Note 1: Corporate Information
Rain Industries Limited (''the Company'') was incorporated on March 15,
1974 under the Companies Act, 1956. The Company is currently engaged in
the business of trading in Carbon Products. The Company''s equity shares
are Listed at BSE Limited and National Stock Exchange of India Limited
The Company''s name was changed to Rain Industries Limited from Rain
Commodities Limited, pursuant to the approval received from the
Registrar of Companies, Hyderabad on July 8, 2013.
(a) Basis of accounting and preparation of financial statements
The financial statements have been prepared in accordance with
accounting principles generally accepted in India (Indian GAAP). Indian
GAAP comprises Accounting Standards specified under Section 133 of the
Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules,
2014, other pronouncements of the Institute of Chartered Accountants of
India, the relevant provisions of the Companies Act, 2013 and
guidelines issued by the Securities and Exchange Board of India (SEBI)
(Collectively) referred to as IGAAP). The financial statements are
presented in Indian Rupees Millions.
(b) Use of estimates
The preparation of the financial statements in conformity with the
Indian GAAP requires the Management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure
of contingent liabilities as at the date of the financial statements
and the reported amounts of revenue and expenses during the reported
period. Management believes that the estimates used in the preparation
of the financial statements are prudent and reasonable. Actual results
could differ from these estimates. Changes in estimates are reflected
in the financial statements in the period in which changes are made.
(c) Current and non-current classification
All the assets and liabilities have been classified as current or
noncurrent as per the Company''s normal operating cycle.
An asset is classified as current when it satisfies any of the
i. It is expected to be realized in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
ii. It is held primarily for the purpose of being traded;
iii. It is expected to be realized within 12 months after the reporting
iv. It is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non- current financial
assets. All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the
i. It is expected to be settled in the Company''s normal operating
ii. It is held primarily for the purpose of being traded;
iii. It is due to be settled within 12 months after the reporting date;
iv. The company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities. All other liabilities are classified as non-current.
Operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents. The
Company''s operating cycle is within a period of 12 months.
Traded goods are valued at lower of weighted average cost and net
realizable value. Goods in transit are valued at cost or below.
(e) Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit/
(loss) before tax is adjusted for the effects of transactions of a
non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from regular revenue generating,
investing and financing activities of the company are segregated.
Cash and cash equivalents for the purpose of cash flow comprise cash at
bank and in hand and short term investments with an original maturity
of three months or less.
(f) Revenue Recognition
Sales are recognized on dispatch of goods and upon transfer of property
in the goods to customers. Sales are inclusive of excise duty, as
Income from shared services (services provided to Group companies) is
recognized by the Company on accrual basis. Income in excess of
billings is disclosed under Other current assets as unbilled revenues.
(g) Other Income
Interest income is recognized using the time proportion method, based
on the transactional interest rates.
Dividend income is recognized when the Company''s right to receive
dividend is established.
(h) Fixed Assets, Depreciation, Impairment
Fixed Assets are stated at cost/professional valuation less accumulated
depreciation. Cost includes freight, installation cost, duties and
taxes, interest on specific borrowings utilized for financing the
qualifying fixed assets and other incidental expenses.
Effective from January 01, 2015, the Company has charged Depreciation
based on the revised remaining useful life of the assets as per the
requirement of Schedule II of the Companies Act, 2013. Depreciation on
fixed assets is provided using the straight-line method based on the
useful life of the assets as prescribed by Schedule II to the Companies
Act, 2013. Depreciation is calculated on a pro-rata basis from the
date of installation till the date the assets are sold or disposed.
Individual assets costing rupees five thousand or below are fully
depreciated in the year of acquisition and put to use.
All fixed assets are assessed for any indication of impairment at the
end of each financial year. On such indication, the impairment loss
being the excess of carrying value over the recoverable value of the
assets is charged to the Statement of Profit and Loss in the respective
financial years. The impairment loss recognized in prior years is
reversed in cases where the recoverable value exceeds the carrying
value, upon reassessment in the subsequent years.
(i) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transactions. Monetary assets and
liabilities denominated in foreign currency are restated at the
prevailing year end rates. The resultant gain/ loss upon such
restatement along with the gain/ loss on account of foreign currency
transactions are accounted in the Statement of Profit and Loss. In
respect of items covered by forward exchange contracts, the premium or
discount arising at the inception of such a forward exchange contract
is amortized as expense or income over the life of the contract. Any
profit or loss arising on cancellation or renewal of such a forward
contract is recognized in the Statement of Profit and Loss.
Long term investments are carried at cost less provision for
diminution, other than temporary, if any, in the value of such
investments. Current investments are carried at the lower of cost and
(k) Employee Benefits
Defined Contribution Plans
Contributions paid/payable under defined contribution plans are
recognized in the Statement of Profit and Loss each year. Contribution
plans comprises of Superannuation fund covered under a scheme
administered and managed by ICICI Prudential Life Insurance Company
Limited, and Provident Fund is administered and managed by the
Government of India. The Company makes monthly contributions and has no
further obligations under the plan beyond its contributions.
Defined Benefit Plans
The Company has a defined benefit Gratuity plan covering all its
employees. Gratuity is covered under a scheme administered by Life
Insurance Corporation of India (LIC). The liability as at the balance
sheet date is provided based on an actuarial valuation carried out by
an independent actuary, in accordance with Accounting Standard 15 on
''Employee Benefits'' (AS 15).
All actuarial gains and losses arising during the year are recognised
in the Statement of Profit and Loss of the year.
Other Long-term Employee Benefits
Other long term employee benefits comprise compensated absences which
is provided based on an actuarial valuation carried out in accordance
with AS-15 at the end of the year.
Short-term Employee Benefits
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits. These
benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short- term employee benefits to be paid in
exchange for employee services is recognized as an expense as the
related service is rendered by employees.
(l) Borrowing Costs
Borrowing costs include interest and exchange differences arising from
foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost. Borrowing costs, allocated to and
utilized for qualifying assets, pertaining to the period from
commencement of activities relating to construction / development of
the qualifying asset upto the date of capitalization of such asset is
added to the cost of the assets.
Assets taken on lease where the Company acquires substantially the
entire risks and rewards incidental to ownership are classified as
finance leases. The amount recorded is the lesser of the present value
of minimum lease rental and other incidental expenses during the lease
term or the fair value of the assets taken on lease. The rental
obligations, net of interest charges are reflected as finance lease
Leases that do not transfer substantially all the risks and rewards of
ownership are classified as operating leases and recorded as expense as
and when the payments are made over the lease term.
(n) Earnings Per Share
The earnings considered in ascertaining the company''s Earnings Per
Share (EPS) comprise net profit after tax (and includes the post tax
effect of any extra ordinary items). The number of shares used in
computing Basic EPS is the weighted average number of shares
outstanding during the year.
Dilutive potential equity shares are deemed to be converted as of the
beginning of the year, unless they have been issued at a later date.
The number of shares used for computing the diluted EPS is the weighted
average number of shares outstanding during the year after considering
the dilutive potential equity shares.
(o) Taxes on Income
Current tax is determined based on the amount of tax payable in respect
of taxable income for the year. Deferred tax is recognized on timing
differences being the difference between the taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods subject to consideration of
prudence. Deferred tax assets on unabsorbed depreciation and carry
forward of losses are not recognized unless there is a virtual
certainty that there will be sufficient future taxable income available
to realize such assets. Deferred tax assets and liabilities have been
measured using the tax rates and tax laws that have been enacted or
substantially enacted by the Balance Sheet date.
(p) Provisions and Contingencies
A provision is recognized when the Company has a present obligation as
a result of past events 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 (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the notes to the financial statements.