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Moneycontrol.com India | Accounting Policy > Machine Tools > Accounting Policy followed by ITL Industries - BSE: 522183, NSE: N.A
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ITL Industries

BSE: 522183|ISIN: INE478D01014|SECTOR: Machine Tools
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Dec 13, 16:00
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ITL Industries is not listed on NSE
Mar 15
Accounting Policy Year : Mar '18

(A) SIGNIFICANT ACCOUNTING POLICIES

1) Basis for preparation of Financial Statements

The accounts have been prepared in accordance with IND AS to the extent applicable to the Company, and Disclosures thereon comply with requirements of IND AS, stipulations contained in Schedule- III (revised) as applicable under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014, Companies (Indian Accounting Standards) Rules 2015 as amended form time to time, other pronouncement of ICAI, provisions of the Companies Act and Rules and guidelines issued by SEBI as applicable. Up to financial year ended on 31st March 2017, the company has prepared the accounts according to the Previous GAAP. The financial statements for the year ended 31st March 2018 are the first to have been prepared in accordance with IND AS. Opening balance sheet as on 1st April 2016 and 31st March 2017 have been presented as comparatives. The transition was carried out retrospectively as on the transition date which is 1st April 2016, and for any variation in the amounts represented in the comparative balance sheet vis-a-vis earlier presentation, reconciliation is given as part of notes. Assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in revised Schedule - III to the Companies Act, 2013.

These financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting except as stated elsewhere in these financial statements and except for certain financial assets and financial liabilities that are measured at fair values at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.

2) Current/Non-Current Classification

For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of services and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.

3) Use of Estimates and Judgments

The preparation of financial statements in conformity with the GAAP requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates and differences between actual results and estimates are recognized in the periods in which the results are known/materialized.

4) Property, Plant and Equipment Measurement and recognition:

An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost. Following initial recognition, items of property, plant and equipment are carried at its cost less accumulated depreciation and accumulated impairment losses, if any.

The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other non-refundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for its intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any.

Transition to Ind AS

On transition to Ind AS the company has elected to continue with the carrying value of all its property, plant and equipments recognized as at 01.04.2016 measured as previous GAAP and used that carrying value as the deemed cost of all its property, plant and equipments.

Depreciation:

Depreciation on each part of an item of property, plant and equipment is provided using the Straight Line Method based on the useful life of the asset as per the provisions of Schedule II of the Companies Act 2013.

5) Impairment

Impairment loss if any is provided to the extent the carrying amount of assets exceeds it recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired.

6) Revenue Recognition

Revenue is recognized when it is probable that economic benefits associated with a transaction flows to the Company in the ordinary course of its activities and the amount of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, net of returns and trade discounts allowed by the Company.

Revenue includes only the gross inflows of economic benefits, including excise duty, received and receivable by the Company, on its own account. Amounts collected on behalf of third parties such as sales tax, value added tax and goods and service tax are excluded from revenue.

Sale of products:

Revenue from sale of products is recognized when the Company transfers all significant risks and rewards of ownership to the buyer, while the Company retains neither continuing managerial involvement nor effective control over the products sold.

7) Inventories

Raw materials, work-in-progress, finished goods, packing materials, stores, spares, components, consumables and stock-in-trade are carried at the lower of cost and net realizable value. The cost in respect of the various items of inventory is arrived at as under:

- Raw material - cost includes direct expenses and is determined on the basis of weighted average method.

- Packing material - cost includes direct expenses and is determined on the basis of weighted average method.

- Work in progress - includes cost of conversion and other costs incurred to bring the inventories in their present condition.

- Finished goods - cost includes raw material cost, other overheads incurred to bring the goods to their present location and condition.

Cost of goods also includes taxes, wherever applicable.

8) Fair Value

The Company measures financial instruments at Fair value in accordance with the accounting policies mentioned above. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market For the asset or liability, or

- In the absence of a principal market, in the most advantageous market For the asset or liability.

All assets and liabilities For which Fair value is measured or disclosed in the Financial statements are categorized within the Fair value hierarchy that categorizes into three levels, described as Follows, the inputs to valuation techniques used to measure value. The Fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

Level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 - inputs that are unobservable for the asset or liability.

For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period and discloses the same.

9) Investment in subsidiary and associate Companies

The Company has elected to recognize its investments in subsidiary company at cost in accordance with the option available in Ind AS 27.

10) Income Taxes

Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current tax:

Current tax is the amount of income taxes payable in respect of taxable profit for the reporting period as per the applicable provisions of the Income Tax Act 1961.

Deferred tax:

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit under Income tax Act, 1961.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and adjusted to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such deferred tax assets to be utilized.

11) Provisions and Contingencies

The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated.

12) Employee Benefits

i) Short Term Employee Benefits

Short term employee benefits are recognized in the period during which the services have been rendered.

ii) Long Term Employee Benefits

- Provident Fund & Employees State Insurance Scheme:

As per the Employees’ Provident Fund and Miscellaneous Provision Act, 1952 all eligible employees of the company are entitled to receive benefits under the provident fund and family pension fund which is a defined contribution plan. These contributions are made to the fund administrated and managed by the Government of India. Similarly all eligible employees of the company are covered under Employees’ State Insurance Act, 1948, which are also defined contribution schemes recognized and administrated by the Government of India. The Company’s contributions to these schemes are recognized as expenses in the statement of profit of loss during the period in which the employees render the related service. The company has no further obligation under these plans beyond its monthly contribution.

- Gratuity:

The Company has provided for Gratuity in accordance with the Ind AS - 19 “Employee Benefits”, the company has obtained group Gratuity Insurance Policy from LIC of India and contribution are made to LIC’s recognized group gratuity fund scheme based on amount demanded by LIC of India to cover its gratuity liability and making annual payments of the liability as calculated by them.

13) Borrowing Cost

Borrowing costs, if any, directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized, if any. All other borrowing costs are expensed in the period in which they occur.

14) Events after reporting date

Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.

15) Research and Development Expenses

Research and Development Expenditure is charged to the statement of Profit and Loss in the year of incurrence and has been included in the respective account heads in the statement of accounts. However, expenditure on fixed assets laid into Research and Development is treated in the same way as other fixed assets.

16) Other Income

Interest Income is accounted on accrual basis. Dividend income is accounted for when the right to receive is established.

17) Earnings Per Share

Basic Earnings Per Share is computed by dividing the profit/(Loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity share outstanding during the year.

Source : Dion Global Solutions Limited
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