Moneycontrol Be a Pro
Get App
SENSEX NIFTY
Moneycontrol.com India | Accounting Policy > Metals - Non Ferrous > Accounting Policy followed by Precision Wires India - BSE: 523539, NSE: PRECWIRE
YOU ARE HERE > MONEYCONTROL > MARKETS > METALS - NON FERROUS > ACCOUNTING POLICY - Precision Wires India

Precision Wires India

BSE: 523539|NSE: PRECWIRE|ISIN: INE372C01029|SECTOR: Metals - Non Ferrous
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Oct 15, 16:00
146.00
-1 (-0.68%)
VOLUME 990
LIVE
NSE
Oct 15, 15:59
145.75
-2.3 (-1.55%)
VOLUME 4,778
Mar 17
Accounting Policy Year : Mar '18

1. Statement of Compliance with IND AS:

These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') as notified by the Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 and Companies (Indian Accounting Standards) Amendment Rules, 2017.

These financial statements for the year ended 31st March, 2018 are the first the Company has prepared under Ind AS. For all the periods up to and including the year ended 31st March, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies act, 2013 read together with paragraph 7 of the Companies (Accounts) Rule, 2014 (referred to as ''Previous GAAP''). The financial statements for year ending 31st March, 2017 and the opening balance sheet as at 01st April, 2016 have been restated in accordance with Ind AS for comparative information.

In accordance with Ind AS 101 - First Time Adoption of Indian Accounting Standards, the Company has presented a statement of reconciliation of Shareholders'' Equity under Previous GAAP and Ind AS as at 31st March, 2017, and 1st April, 2016 and of the Net Profit as per Previous GAAP and Total Comprehensive Income under Ind AS forthe yearended 31st March, 2017

2. Basis of Preparation of Financial Statements :

The Financial Statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1st April, 2016 being the ‘date oftransition to Ind AS’.

All assets and liabilities have been classified as current or non current as per the Company’s normal operating cycle and other criteria as set out in the Schedule III to the Companies Act, 2013. Based on the nature of the products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current classification of assets and liabilities as current or non- current.

3. Use of Estimates :

The preparation of financial statements in conformity with Ind AS requires the management ofthe Company to make estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. These estimates are based upon management''s best knowledge of current events and actions. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known.

4. Property, PlantandEquipments:

(i) Property, Plant and Equipment is stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which they are incurred.

(ii) The cost of an asset comprises its purchase price or its construction cost (net of applicable tax credits) and any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by the Management. It includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company’s accounting policy.

(iii) Gains or losses arising on retirement or disposal of property, plant and equipment are recognised in the Statement of Profit and Loss.

(iv) Property, plant and equipment which are not ready for intended use as on date of Balance Sheet are disclosed as ''Capital Work-in Progress.

(v) Depreciation is provided on a pro-rata basis on the straight line method based on estimated useful life prescribed under Schedule II to the Companies Act, 2013 :

The management estimates the useful life of certain assets as follows:

Wire Enamelling Machines 08 years

Other Plant and Machinery 15 years

Building 30 years

Office Equipments 05 years

Computers 03years

Furniture and Fixtures 05 years

Freehold land is not depreciated.

Assets Costing Rs. 5000 or less are fully depreciated in the year of purchase.

(vi) Depreciation on additions to assets or on sale of assets as the case may be is calculated pro-rata from the month of such addition orupto the month of such sale.

(vii) Assets scrapped / discarded from use and held for disposal, if any, are stated at lower of book value or their estimated net realisable value.

(viii) Upon first-time adoption of ind AS, the Company has elected to measure all its property, plant and equipment at the Previous GAAP carrying amount as its deemed cost on the date oftransition to Ind AS i.e., 1st April, 2016.

5. Intangible Assets:

Separately purchased Intangible assets are initially measured at cost. Subsequently, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, ifany. The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortised on a straight-line basis over the period of their estimated useful lives.

The management estimates the useful life as follows :

Technology Transfer Cost: 6 Years

Upon first-time adoption of Ind AS, the Company has elected to measure all its Intangible Assets at the Previous GAAP carrying amount as its deemed cost on the date oftransition to Ind AS i.e., 1st April, 2016.

6. Impairmentof Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its estimated recoverable value. The recoverable amount is greater of the Fair Value less cost of disposal and Value in use, An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. Post impairment, depreciation is provided on the revised carrying value ofthe impaired assets over its remaining life.

7. Non-Current Assets held for Sale

The Company classifies Non-Current Assets as held for sale of their carrying amounts will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one yearfrom the date ofclassification.

Non-current assets or disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Property, Plant and Equipment and intangible assets are not depreciated or amortised once classified as held for sale.

8. Financial Instruments:

Investments

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument.

On initial recognition, a financial asset is recognised at fair value, in case of Financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost are recognised in the statement of profit and loss. In other cases, the transaction cost are attributed to the acquisition value of the financial asset.

Financial assets subsequently classified as measured at

Amortised Cost

fair value through profit and loss (FVPTL)

fair value thorough other comprehensive income (FVOCI)

All Investment in equity instruments classified under financial assets are initially measured at fair value, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.

The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument is recognised as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in OCI. Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised as ‘other income’ in the Statement of Profit and Loss.

9. Trade Receivables :

Trade receivables are measured at their transaction price unless it contains a significant financing component or pricing adjustments embedded in the contract.

Loss allowance forexpected life time credit loss is recognised on initial recognition through Profit and Loss Account.

10. Cashand cash Equivalents:

Cash and cash equivalents are short-term (three months or less from the date of acquisition), highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk ofchanges in value.

11. Inventories:

(i) Inventories are valued on FIFO basis at lower of cost or estimated net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at cost or above cost.

(ii) Cost of Work in progress includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

(iii) Cost of finished goods and work in progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion and estimated costs necessary to make the sale.

(iv) Scrap is valued at Net Realisable Value.

12. Financial Liabilities :

Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit and loss.

Derecognition

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

13. Provisions, Contingent Liabilities and Contingent Assets :

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the company will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.

Contingent liabilities are disclosed in the Financial Statements by way of notes to accounts, unless possibility of an outflow of resources embodying economic benefit is remote.

Contingent assets are neither disclosed nor recognised.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet Date.

14. Taxes on lncome:

Income Tax Expense Comprises of Current Tax and Deferred Tax.

(i) Current Taxes :

It is recognised in the Statement of Profit and Loss except to the extent it relates to an item which is recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable/receivable on the taxable income/ loss for the year using applicable tax rates at the Balance Sheet date, and any adjustment to taxes in respect of previous years, income/expenses and penalties, if any, related to income tax are included in current tax expense.

(ii) Deferred Taxes :

Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.

(iii) A deferred tax liability is recognised based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting period. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

15. Revenue Recognition :

(i) Sale of Products :

Revenue arising from sale of products is recognized when significant risks and rewards of ownership have passed to the buyer under the terms of contract and the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Company.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods provided in the normal course of business, net of discounts, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. Any retrospective revision in prices is accounted for in the year of such revision.

(ii) Interest Income :

Interest income is recognised on time proportion basis.

(iii) Other Income :

(a) Dividend : Dividend on Investments is accounted when received.

(b) Insurance Claim : Insurance claim receivable is recognised in the year of the loss to the extent ascertainable.

(c) Any Other Income is recognised in the Statement of Profit and Loss Account as and when accrued.

(d) In cases where duty paid material are consumed prior to duty free import of material for manufacture of products for export, the estimated excess cost of such material over that of duty free material is carried forward and charged to revenue on consumption of such duty free materials.

16. Expenditure:

Expenditure are generally accounted on accrual basis as they are earned or incurred, except those with significant uncertainties.

17. EmployeeBenefits:

Defined Contribution Plans:

Contributions to defined contribution schemes such as provident fund, etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.

Defined benefit plans

Defined Benefit plans comprising of gratuity are recognized based on the present value of defined benefit obligation which is computed using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period.

Net interest on the net defined liability is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset and is recognised in the statement of profit and loss.

Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (excluding net interest as defined above) and the return on plan assets (excluding net interest as defined above), are recognized in other comprehensive income in the period in which they occur. Remeasurements are not reclassified to profit and loss in subsequent periods.

The Company contributes all ascertained liabilities with respect to gratuity to Life Insurance Corporation of India (LIC).

The retirement benefit obligation recognised in the Financial Statements 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 reductions in future contributions to the plans.

In respect of certain employees who are unfunded through the approved trust, the gratuity liability is provided as per the actuarial valuation.

Gain or loss on account of actuarial valuation is routed through other comprehensive income.

Short-term employee Benefits

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised, undiscounted, during the period the employee renders services. These benefits include salary, wages, bonus, performance incentives etc.

Other long-term employee benefits

Other long-term employee benefit comprises of leave encashment towards un-availed leave and compensated absences; these are recognized based on the present value of defined obligation which is computed using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. These are accounted as current employee cost. The monetary value of leave encashment benefit is for the Factory Workers and is accounted on the basis of acturial valuation.

The employees, other than factory workers are not permitted to carry forward their leaves beyond a period of one year and hence the liability if any arising on such employees would be of short term nature and shall be accounted on actual basis as and when paid.

18. Earnings Per Share :

Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares considered for deriving the basic earnings per share and the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

19. Foreign Currency Transactions :

The financial statements are presented in INR, the functional currency of the Company. Items included in the financial statements of the Company are recorded using the currency of the primary economic environment in which the Company operates (the ‘functional currency’).

Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions, and from translation of monetary assets and liabilities at the reporting date exchange rates are recognised in the Statement of Profit and Loss.

Premium or discount on forward contracts are amortised over the life of the contract. Foreign Exchange Forward Contracts are re-expressed at the Balance Sheet date and Exchange difference between the spot rate at the date of contract and spot rate on the Balance Sheet date is recognised as gain/loss in the Profit & Loss Account.

20. Derivative Instruments and Hedge Accounting :

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and ifso, the nature ofthe item being hedged.

The Company designates certain derivatives as either:

(a) hedges ofthe fairvalue ofrecognised assets or liabilities or a firm commitment (fairvalue hedge); or

(b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge).

The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items. The Company also documents the nature of the risk being hedged.

The full fair value of a hedging derivative is classified as a non-current asset or liability when the residual maturity of the derivative is more than 12 months and as a current asset or liability when the residual maturity of the derivative is less than 12 months.

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of profit and loss, together with any changes in the fair value of the hedged item that are attributable to the hedged risk.

Hedge accounting is discontinued when the Company revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to the statement of profit and loss from that date.

21. First Time Adoption - Mandatory Exceptions and Optional Exemptions :

Overall Principle :

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from 1st April, 2017, with a transition date of 1st April, 2016. These financial statements for the year ended 31st March, 2018 are the first time financial statements of the Company has prepared under the Ind AS. For all the periods upto and including the yearended 31st March, 2017, the Company prepared its financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 [Previous GAAP],

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for the year ended 31st March, 2018 and other accounting principles generally accepted in India, together with the comparative period data as at and for the year ended 31st March, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1st April, 2016, the Company''s date of transition.

In preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as the transition date under Ind AS and Previous GAAP have been recognised directly in equity [retained earnings]. This note explains the adjustments made by the Company in restating its financial statements prepared under previous GAAP, including the Balance Sheet as at 1st April, 2016 and the financial statement as at and for the year ended 31st March, 2017.

This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

Classification and measurement offinancial assets :

The Company has determined the classification and measurement offinancial assets in terms of whether they meet the Fair Value through Profit and Loss criteria or the fair value through other comprehensive income (FVOCI) criteria based on the facts and circumstances that existed as of the transition date.

Impairmentoffinancial assets :

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available to determine the credit risk at the date on which that financial instruments were initially recognised in order to compare it with the credit risk at the transition date.

Deemed Cost of Property, Plant and Equipment:

The Company has elected to continue with the carrying value of all of its Property, Plant and Equipment recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and use that carrying value as its deemed cost as of the transition date. As per the requirement of Ind AS 16, the spares related to a particular machinery has to be capitalised alongwith the machinery and depreciated accordingly. Such spares which were under previous gap recorded under inventory of spares, now has been retrospectively transferred to plant and equipment account by giving effect from the date transition.

Estimates :

On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.

22. Transition to Ind AS- Reconciliations

The following reconciliations provide the explanations and quantification of the differences arising from the transtiion from Previous GAAP to Ind AS in accordance with Ind AS101.

I. Reconciliation of Equity as as at 1st April, 2016 and Reconciliation of Equity as as at31st March, 2017

II. Reconciliation ofStatement of Profit and Loss for the yearended 31st March, 2017.

III. Adjustments to Statement of Cash Flows for the yearended 31st March, 2017. There are no material differences between the statement of Cash flows presented under Ind AS and the Previous GAAP.

Source : Dion Global Solutions Limited
Quick Links for precisionwiresindia
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.