. The
employee stock option outstanding account is shown net of any
unamortised deferred employee compensation.
1.14 Foreign Currency Transactions and Translation:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency, existing at the Balance Sheet date, are translated
at the year-end exchange rates.
Exchange differences, including premium or discount on forward exchange
contracts, arising till the commissioning of fi xed assets, relating to
borrowed funds and liabilities in foreign currency for acquisition of
the fi xed assets, are adjusted to the cost of fi xed assets. All other
exchange differences are recognised in the Statement of Profi t and
Loss.
Investment in Share Capital of companies registered outside India is
carried in the Balance Sheet at the rates at which transactions have
been executed.
Exchange difference, arising on restatement of long-term monetary items
that in substance forms part of Company''s net investment in
non-integral foreign operations, is accumulated in Foreign Currency
Translation Reserve until the disposal of the investment, at which time
such exchange difference is recognised in the Statement of Profi t and
Loss.
1.15 Research and Development Expenditure:
Revenue expenditure pertaining to research is charged to the Statement
of Profi t and Loss. Development expenditure is capitalised if such
expenditure leads to creation of any intangible asset, otherwise, such
expenditure is charged to the Statement of Profi t and Loss. Fixed
assets procured for research and development activities are
capitalised.
1.16 Operating Leases:
Leases, where risk and reward of ownership are signifi cantly retained
by the lessor, are classifi ed as operating leases, and lease rentals
thereon are charged to the Statement of Profi t and Loss on
straight-line basis over the period of the lease.
1.17 Borrowing Costs:
Borrowing costs include interest and ancillary costs incurred in
connection with the borrowings. Borrowing costs in connection with the
borrowing of funds, to the extent attributable to the acquisition or
construction of a qualifying asset, are capitalised as part of the cost
of such asset till such time the asset is ready for its intended use.
All other borrowing costs are recognised in the Statement of Profi t
and Loss in the period in which they are incurred.
1.18 Depreciation/Amortisation:
Depreciation is the systematic allocation of the depreciable amount of
an asset over its useful life and is provided on a straight-line basis
or WDV basis over the useful lives as prescribed in Schedule II to the
Companies Act, 2013.
Depreciable amount for assets is the cost of an asset less its
estimated residual value.
Depreciation/Amortisation charge is provided on fi xed assets on
written-down-value method in respect of fi xed assets of Viscose Staple
Fibre Division (excluding Power Plants), Nagda, Engineering Division,
Nagda and Corporate Finance Division, Mumbai, and on Straight-line
Method in respect of other assets.
The useful life of an asset is the period over which an asset is
expected to be available for use by an entity, or the number of
production or similar units expected to be obtained from the asset by
the entity.
Useful life of part of the assets which is signifi cant to total cost
of assets has been determined separately and depreciation has been
provided accordingly.
In case of certain class of assets, the Company uses different useful
life than those prescribed in Schedule II to the Companies Act, 2013.
The useful life has been assessed based on technical advice, taking
into account the nature of the asset, the estimated usage of the asset
on the basis of management''s best estimation of getting economic benefi
ts from those class of assets. The Company uses its technical expertise
along with historical and industry trends for arriving the economic
life of an asset. Such class of assets and their estimated useful lives
are as under:
Continuous process plant, as defi ned in Schedule II of the Companies
Act, 2013, have been classifi ed on the basis of technical assessment
and depreciation is provided accordingly.
Individual assets costing less than Rs. 10,000 are depreciated in full
in the year of acquisition.
Cost of Leasehold Land is amortised over the period of lease.
In respect of fi xed assets added/disposed of during the year,
depreciation is provided on pro-rata basis with reference to the month
of addition/deduction, however, in case of a new project the
depreciation from the date of commissioning of such project is charged
to Statement of Profi t and Loss.
1.19 Provision for Current and Deferred Tax:
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting period in accordance with the
provisions of the Income-tax Act, 1961.
Deferred Tax, resulting from timing difference between book and taxable
profi t for the year, is accounted for using the Tax rates and laws
enacted or substantively enacted as on the Balance Sheet date. The
Deferred Tax asset is recognised and carried forward only to the extent
there is a reasonable certainty of its realisation in future.
In the event of Unabsorbed Losses, deferred tax assets are recognised
to the extent of virtual certainty that suffi cient future taxable
income will be available to realise such assets.
1.20 Minimum Alternate Tax (MAT):
MAT is recognised as an asset only when and to the extent there is
convincing evidence based on projections that the Company will pay
normal Income-tax during the specifi ed period. In the year, in which
the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in the Guidance Note
issued by the ICAI, the said asset is created by way of a credit to the
Statement of Profi t and Loss and is shown as MAT Credit Entitlement.
The Company reviews the same at each Balance Sheet date and writes down
the carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that Company will pay normal
Income-tax during the specifi ed period.
1.21 Provisions/Contingencies:
A provision is recognised when there is a present obligation as a
result of past event, and it is probable that an outfl ow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are determined (as
provided/charged to the Statement of Profi t and Loss) based on
estimate of the amount required to settle the obligation at the Balance
Sheet date and are not discounted to present value.
Contingent liabilities are not recognised but are disclosed in the fi
nancial statements. Claims against the Company where the possibility of
materialisation is remote are not considered as contingent liabilities.
Contingent assets are neither recognised nor disclosed, in the
financial statements.
Mar 31, 2014
1.1 Basis of Preparation:
The financial statements have been prepared and presented in accordance
with the Generally Accepted Accounting Principles (GAAP) in India under
the historical cost convention on accrual basis and comply in all
material aspects with the Accounting Standards (AS) and the relevant
provisions of the Companies Act, 1956, and Companies Act, 2013, as
applicable, besides the pronouncements/guidelines of the Institute of
Chartered Accountants of India (ICAI) and of the Securities and
Exchange Board of India (SEBI).
1.2 Classification of Assets and Liabilities as Current and
Non-Current:
All assets and liabilities are classified as current or non-current as
per the Company''s normal operating cycle, and other criteria set out in
Revised Schedule VI to the Companies Act, 1956. Based on the nature of
products and the time between the acquisition of assets for processing
and their realisation in cash and cash equivalents, 12 months period
has been considered by the Company as its normal operating cycle for
the purpose of classification of assets and liabilities as current and
non-current.
1.3 Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of the financial statements and reported amount
of revenues and expenses during the reporting period and the
disclosures relating to contingent liabilities as of the date of the
financial statements. Although these estimates are based on the
management''s best knowledge of current events and actions, the actual
outcome may be different from the estimates. Difference between actual
results and estimates are recognised in the period in which the results
are known or materialise.
1.4 Government Grants:
Any government grant is recognised when there is reasonable assurance
of its receipt. A capital grant relating to specific assets is reduced
from the gross value of the fixed assets, and capital grant for Project
Capital Subsidy is credited to Capital Reserve. Revenue grant is
recognised in the Statement of Profit and Loss.
1.5 General Reserve:
General Reserve, a free reserve, is created by appropriation from
profits of the current year and/or undistributed profits of previous
years, before declaration of dividend duly complying with any
regulations in this regard.
1.6 Fixed Assets:
Fixed assets (Tangible and Intangible) are stated at cost, less
accumulated depreciation/amortisation. Cost comprises the purchase
price and any attributable cost of bringing the asset to its location
and working condition for its intended use. Fixed assets, retired from
active use and held for sale, are stated at lower of their net book
value and net realisable value, and are disclosed separately in the
financial statements under Current Assets.
1.7 Treatment of Expenditure during Construction Period:
Expenditure during construction period is included under capital
work-in-progress, and the same is allocated to the respective fixed
assets on the completion of construction.
1.8 Impairment of Assets:
Carrying amount of assets is reviewed at the Balance Sheet date to
ascertain if there is any indication of impairment based on the
internal and external factors. The assets are treated as impaired when
the carrying amount of the asset exceeds its recoverable amount.
An impairment loss, if any, is charged to the Statement of Profit and
Loss as and when it arises. Impairment loss recognised in prior years
is reversed when there is an indication that impairment loss recognised
for the asset no longer exists or may have decreased.
1.9 Investments:
Long-term investments are stated at cost. However, provision for
diminution is made to recognise a decline, other than temporary, in the
value of the investments. Such reduction is determined and made for
each investment individually.
Current investments, except current maturities of Long-term
investments, are stated at lower of cost and fair value determined for
each category of investments.
1.10 Inventories:
Inventories are valued at the lower of cost and net realisable value.
The cost is computed on weighted-average basis. In case of sale of raw
material/stores, the proceeds are credited to their respective heads.
Cost of finished goods and process stock include cost of conversion,
and other costs incurred in bringing the inventories to their present
location and condition. Net realisable value is the estimated selling
price in the ordinary course of business, less the estimated costs of
completion, and the estimated costs necessary to make the sale. In the
absence of cost, waste/scrap is valued at estimated net realisable
value.
Obsolete, defective, slow moving and unserviceable inventories, if any,
are duly provided for.
1.11 Financial Derivatives:
Financial derivative instruments, such as swaps and options, are meant
to hedge risks associated with fluctuations in foreign exchange and
interest rates and, accordingly, are closely linked with the underlying
transactions and are intended to be held to maturity. The underlying
transactions are recorded as per the terms of the financial derivative
contracts.
1.12 Revenue Recognition:
Sales revenue is recognised on transfer of the significant risks and
rewards of ownership of the goods to the buyer, and stated net of sales
tax, VAT, trade discounts and rebates but includes excise duty.
Income from services is recognised as they are rendered (based on
agreement/arrangement with the concerned customers).
Dividend income on investments is accounted for as and when the right
to receive the payment is established.
Interest income is recognised on time-proportion basis.
Export incentives and other government incentives, insurance claims and
other claims, where quantum of accruals cannot be ascertained with
reasonable certainty, are accounted on acceptance basis.
Profit/(Loss) on sale of investments is recorded on transfer of title
from the Company, and is determined as the difference between the sale
price and carrying value of investment and other incidental expenses.
1.13 Employee Benefits: Short-Term Employee Benefits
Short-term employee benefits are recognised as an expense on accrual
basis.
Defined Contribution Plan
Contribution payable to the recognised provident fund and approved
superannuation scheme, which are substantially defined contribution
plans, are recognised as expense in the Statement of Profit and Loss,
as they are incurred.
The Provident Fund contribution as specified under the law is paid to
the Provident Fund set-up as an irrevocable trust by the Company or to
the Regional Provident Fund Commissioner. The Company is liable for any
shortfall in the fund assets based on the Government specified minimum
rates of return. Such shortfall, if any, is recognised in the Statement
of Profit and Loss as an expense in the year incurred.
Defined Benefit Plan
The obligation in respect of defined benefit plans, which covers
Gratuity and Pension, are provided for on the basis of an actuarial
valuation at the end of each financial year. Gratuity is funded with an
approved fund. Actuarial gains/losses, if any, are recognised
immediately in the Statement of Profit and Loss.
Other Long-Term Benefits
Long-term compensated absences are provided for on the basis of an
actuarial valuation at the end of each financial year. Actuarial
gains/losses, if any, are recognised immediately in the Statement of
Profit and Loss.
Employee Share-Based Payments
The stock options granted under Employee Stock Option Scheme-2006 and
Employee Stock Option Scheme-2013 to employees of the Company are
accounted for as per the accounting treatment prescribed by the
Securities and Exchange Board of India, whereby the intrinsic value of
options is recognised as deferred employee compensation. The deferred
employee compensation is charged to the Statement of Profit and Loss on
the straight-line basis over the vesting period of the option. The
employee stock option outstanding account is shown net of any
unamortised deferred employee compensation.
1.14 Foreign Currency Transactions and Translation:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency, existing at the Balance Sheet date, are translated
at the year-end exchange rates.
Exchange differences, including premium or discount on forward exchange
contracts, arising till the commissioning of fixed assets, relating to
borrowed funds and liabilities in foreign currency for acquisition of
the fixed assets, are adjusted to the cost of fixed assets. All other
exchange differences are recognised in the Statement of Profit and
Loss.
The premium or discount on forward exchange contracts entered into to
hedge an existing asset/liability is amortised as expense or income
over the life of the contract. Any gain or loss arising on cancellation
or renewal of such forward exchange contract is recognised as income or
expense, as the case may be on such occurence.
Forward exchange contracts entered to hedge firm commitment and
outstanding as at the year end are marked-to-market. In accordance with
the announcement by the Institute of Chartered Accountants of India on
''Accounting for Derivatives'' the marked-to-market losses, if any, are
recognised in the Statement of Profit and Loss, while gains are
ignored.
Investment in Share Capital of companies registered outside India is
carried in the Balance Sheet at the rates at which transactions have
been executed.
Exchange difference, arising on restatement of long-term monetary items
that in substance forms part of Company''s net investment in
non-integral foreign operations, is accumulated in Foreign Currency
Translation Reserve until the disposal of the investment, at which time
such exchange difference is recognised in the Statement of Profit and
Loss.
1.15 Research and Development Expenditure:
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development expenditure is capitalised if such
expenditure leads to creation of any intangible asset, otherwise, such
expenditure is charged to the Statement of Profit and Loss. Fixed
assets procured for research and development activities are
capitalised.
1.16 Operating Leases:
Leases, where risk and reward of ownership are significantly retained
by the lessor, are classified as operating leases, and lease rentals
thereon are charged to the Statement of Profit and Loss on
straight-line basis over the period of the lease.
1.17 Borrowing Costs:
Borrowing costs include interest and ancillary costs incurred in
connection with the borrowings. Borrowing costs in connection with the
borrowing of funds, to the extent attributable to the acquisition or
construction of a qualifying asset, are capitalised as part of the cost
of such asset till such time the asset is ready for its intended use.
All other borrowing costs are recognised in the Statement of Profit and
Loss in the period in which they are incurred.
1.18 Depreciation/Amortisation:
Depreciation/Amortisation charge is provided on fixed assets on
written-down-value method in respect of fixed assets of Viscose Staple
Fibre Division (excluding Power Plants), Nagda, Engineering Division,
Nagda, and Corporate Finance Division, Mumbai, and on Straight-line
Method in respect of other assets.
For provision of Depreciation/Amortisation the rates/useful life
specified in Schedule XIV to the Companies Act, 1956, are applied
except for the following assets where different useful life as stated
below is used:
Assets Estimated Useful Life
Leasehold Land Over the period of lease
Motor Cars/Two-Wheelers 5 years
Computer Software 3 years
Computer and Other Electronic Office Equipment 4 years
Furniture, Fixtures and Electrical Fittings 7 years
Trademarks 10 years
Individual assets costing less than Rs. 5,000 are depreciated in full in
the year of acquisition.
Continuous process plants, as defined in Schedule XIV of the Companies
Act, 1956, have been classified on the basis of technical assessment
and depreciation is provided accordingly.
In respect of fixed assets added/disposed off during the year,
depreciation is provided on pro-rata basis with reference to the month
of addition/deduction, however, in case of new projects the
depreciation from the date of commissioning of such project is charged
to the Statement of Profit and Loss.
1.19 Provision for Current and Deferred Tax:
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting period in accordance with the
provisions of the Income-tax Act, 1961.
Deferred Tax, resulting from timing difference between book and taxable
profit for the year, is accounted for using the Tax rates and laws
enacted or substantively enacted as on the Balance Sheet date. The
Deferred Tax asset is recognised and carried forward only to the extent
there is a reasonable certainty of its realisation in future.
1.20 Minimum Alternate Tax (MAT):
MAT is recognised as an asset only when and to the extent there is
convincing evidence based on projections that the Company will pay
normal Income-tax during the specified period. In the year in which the
MAT credit becomes eligible to be recognized as an asset in accordance
with the recommendations contained in the Guidance Note issued by the
ICAI, the said asset is created by way of a credit to the Statement of
Profit and Loss and is shown as MAT Credit Entitlement. The Company
reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that Company will pay normal
Income-tax during the specified period.
1.21 Provisions/Contingencies:
A provision is recognised when there is a present obligation as a
result of past event, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are determined (as
provided/charged to the Statement of Profit and Loss) based on estimate
of the amount required to settle the obligation at the Balance Sheet
date and are not discounted to the present value.
Contingent liabilities are not recognised but are disclosed in the
financial statements. Claims against the Company where the possibility
of materialisation is remote are not considered as contingent
liabilities.
Contingent assets are neither recognised nor disclosed, in the
financial statements.
2.1.7 Rights, Preferences and Restrictions attached to Equity Shares
The Company has only one class of Equity Shares having a par value of Rs.
10 per share. Each holder of Equity Shares is entitled to one vote per
share. The Company declares dividend in Indian Rupees. The dividend
proposed by the Board of Directors is subject to the approval of the
Shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of Equity
Shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of Equity Shares held by the
Shareholders.
2.1.8.3 Fair Valuation
The fair value of options used to compute proforma net income and
earnings per equity share has been done by an independent firm of
Chartered Accountants on the date of grant using Black- Scholes Model.
The Key assumptions in Black-Scholes Model for calculating fair value
as on the date of grant are:
2.2 RESERVES AND SURPLUS
2.2.1 The Board of Directors has recommended a dividend of Rs. 21 per
share for the year ended, 31st March, 2014 (Previous Year Rs. 22.50 per
share). The total cash outflows on account of the dividend would be Rs.
192.84 Crore (Previous Year Rs. 206.52 Crore) and on account of Corporate
Dividend Tax Rs. 7.48 Crore (Previous Year Rs. 9.81 Crore).
2.2.2 Proposed Dividend (including Corporate Dividend Tax) includes Rs.
0.03 Crore (Previous Year Rs. 0.02 Crore) related to Previous Year.
2.8 TRADE PAYABLES
There is no principal amount and interest overdue to the Micro and
Small Enterprises. During the year, no interest has been paid to such
parties. This information has been determined to the extent such
parties have been identified on the basis of information available with
the Company and the same has been relied upon by the auditors.
2.11.6 Amortisation Expenses related to Trademark for the year is Rs.
10,000 (Previous Year Rs. 10,619)
2.12.2 97,142,856 Equity Shares of Rs. 10 each, received in terms of the
Scheme of Amalgamation of Samruddhi Cement Limited with UltraTech
Cement Limited, were locked in for a period of 3 years from the date of
allotment, i.e., 26th August, 2010.
2.12.3 The investment in Company''s Subsidiary, Grasim Bhiwani Textiles
Limited; its Joint Ventures, AV Cell Inc., AV Nackawic Inc., AV Terrace
Bay Inc., Birla Jingwei Fibres Company Limited, Aditya Group AB; and
its Associate, Idea Cellular Limited, are subject to maintenance of
specified holding by the Company until the credit facility provided by
certain lenders to the respective companies are outstanding.
Without guaranteeing the repayment to the lenders, the Company has also
agreed that the affairs of the Subsidiary and JVs will be managed
through its nominee directors on the boards of respective borrowing
companies, in such a manner that they are able to meet their respective
financial obligations.
2.12.4 Investment in shares of Larsen & Toubro Limited are
non-transferable, pending disposal of appeal filed in earlier year by
Larsen & Toubro Limited and others in the Hon''ble Bombay High Court
against the single bench order of the court in favour of the Company.
2.12.5 Provision for diminution represents diminution in value of
shares of Aditya Birla Power Ventures Limited (ABPVL). Application
filed during the year for striking off the name of ABPVL under Section
560 of the Companies Act, 1956.
2.18 SHORT-TERM LOANS AND ADVANCES
* Includes deposit of Rs. 9.49 Crore (Previous Year Rs. 9.49 Crore) given
to Aditya Birla Management Corporation Pvt. Limited (ABMCPL), Directors
of which include Directors of the Company. The Company is one of the
Promoter members of ABMCPL, a company limited by guarantee, which has
been formed to provide a common pool of facilities and resources to its
members, with a view to optimise the benefits of specialisation and
minimise cost to each member. The Company''s share of expenses, under
the common pool, has been accounted for under the appropriate heads.
3.12 Donations include contribution of Rs. 20 Crore (Previous Year Rs. 5.50
Crore) to General Electoral Trust (the ''Trust''), set up by the Company
(along with other group companies). As per governing charter of the
Trust, these contributions are used for contribution for Political
purposes, as may be decided by the Board of Independent Trustees of the
Mar 31, 2013
1.1 Basis of Preparation:
The financial statements have been prepared and presented in accordance
with the Generally Accepted Accounting Principles (GAAP) in India under
historical cost convention on accrual basis and comply in all material
aspects with the Accounting Standards (AS) and the relevant provisions
prescribed in the Companies Act, 1956, besides the
pronouncements/guidelines of the Institute of Chartered Accountants of
India (ICAI) and of the Securities and Exchange Board of India (SEBI).
1.2 Classification of Assets and Liabilities as Current and
Non-Current:
All assets and liabilities are classified as current or non-current as
per the Company''s normal operating cycle, and other criteria set out in
Revised Schedule VI to the Companies Act, 1956. Based on the nature of
products and the time between the acquisition of assets for processing
and their realisation in cash and cash equivalents, 12 months period
has been considered by the Company as its normal operating cycle for
the purpose of current-non-current classification of assets and
liabilities.
1.3 Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of the financial statements and reported amount
of revenues and expenses during the reporting period and the
disclosures relating to contingent liabilities as of the date of the
Financial Statements. Although these estimates are based on the
management''s best knowledge of current events and actions, the actual
outcome may be different from the estimates. Difference between actual
results and estimates are recognised in the period in which the results
are known or materialise.
1.4 Government Grants:
Any government grant is recognised when there is reasonable assurance
of its receipt. A capital grant relating to specific assets is reduced
from the gross value of the fixed assets, and capital grant for Project
Capital Subsidy is credited to Capital Reserve. Revenue grant is
recognised in the Statement of Profit and Loss.
1.5 General Reserve:
General Reserve is created by appropriation from profits of the current
year and/or undistributed profits of previous years, before declaration
of dividend duly complying with any regulations in this regard. The
General Reserve is a free reserve and can be utilised in accordance
with the provisions of the Companies Act, 1956.
1.6 Fixed Assets:
Fixed assets (Tangible and Intangible) are stated at cost, less
accumulated depreciation/amortisation. Cost comprises the purchase
price and any attributable cost of bringing the asset to its location
and working condition for its intended use. Fixed Assets retired from
active use and held for sale are stated at lower of their net book
value and net realisable value and are disclosed separately in the
Financial Statements under Current Assets.
1.7 Treatment of Expenditure during Construction Period:
Expenditure during construction period is included under capital
work-in-progress and the same is allocated to the respective fixed
assets on the completion of construction.
1.8 Impairment of Assets:
Carrying amount of assets is reviewed at the Balance Sheet date if
there is any indication of impairment based on the internal and
external factors. The assets are treated as impaired when the carrying
amount of the asset exceeds its recoverable amount.
An impairment loss, if any, is charged to the Statement of Profit and
Loss as and when it arises. Impairment loss recognised in prior years
is reversed when there is an indication that impairment loss recognised
for the asset no longer exists or may have decreased.
1.9 Investments:
Long-term investments are stated at cost. However, provision for
diminution is made to recognise a decline, other than temporary, in the
value of investments, such reduction being determined and made for each
investment individually.
Current investments, except current maturities of Long-term
investments, are stated at lower of cost and fair value determined for
each category of investments.
1.10 Inventories:
Inventories are valued at the lower of cost and net realisable value.
The cost is computed on weighted- average basis. In case of sale of raw
material/stores the proceeds are credited to their respective heads.
Cost of finished goods and process stock include cost of conversion and
other costs incurred in bringing the inventories to their present
location and condition. Net realisable value is the estimated selling
price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale. In the
absence of cost, waste/scrap is valued at estimated net realisable
value.
Obsolete, defective, slow moving and/or unserviceable inventories, if
any, are duly provided for.
1.11 Financial Derivatives:
Financial derivative instruments, such as swaps and options, are meant
to hedge risks associated with fluctuations in foreign exchange and
interest rates, and accordingly are closely linked with the underlying
transactions and are intended to be held to maturity. The underlying
transactions are recorded as per the terms of the financial derivative
contracts.
1.12 Revenue Recognition:
Sales revenue is recognised on transfer of the significant risks and
rewards of ownership of the goods to the buyer and stated net of sales
tax, VAT, trade discounts and rebates but includes excise duty.
Income from services is recognised as they are rendered (based on
agreement/arrangement with the concerned customers).
Dividend income on investments is accounted for as and when the right
to receive the payment is established. Interest income is recognised
on time-proportion basis.
Export or other government incentives, insurance claims and other
claims, where quantum of accruals cannot be ascertained with reasonable
certainty, are accounted on acceptance basis.
Profit on sale of investments is recorded on transfer of title from the
Company and is determined as the difference between the sale price and
carrying value of investment and other incidental expenses.
1.13 Employee Benefits:
Short-Term Employee Benefits
Short-term employee benefits are recognised as an expense on accrual
basis.
Defined Contribution Plan
Contribution payable to recognised provident fund and approved
superannuation scheme, which are substantially defined contribution
plans, are recognised as expense in the Statement of Profit and Loss,
as they are incurred.
The Provident Fund contribution as specified under the law is paid to
the Provident Fund set-up as an irrevocable trust by the Company or to
the Regional Provident Fund Commissioner. The Company is liable for any
shortfall in the Fund assets based on the Government specified minimum
rates of return. Such shortfall, if any, is recognised in the Statement
of Profit and Loss as an expense in the year incurred.
Defined Benefit Plan
The obligation in respect of defined benefit plans, which covers
Gratuity and Pension are provided for on the basis of an actuarial
valuation at the end of each financial year. Gratuity is funded with an
approved fund. Actuarial gains/losses, if any, are recognised
immediately in the Statement of Profit and Loss.
Other Long-Tem Benefits
Long-term compensated absences are provided for on the basis of an
actuarial valuation at the end of each financial year. Actuarial
gains/losses, if any, are recognised immediately in the Statement of
Profit and Loss.
Employee Share-Based Payments
The stock options granted under Employee Stock Option Scheme, 2006, are
accounted for as per the accounting treatment prescribed by the
Securities and Exchange Board of India, whereby the intrinsic value of
options is recognised as deferred employee compensation. The deferred
employee compensation is charged to the Statement of Profit and Loss on
the straight-line basis over the vesting period of the option. The
employee stock option outstanding account is shown net of any
unamortised deferred employee compensation.
1.14 Foreign Currency Transactions and Translation:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at the Balance Sheet date are translated
at the year-end exchange rates.
Exchange differences, including premium or discount on forward exchange
contracts, arising till the commissioning of fixed assets, relating to
borrowed funds and liabilities in foreign currency for acquisition of
the fixed assets, are adjusted to the cost of fixed assets. All other
exchange differences are recognised in the Statement of Profit and
Loss.
The premium or discount on forward exchange contracts entered into to
hedge an existing asset/liability is amortised as expense or income
over the life of the contract. Any gain or loss arising on cancellation
or renewal of such a forward exchange contract is recognised as income
or as expense, as the case may be, on such occurrence.
Forward exchange contracts entered to hedge firm commitment and
outstanding as at the year end are marked to market. In accordance with
the announcement by the Institute of Chartered Accountants of India on
''Accounting for Derivatives'', the marked to market losses, if any, are
recognised in the Statement of Profit and Loss while gains are ignored.
Investment in Share Capital of companies registered outside India is
carried in the Balance Sheet at the rates at which transactions have
been executed.
Exchange difference arising on restatement of long-term monetary items
that in substance forms part of the Company''s net investment in
non-integral foreign operations is accumulated in Foreign Currency
Translation Reserve until the disposal of the investment, at which time
such exchange difference is recognised in the Statement of Profit and
Loss.
1.15 Research and Development Expenditure:
Expenditure incurred during research phase is capitalised if such
expenditure leads to creation of any intangible asset, otherwise the
expenditure is charged to revenue. Fixed assets procured for research
and development activities are capitalised.
1.16 Operating Leases:
Leases, where risk and reward of ownership are significantly retained
by the lessor, are classified as operating leases, and lease rentals
thereon are charged to the Statement of Profit and Loss equally over
the period of the lease.
1.17 Borrowing Cost:
Borrowing cost includes interest and ancilliary cost incurred in
connection with the borrowings. Borrowing costs, in connection with the
borrowing of funds to the extent attributable to the acquisition or
construction of a qualifying fixed asset, are capitalised as part of
the cost of such asset till such time the asset is ready for its
intended use. All other borrowing costs are recognised in the Statement
of Profit and Loss in the period in which they are incurred.
1.18 Depreciation/Amortisation:
Depreciation/Amortisation charge is provided on fixed assets on
written-down-value method in respect of fixed assets of Viscose Staple
Fibre Division (excluding Power Plants), Nagda, Engineering Division,
Nagda, and Corporate Finance Division, Mumbai, and on Straight-line
Method in respect of other assets.
For provision of Depreciation/Amortisation the rates/useful life
specified in Schedule XIV to the Companies Act, 1956, are applied
except for the following assets where different useful life as stated
below is used:
Individual assets costing less than Rs. 5,000 are depreciated in full
in the year of acquisition.
Continuous process plants, as defined in Schedule XIV of the Companies
Act, 1956, have been classified on technical assessment and
depreciation provided accordingly.
In respect of fixed assets, added/disposed off during the year, the
depreciation is provided on pro-rata basis with reference to the month
of addition/deduction, however, in case of new projects the
depreciation from the date of commissioning of such project is charged
to the Statement of Profit and Loss.
1.19 Provision for Current and Deferred Tax:
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting period in accordance with the
provisions of the Income Tax Act, 1961.
Deferred Tax resulting from timing difference between book and taxable
profit for the year is accounted for using the Tax rates and laws
enacted or substantively enacted as on the Balance Sheet Date. The
Deferred Tax asset is recognised and carried forward only to the extent
there is a reasonable certainty of its realisation in future.
1.20 Minimum Alternate Tax (MAT):
MAT is recognised as an asset only when and to the extent there is
convincing evidence based on projections that the Company will pay
normal income tax during the specified period. In the year in which the
MAT credit becomes eligible to be recognised as an asset in accordance
with the recommendations contained in the Guidance Note issued by the
ICAI, the said asset is created by way of a credit to the Statement of
Profit and Loss, and is shown as MAT Credit Entitlement. The Company
reviews the same at each balance sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that Company will pay normal
Income Tax during the specified period.
1.21 Provisions/Contingencies:
A provision is recognised when there is a present obligation as a
result of past event, and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. Provisions are determined (as
provided/charged to the Statement of Profit and Loss) based on estimate
of the amount required to settle the obligation at the Balance Sheet
date and are not discounted to the present value.
Contingent liabilities are not recognised but are disclosed in the
financial statements. Claims against the Company, where the possibility
of materialisation is remote, are not considered as contingent
liabilities.
Contingent assets are neither recognised nor disclosed in the financial
statements.
Mar 31, 2012
1.1 Basis of Preparation:
The financial statements have been prepared and presented in accordance
with the Generally Accepted Accounting Principles (GAAP) in India under
historical cost convention on accrual basis and comply in all material
aspects with the Accounting Standards (AS) and the relevant provisions
prescribed in the Companies Act, 1956, besides the
pronouncements/guidelines of the Institute of Chartered Accountants of
India and of the Securities and Exchange Board of India.
1.2 Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and reported amount
of revenues and expenses during the reporting period. Although these
estimates are based on the management's best knowledge of current
events and actions, the actual outcome may be different from the
estimates. Difference between actual results and estimates are
recognised in the period in which the results are known or materialise.
1.3 Government Grants:
Any government grant is recognised when there is reasonable assurance
of its receipt. A capital grant relating to specific assets is reduced
from the gross value of the fixed assets and capital grant for Project
Capital Subsidy is credited to Capital Reserve. Revenue grant is
recognised in the Statement of Profit and Loss.
1.4 General Reserve:
General Reserve is created by appropriation from profits of the current
year and/or undistributed profits of previous years, before declaration
of dividend duly complying with any regulations in this regard. The
General Reserve is a free reserve and can be utilised in accordance
with the provisions of the Companies Act, 1956.
1.5 Fixed Assets:
Fixed assets (Tangible and Intangible) are stated at cost, less
accumulated depreciation/amortisation. Cost comprises the purchase
price and any attributable cost of bringing the asset to its location
and working condition for its intended use.
1.6 Treatment of Expenditure during Construction Period:
Expenditure during construction period is included under capital
work-in-progress and the same is allocated to the respective fixed
assets on the completion of construction.
1.7 Impairment of Assets:
Carrying amount of assets is reviewed at the Balance Sheet date if
there is any indication of impairment based on the internal and
external factors.
The assets are treated as impaired when the carrying amount of the
asset exceeds its recoverable amount. An impairment loss, if any, is
charged to the Statement of Profit and Loss as and when it arises.
Impairment loss recognised in prior years is reversed when there is an
indication that impairment loss recognised for the asset no longer
exists or may have decreased.
1.8 Classification of Assets and Liabilities as Current and
Non-Current:
All assets and liabilities are classified as current or non-current as
per the Company's normal operating cycle and other criteria set out in
Schedule VI to the Companies Act, 1956. Based on the nature of products
and the time between the acquisition of assets for processing and their
realisation in cash and cash equivalents, 12 months has been considered
by the Company for the purpose of current - non- current classification
of assets and liabilities.
1.9 Investments:
Investments are classified as Current and Non-Current. Current
Investments are those investments which are readily realisable, and are
intended to be held for not more than one year from the date of
investment. All other investments are classified as long-term
investments.
Current investments are stated at lower of cost and fair value
determined for each category of investments.
Long-term investments are stated at cost. However, provision for
diminution is made to recognise a decline, other than temporary, in the
value of the investments, such reduction being determined and made for
each investment individually.
1.10 Inventories:
Inventories are valued at the lower of cost and net realisable value.
The cost is computed on weighted- average basis. In case of sale of raw
material/stores the proceeds are credited to their respective heads.
Cost of finished goods and process stock include cost of conversion and
other costs incurred in bringing the inventories to their present
location and condition. Net realisable value is the estimated selling
price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale. In the
absence of cost, waste/scrap is valued at estimated net realisable
value.
Obsolete, defective, slow moving and/or unserviceable inventories, if
any, are duly provided for.
1.11 Financial Derivatives:
Financial derivative instruments, such as swaps and options, are meant
to hedge risks associated with fluctuations in foreign exchange and
interest rates, and accordingly are closely linked with the underlying
transactions and are intended to be held to maturity. The underlying
transactions are recorded as per the terms of the financial derivative
contracts.
1.12 Revenue Recognition:
Sales revenue is recognised on transfer of the significant risks and
rewards of ownership of the goods to the buyer and stated net of sales
tax, VAT, trade discounts and rebates but includes excise duty.
Income from services is recognised as they are rendered (based on
agreement/arrangement with the concerned customers).
Dividend income on investments is accounted for as and when the right
to receive the payment is established.
Interest income is recognised on time proportion basis.
Income against claims of the Company, viz., export incentives,
insurance and railway claims, etc., is recognised on accrual/right to
receive basis.
Profit on sale of investments is recorded on transfer of title from the
Company and is determined as the difference between the sale price and
carrying value of Investment and other incidental expenses.
1.13 Employee Benefits:
Short-term employee benefits and contribution to defined contribution
plans are recognised as an expense on accrual at the undiscounted
amount in the Statement of Profit and Loss.
The Provident Fund contribution as specified under the law is paid to
the Provident Fund set up as an irrevocable trust by the Company or to
the Regional Provident Fund Commissioner. The Company is liable for any
shortfall in the Fund assets based on the Government specified minimum
rates of return. Such shortfall, if any, is recognised in the Statement
of Profit and Loss.
Long-term employee benefits, including deferred post-employment
benefits, are recognised as an expense, at the present value of the
amounts payable determined using actuarial valuation techniques.
Actuarial gains and losses in respect of post-employment and other
long-term benefits are charged to the Statement of Profit and Loss.
Gratuity is funded with an approved fund.
1.14 Employee Share-Based Payments:
The stock options granted under Employee Stock Option Scheme, 2006, are
accounted for as per the accounting treatment prescribed by the
Securities and Exchange Board of India, whereby the intrinsic value of
options is recognised as deferred employee compensation. The deferred
employee compensation is charged to the Statement of Profit and Loss on
the straight-line basis over the vesting period of the option. The
employee stock option outstanding account is shown net of any
unamortised deferred employee compensation.
1.15 Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at the Balance Sheet date are restated at
the year-end exchange rates.
The premium or discount on forward exchange contracts entered into to
hedge an existing asset/liability is amortised as expense or income
over the life of the contract. Any profit or loss arising on
cancellation or renewal of such a forward exchange contract is
recognised as income or as expense as the case may be on such
occurrence.
Forward exchange contracts, outstanding as at the year end on account
of firm commitment are marked to market. In accordance with the
announcement by the Institute of Chartered Accountants of India on
'Accounting for Derivatives' the losses, if any, are recognised in the
Statement of Profit and Loss while gains are ignored.
Exchange differences, including premium or discount on forward exchange
contracts, arising till the commissioning of fixed assets, relating to
borrowed funds and liabilities in foreign currency for acquisition of
the fixed assets, are adjusted to the cost of fixed assets. All other
exchange differences are recognised in the Statement of Profit and
Loss.
1.16 Research and Development Expenditure:
Expenditure incurred during research phase is capitalised if such
expenditure leads to creation of any intangible asset, otherwise the
expenditure is charged to revenue. Fixed assets procured for research
and development activities are generally capitalised.
1.17 Operating Leases:
Leases, where risk and reward of ownership, are significantly retained
by the lessor are classified as operating leases, and lease rentals
thereon are charged to the Statement of Profit and Loss equally over
the period of the lease.
1.18 Borrowing Cost:
Interest and other costs in connection with the borrowing of funds to
the extent attributable to the acquisition or construction of a
qualifying fixed asset are capitalised as part of the cost of such
asset till such time the asset is ready for its intended use. All other
borrowing costs are recognised in the Statement of Profit and Loss in
the period in which they are incurred.
1.19 Depreciation/Amortisation:
Depreciation/Amortisation charge is provided on fixed assets on
written-down-value method in respect of fixed assets of Viscose Staple
Fibre Division (excluding Power Plants), Nagda, Engineering Division,
Nagda and Corporate Finance Division, Mumbai, and on Straight-line
Method in respect of other assets.
For provision of Depreciation/Amortisation the rates/useful life
specified in Schedule XIV of the Companies Act, 1956, are applied
except for the following assets where different useful life as stated
below is used:
Asset Estimated Useful Life
Leasehold Land over the period of lease
Motor Cars 5 years
Computer Software 3 years
Computer and Other Electronic Office Equipment 4 years Furniture,
Fixtures and Electrical Fittings 7 years
Individual assets costing less than Rs 5,000 are depreciated in full in
the year of acquisition.
Continuous process plants as defined in Schedule XIV of the Companies
Act, 1956, have been classified on technical assessment and
depreciation provided accordingly.
In respect of fixed assets added/disposed off during the year
depreciation is provided on pro-rata basis with reference to the month
of addition/deduction, however, in case of new projects the
depreciation from the date of commissioning of such project is charged
to the Statement of Profit and Loss.
1.20 Provision for Current and Deferred Tax:
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting period in accordance with the
provisions of the Income Tax Act, 1961.
Deferred Tax resulting from timing difference between book and taxable
profit for the year is accounted for using the Tax rates and laws that
are applicable as on the Balance Sheet Date. The Deferred Tax asset is
recognised and carried forward only to the extent there is a reasonable
certainty of its realisation in future.
1.21 Segment Reporting:
The accounting policies adopted for segment reporting are in conformity
with the accounting policies adopted for the Company.
Primary Segments are identified based on the nature of products and
services, the different risks and returns and the internal business
reporting system. Revenue, Expense, Assets and Liabilities, which
relate to the Company as a whole and could not be allocated to segments
on a reasonable basis, have been classified as Unallocated.
Secondary segment is identified based on geography in which major
operating divisions of the Company operate.
Inter-segment revenue have been accounted for based on the transaction
price agreed to between the segments, which is primarily market based.
1.22 Provisions/Contingencies:
A provision is recognised when there is a present obligation as a
result of past event, and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. Provisions are determined (as
provided/charged to the Statement of Profit and Loss) based on estimate
of the amount required to settle the obligation at the Balance Sheet
date and are not discounted to present value.
Contingent liabilities are not recognised but are disclosed in the
financial statements. Claims against the Company where the possibility
of materialisation is remote are not considered as contingent
liabilities. Contingent assets are neither recognised nor disclosed in
the financial statements.
Mar 31, 2011
1. Accounting Concepts:
The financial statements are prepared and presented in accordance with
the Generally Accepted Accounting Principles (GAAP) in India and comply
in all material aspects with the Accounting Standards (AS) notified
under the Companies (Accounting Standard) Rules, 2006 (as amended),
other pronouncements of the Institute of Chartered Accountants of
India, the relevant provisions of the Companies Act, 1956, and
guidelines issued by Securities and Exchange Board of India.
2. Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that effects the reported amount of assets and
liabilities on the date of financial statements and reported amount of
revenues and expenses during the reporting period. Difference between
the actual results and estimates are recognised in the period in which
the results are known/materialise.
3. Fixed Assets:
Fixed assets are stated at cost, less accumulated
depreciation/amortisation. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
4. Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at Balance Sheet date are translated at
the year-end exchange rates.
Exchange differences, including premium or discount on forward exchange
contracts, arising till the commissioning of fixed assets, relating to
borrowed funds and liabilities in foreign currency for acquisition of
the fixed assets, are adjusted to the cost of fixed assets. Other
premium or discount on forward exchange contracts is amortised as
expense or income over the life of the contract. All other exchange
differences are recognised in the Profit and Loss Account.
5. Financial Derivatives:
Financial derivative instruments, such as Swaps and Options, are used
to hedge risks associated with fluctuations in foreign exchange and
interest rates. The derivative contracts are closely linked with the
underlying transactions and are intended to be held to maturity. The
underlying transactions are recorded as per terms of the financial
derivative contracts.
6. Treatment of Expenditure during Construction Period:
Expenditure during construction period is included under Capital
Work-in-Progress and the same is allocated to the respective fixed
assets on the completion of construction.
7. Investments:
Investments are classified as long term based on management intention,
all other investments are classified as current investments. Current
investments are stated at lower of cost and fair value. Long term
investments are stated at cost after deducting provisions made, if any,
for permanent diminution (i.e., other than temporary diminution) in
value.
8. Inventories:
Inventories, except scrap, are valued at the lower of cost and net
realisable value. Waste/Scrap is valued at net realisable value. The
cost is computed on weighted-average basis. Proceeds in respect of sale
of raw material/stores are credited to their respective heads.
Cost of Finished goods and process stock include cost of conversion and
other costs incurred in bringing the inventories to their present
location and condition.
Obsolete, defective, slow moving and unserviceable inventories are duly
provided for.
9. Research and Development Expenditure:
Expenditure incurred during research phase is charged to revenue when
no intangible asset arises from such research. Fixed Assets procured
for research and development activities are generally capitalised.
10. Depreciation/Amortisation:
Depreciation/Amortisation charge is provided for on the following
basis:
(a) On fixed assets on written-down-value method in respect of Viscose
Staple Fibre Division, Nagda, Engineering Division, Nagda and Corporate
Finance Division, Mumbai and on Straight Line Method in respect of
assets of other Divisions including Power Plants at Nagda; applying the
rates/useful life specified in Schedule XIV of the Companies Act, 1956,
except as stated hereunder:
Asset Estimated Useful Life
Leasehold Land over the period of lease
Motor Cars 5 years
Computer Software 3 years
Computer and Other Electronic
Office Equipment 4 years
Furniture, Fixtures and
Electrical Fittings 7 years
Continuous process plants as defined in Schedule XIV of the Companies
Act, 1956, have been classified on technical assessment and
depreciation provided accordingly.
(b) In respect of Revalued Fixed Assets, on straight line method on the
gross value of assets as increased by the amount of revaluation at
lower rates, based on life of assets, as ascertained by the valuers.
(c) In respect of fixed assets added/disposed off during the year on
pro-rata basis with reference to the month of addition/deduction except
in case of new projects where it is provided on the basis of days of
use.
(d) Individual assets costing less than Rs. 5,000 are depreciated in full
in the year of acquisition.
11. Impairment of Assets:
Carrying amount of assets is reviewed at the Balance Sheet date if
there is indication of impairment based on the internal and external
factors.
The assets are treated as impaired when the carrying amount of asset
exceeds its recoverable amount. An impairment loss, if any, is charged
to the Profit and Loss Account in the year in which the asset is
identified as impaired. Reversal of impairment loss recognised in prior
years is recorded when there is an indication that impairment loss
recognised for the asset no longer exists or has decreased.
12. Revenue Recognition:
Sales revenue is recognised on transfer of the significant risks and
rewards of ownership of the goods to the buyer and stated at net of
sales tax, VAT, trade discounts and rebates but includes excise duty.
Dividend income on investments is accounted for when the right to
receive the payment is established.
Interest income is recognised on time proportion basis.
Income against claims of the Company, viz., export incentives,
insurance and railway claims, etc., is recognised on accrual/right to
receive basis. However, where the quantum of accrual cannot be
ascertained with reasonable certainty, the same is accounted on
acceptance basis.
Profit on sale of investments is recorded on transfer of title from the
Company and is determined as the difference between sale price,
carrying value of Investment and other incidental Expenses.
13. Employee Benefits:
(a) Short-term employee benefits and contribution to defined
contribution plans are recognised as an expense on accrual at the
undiscounted amount in the Profit and Loss Account.
The contribution as specified under the law are paid to the Provident
Fund set up as irrevocable trust by the Company or to the Regional
Provident Fund Commissioner. The Company is generally liable for annual
contribution and any shortfall in the fund assets based on the
government specified minimum rates of return. Such contributions and
shortfall, if any, are recognised in the Profit and Loss Account as an
expense in the year incurred.
(b) Post-employment and other long-term employee benefits are
recognised as an expense, at the present value of the amounts payable
determined using actuarial valuation techniques. Actuarial gains and
losses in respect of post-employment and other long term benefits are
charged to the Profit and Loss Account.
(c) Employee Stock Option Scheme: The stock options granted are
accounted for as per the accounting treatment prescribed by Employee
Stock Option Scheme and Employee Stock Purchase Guidelines, 1999,
issued by Securities and Exchange Board of India, whereby the intrinsic
value of options is recognised as deferred employee compensation. The
deferred employee compensation is charged to Profit and Loss Account on
straight line basis over the vesting period of the option. The employee
stock option outstanding account is shown net of any unamortised
deferred employee compensation.
14. Government Grants:
Government grants are recognised when there is reasonable assurance
that the same will be received. Capital grants relating to specific
assets are reduced from the gross value of the fixed assets and capital
grants for Project Capital Subsidy are credited to Capital Reserve.
Revenue grants are recognised in the Profit and Loss Account.
15. Borrowing Cost:
Interest and other costs in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/construction of
qualifying fixed assets are capitalised upto the date when such fixed
assets are ready for their intended use and all other borrowing costs
are charged to Profit and Loss Account.
16. Provision for Current and Deferred Tax:
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting period in accordance with the
provisions of the Income Tax Act, 1961. Deferred Tax resulting from
timing difference between book and taxable profit for the year is
accounted for using the tax rates and laws that have been enacted or
substantively enacted as on the Balance Sheet date. The deferred tax
asset is recognised and carried forward only to the extent there is a
reasonable certainty that the deferred tax assets will be realised in
future.
17. Operating Leases:
Leases where significant portion of risk and reward of ownership are
retained by the Lessor are classified as Operating Leases and lease
rentals thereon are charged to Profit and Loss Account over the period
of the lease.
18. Provisions/Contingencies:
A provision is recognised when there is a present obligation as a
result of past event, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are determined (as
provided/charged to Profit and Loss Account) based on best estimate of
the amount required to settle the obligation at the Balance Sheet date.
Contingent Liabilities are not recognised but are disclosed, and
Contingent Assets are neither recognised nor disclosed, in the
financial statements.
Mar 31, 2010
1. Accounting Concepts:
The financial statements are prepared and presented in accordance with
the Generally Accepted Accounting Principles (GAAP) in India and comply
in all material aspects with the Accounting Standards (AS) notified
under the Companies (Accounting Standard) Rules, 2006 (as amended),
other pronouncements of the Institute of Chartered Accountants of
India, the relevant provisions of the Companies Act, 1956, and
guidelines issued by Securities and Exchange Board of India.
2. Use of Estimates:
The preparation of financial statements require estimates and
assumptions to be made that effects the reported amount of assets and
liabilities on the date of financial statements and reported amount of
revenues and expenses during the reporting period. Difference between
the actual results and estimates are recognized in the period in which
the results are known/materialise.
3. Fixed Assets:
Fixed Assets are stated at cost, less accumulated
depreciation/amortisation. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
4. Fixed Assets Held for Disposal:
Fixed assets held for disposal are stated at the lower of net book
value and net realisable value.
5. Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at Balance Sheet date are translated at
year-end exchange rates. Exchange differences, including premium or
discount on forward exchange contracts, arising till the commissioning
of fixed assets, relating to borrowed funds and liabilities in foreign
currency for acquisition of the fixed assets, are adjusted to the cost
of fixed assets. Other premium or discount on forward exchange
contracts is amortised as expense or income over the life of the
contract. All other exchange differences are recognised in Profit and
Loss Account.
6. Financial Derivatives:
Financial Derivative instruments, such as Swaps and Options, are used
to hedge risks associated with fluctuations in foreign exchange and
interest rates. The derivative contracts are closely linked with the
underlying transactions and are intended to be held to maturity. The
underlying transactions are recorded as per terms of the financial
derivative contracts.
7. Treatment of expenditure during construction period:
Expenditure during construction period is included under Capital Work
in Progress and the same is allocated to the respective fixed assets on
the completion of construction.
8. Investments:
Investments are classified as long term based on management intention,
all other investments are classified as current investment. Current
investments are stated at lower of cost and fair value. Long term
investments are stated at cost after deducting provisions made, if any,
for permanent diminution (i.e. other than temporary diminution) in
value.
9. Inventories:
Inventories, except scrap, are valued at the lower of cost and net
realisable value. Waste/Scrap is valued at net realisable value. The
cost is computed on weighted average basis.
Cost of Finished goods and process stock include cost of conversion and
other costs incurred in bringing the inventories to their present
location and condition.
Obsolete, defective, slow moving and unserviceable inventories are duly
provided for.
10. Research and Development Expenditure:
Expenditure incurred during research phase is charged to revenue when
no intangible asset arises from such research. Assets procured for
research and development activities are generally capitalised.
11. Depreciation/Amortisation:
Depreciation/Amortisation charge is provided for on the following
basis:
(a) On fixed assets on written down value method in respect of Viscose
Staple Fibre Division Nagda, Engineering Division Nagda and Corporate
Finance Division Mumbai and on Straight Line Method in respect of
assets of other Divisions including Power Plants at Nagda; applying the
rates/useful life specified in Schedule XIV of the Companies Act, 1956,
except as stated hereunder:
Asset Estimated useful life
Leasehold Land over the period of lease
Capital Expenditure on Assets not owned 5 years
Motor Cars 5 years
Computer Software 3 years
Computer and Other Electronic Office Equipments 4 years
Furniture, Fixtures and Electrical Fittings 7 years
Continuous process plants as defined in Schedule XIV have been
classified on technical assessment and depreciation provided
accordingly.
(b) In respect of Revalued Fixed Assets, on straight line method on the
gross value of assets as increased by the amount of revaluation at
lower rates, based on life of assets, as ascertained by the valuers.
(c) In respect of fixed assets added/disposed off during the year on
pro-rata basis with reference to the month of addition/deduction except
in case of new projects where it is provided on the basis of days of
use.
12. Impairment of Assets:
Carrying amount of assets is reviewed at Balance Sheet date if there is
indication of impairment based on the internal and external factors.
The assets are treated as impaired when the carrying amount of asset
exceeds its recoverable amount. An impairment loss, if any, is charged
to Profit and Loss Account in the year in which the asset is identified
as impaired. Reversal of impairment loss recognised in prior years is
recorded when there is an indication that impairment loss recognised
for the asset no longer exists or has decreased.
13. Revenue Recognition:
(a) Sales revenue is recognised on transfer of the significant risks
and rewards of ownership of the goods to the buyer and stated at net of
sales tax, VAT, trade discounts and rebates but includes excise duty.
(b) Income from services is recognised as the services are rendered,
based on agreement/arrangement with the concerned parties.
(c) Dividend income on investments is accounted for when the right to
receive the payment is established.
(d) Interest income is recognised on time proportion basis.
(e) Certain claims of the Company, viz., export incentives, insurance,
railway, etc. in respect of which quantum of accruals cannot be
ascertained with reasonable certainity, are accounted on acceptance
basis.
(f) Profit on sale of investments is recorded on transfer of title from
the Company and is determined as the difference between sale price,
carrying value of Investment and other incidental expenses.
14. Employee Benefits:
(a) Short term employee benefits and contribution to defined
contribution plans are recognised as an expense on accrual at the
undiscounted amount in the Profit and Loss Account.
The contribution as specified under the law are paid to the provident
fund setup as irrevocable trust by the Company or to the Regional
Provident Fund Commissioner. The Company is generally liable for annual
contribution and any shortfall in the fund assets based on the
government specified minimum rates of return and recognises such
contributions and shortfall, if any, as an expense in the year
incurred.
(b) Post-employment and other long term employee benefits are
recognised as an expense, at the present value of the amounts payable
determined using actuarial valuation techniques, in the Profit and Loss
Account for the year Actuarial gains and losses in respect of
post-employment and other long term benefits are charged to the Profit
and Loss Account.
(c) Employee Stock Option Scheme: The intrinsic value of options
granted under Employee Stock Option Scheme is recognised as deferred
compensation cost and amortised over the vesting period.
15. Government Grants:
Government Grants are recognised when there is reasonable assurance
that the same will be received. Capital grants relating to specific
assets are reduced from the gross value of the Fixed Assets and capital
grants for Project Capital Subsidy are credited to Capital Reserve.
Revenue grants are recognised in the Profit and Loss Account.
16. Borrowing Cost:
Interest and other costs, in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/construction of
qualifying fixed assets, are capitalised upto the date when such fixed
assets are ready for their intended use and all other borrowing costs
are charged to Profit and Loss Account.
17. Provision for Current and Deferred Tax:
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting period in accordance with the
provisions of the Income tax Act, 1961. Deferred Tax resulting from
timing difference between book and taxable profit for the year is
accounted for using the tax rates and laws that have been enacted or
substantively enacted as on the balance sheet date. The deferred tax
asset is recognised and carried forward only to the extent there is a
reasonable certainty that the deferred tax assets will be realised in
future.
18. Mines Restoration Expenditure:
The Company provides for the expenditure to restore the mines based on
technical estimates by internal/ external specialists. The total
estimate of restoration expenditure is apportioned over the estimated
quantities of total mineral reserves and provision is made based on the
minerals mined during the year.
19. Operating Leases:
Leases where significant portion of risk and reward of ownership are
retained by the Lessor are classified as Operating Leases and lease
rentals thereon are charged to Profit and Loss Account.
20. Provisions/Contingencies:
A provision is recognised when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are determined (as
provided/charged to Profit and Loss Account) based on best estimate of
the amount required to settle the obligation at the Balance Sheet date.
Contingent Liabilities are not recognised but are disclosed and
Contingent Assets are neither recognised nor disclosed, in the
financial statements.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article