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ಕಂಪನಿಯ ಅಕೌಂಟಿಗ್ ಪಾಲಿಸಿ Chemcrux Enterprises Ltd.
1. General Information of the Company:
Chemcrux Enterprises Limited ("the company") was incorporated in April 1996 under erstwhile Companies Act, 1956 to undertake the business of manufacturing or processing of Bulk Drug Intermediates like Para Chloro Benzoic, Ortho Benzoic Acid and Lasamide, etc.
The Company started its business activities in the year 2000-01 by taking over the running business of M/s. Chemcrux, a partnership firm of the promoters, as a going concern. It manufactures Bulk Drug Intermediates and caters Domestic and International markets and has a healthy track record.
The Equity Shares of Company were listed on the BSE SME exchange 28th March 2017. Thereafter the Company has successfully migrated to the Main Board of the BSE from 5th May, 2022.
2. Basis of Preparation:a. Statement of Compliance
These financial statements are the separate financial statements of the Company (also called standalone financial statements) and comply in all material aspects with the Indian Accounting Standards ("Ind AS") notified under section 133 of the Companies Act, 2013 ("the Act"), read together with the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time, relevant provisions of the Act and other accounting principles generally accepted in India. The accounting policies have been consistently applied except where a newly issued accounting standard initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
b. Basis of Preparation, Presentation and Measurement
These Financial Statements are presented in Indian Rupees (Rs.), which is also the Company''s functional currency. All amounts have been rounded-off to two decimal places to the nearest Lakhs, unless otherwise indicated.
These financial statements have been prepared on an accrual basis and under the historical cost basis except as under:
a) certain financial assets and liabilities are measured at fair value or amortized cost (refer accounting policy regarding financial instruments)
b) defined benefit liability is measured as per actuarial valuation
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
c. Significant accounting judgements, estimates and assumptions
The preparation of the company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the
accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
d. Critical accounting estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and assumptions about future developments, 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.
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
The cost of the defined benefit gratuity plan, other post-employment benefits 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.
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events.
iv. Property, Plant and Equipment
Useful lives and residual values are determined by the management at the time the asset is acquired and reviewed at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.
e. Amendments to Existing Accounting StandardsNew and amended standards adopted by the Company:
The Ministry of Corporate Affairs vide notification dated May 7, 2025, and August 13, 2025, notified the Companies (Indian Accounting Standards) Amendment Rules, 2025, and Companies (Indian Accounting Standards) Second Amendment Rules, 2025, respectively, which amended certain accounting standards as detailed below. These are effective for annual reporting periods beginning on or after April 1, 2025:
Ind AS 21 - The Effects of Changes in Foreign Exchange Rates:- In May 2025, the Ministry of Corporate Affairs (MCA) notified amendments to Ind AS 21 - The Effects of Changes in Foreign Exchange Rates, applicable for annual periods beginning on or after April 01, 2025. The amendment introduces a new framework for assessing whether a currency is exchangeable into another currency and provides guidance when exchangeability is lacking. The Company has reviewed the amendment and based on its evaluation has determined that it does not have any significant impact in its financial statements.
Ind AS 1 - Presentation of Financial Statements (applicable w.e.f. April 01, 2025):- The amendment relates to classification of liabilities as current or non-current and non-current liabilities with covenants. In the context of classifying a liability as current, it removes the requirement of existence of a right to defer settlement for at least 12 months after the reporting date and instead requires that the said right should exist on the reporting date and have substance. The amendment also introduces guidance on classification of liabilities with covenants. Based on the Company''s assessment, the Company has no impact of these amendments in its classification criteria of current and non-current liabilities.
Ind AS 7 - Statement of Cash Flows and Ind AS 107 - Financial Instruments: Disclosures (applicable w.e.f. April 01, 2025):- The amendment in Ind AS 7 requires to inform users of financial statements of the existence of supplier finance arrangements and explain the nature of the arrangements, the carrying amount of liabilities and the range of payment due dates. Ind AS 107 has been amended to add supplier finance arrangements as a factor that may cause concentration of liquidity risk. The Company has reviewed the amendment and based on its evaluation has determined that it does not have any impact in its financial statements.
Ind AS 12 - International Tax Reform - Pillar Two Model Rules (applicable immediately):- The
amendments provide a temporary mandatory relief from deferred tax accounting for top-up tax and disclose that they have applied the relief. This relief is immediate and applies retrospectively. The Company has determined that this amendment does not have any impact in its standalone financial statements.
New standards or amendments not yet effective
Amendments to Ind AS 1 (Effective April 1, 2026): The MCA has notified further amendments to Ind AS 1
restricting the use of post-reporting date lender waivers for classifying long-term debt in the event of covenant breaches. Based on the current assessment and compliance status, this amendment is not expected to have a material impact on the classification of borrowings in the financial statements, unless a covenant breach occurs without a timely waiver.
3. Significant Accounting Policies:3.1 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non- current classification as per Company''s normal operating cycle. The operating cycle is the time between the acquisition of assets and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
An asset is treated as current when it is:
? Expected to be realised or intended to be sold or consumed in normal operating cycle
? Held primarily for the purpose of trading
? Expected to be realised within twelve months after the reporting period, or
? Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
? It is expected to be settled in normal operating cycle
? It is held primarily for the purpose of trading
? It is due to be settled within twelve months after the reporting period, or
? There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
3.2 Property, Plant & Equipments Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use but are net of tax credits (GST) availed, including borrowing costs capitalized on qualifying assets. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company.
Expenditures on Expansion, Modernization and Integrated Plant Components
The Company undertakes regular expansion and modernization / upgradation activities involving structural steel frameworks, gratings, piping systems, civil construction works, electrification, chemical processing vessels and modifications or additions or internal shifting thereof.
Expenditures incurred on such activities are capitalized as part of PPE when they:
? Result in an enhancement of the plant''s capacity, operational efficiency, or future economic benefits extending beyond the current reporting period;
? Are directly attributable to bringing new assets to their intended use or enhancing the existing assets'' service potential;
? Cannot be individually identified or segregated due to their integrated nature but are evaluated through technical assessments for their capital nature.
Routine repairs and maintenance costs that do not meet the above criteria are charged to the Statement of Profit and Loss in the period they are incurred.
In cases where existing components of PPE are replaced or modified during expansion projects, the carrying amount of the replaced components is derecognized if identifiable, and the cost of the new component is capitalized. Where individual identification is not feasible, the cost is aggregated and capitalized based on management''s assessment and technical evaluations of the nature of the expenditure.
Subsequent measurement (depreciation and useful lives)
Property, Plant and Equipment are subsequently measured at cost less accumulated depreciation and impairment losses, if any.
Depreciation on property, plant and equipment has been provided using straight line method using rates determined based on management''s assessment of useful economic lives of the asset upon the asset being put to use.
Followings are the estimated useful lives of various category of assets used which are aligned with useful lives defined in schedule II of Companies Act, 2013:
|
Office Building |
30 Years |
|
Factory Building |
30 Years |
|
Furniture & Fixture |
10 Years |
|
Vehicles |
8 Years |
|
Plant & Machinery |
15 Years |
|
Office Equipment |
5 Years |
|
Computers |
3 Years |
|
Pollution Control System |
15 Years |
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
An item of property, plant and equipment and any significant part initially recognized is de- recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the statement of profit and loss, when the asset is de-recognized.
Capital work-in-progress (CWIP)
Cost of property, plant and equipment not ready for use as at the reporting date are disclosed as capital work-in progress. At the point when a item is started to be operated for its intended use, the accumulated cost are transferred to appropriate category of Property Plant and Equipment & Depreciation is commenced.
Property that is held for long term rental yield or for capital appreciation or both, and that is not occupied by the Company, is classified as Investment property. Investment properties measured initially at cost including related transitions cost and where applicable borrowing cost. Subsequent expenditure is capitalised to the assets carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
3.3 Intangible assetsRecognition and Measurement
Intangible assets are recognised when the asset is identifiable, is within the control of the company, it is probable that the future economic benefits that are attributable to the asset will flow to the company and cost of the asset can be reliably measured.
Intangible assets acquired separately are measured on initial recognition at cost. The cost comprises the purchase price and any directly attributable cost of preparing the asset for its intended use.
Expenditure on research activities is recognised in the statement of profit and loss as incurred. Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the company intends to and has sufficient resources to complete development and to use or sell the asset.
Intangible assets acquired by the company that have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cashgenerating unit level.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognised in statement of profit and loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
The estimated useful lives for current and comparative periods are as follows:
Operating Software 10 Years
An intangible asset is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising from the derecognition of an intangible asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) are recognized in the Statement of Profit and Loss in the period the asset is derecognized.
The Company determines whether an arrangement contains a lease by assessing whether the fulfilment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to control the use of that asset to the Company in return for payment.
The Company accounts for each lease component within the contract as a lease separately from non- lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
The Company recognises right- of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception comprises of the amount of initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date.
Certain lease arrangements include options to extend or terminate the lease before the end of the lease term. The right-of-use assets and lease liabilities include these options when it is reasonably certain that such options would be exercised.
The right-of-use assets are subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re- measurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
Lease liability is measured at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications. The Company recognises the amount of the re-measurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.
Variable lease payments not included in the measurement of the lease liabilities are expensed to the statement of profit and loss in the period in which the events or conditions which trigger those payments occur.
In a sale and lease back transaction, the Company measures right-of-use asset arising from the leaseback as the proportion of the previous carrying amount of the asset that relates to the right-of-use retained. The gain or loss that the company recognises in the statement of profit and loss is limited to the proportion of the total gain or loss that relates to the rights transferred to the buyer.
The Company as lessorOperating lease:
Rental income from operating leases is recognised in the statement of profit and loss on a straight- line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognised on a straight-line basis over the lease term.
When assets are leased out under a finance lease, the present value of minimum lease payments is recognised as a receivable. The difference between the gross receivable and the present value of receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
3.5 Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication of impairment exists, then the asset s recoverable amount is estimated. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3.6 Provisions, Contingent Liabilities and Contingent Assets Provisions:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost in respective expense.
Contingent Liabilities and Contingent Assets:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company, or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation.
Contingent liabilities are not recognized in the financial statements but are disclosed in the notes, unless the possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets are not recognized in the financial statements. However, a contingent asset is disclosed in the notes to the financial statements where an inflow of economic benefits is probable. When the realization of income is virtually certain, the related asset is no longer considered a contingent asset, and its recognition is appropriate.
Provision for current tax is made as per the provisions of the Income Tax Act, 1961. 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.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
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.
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 relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
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 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 taxation authority.
3.8 Employee Benefits Short-term Employee Benefits:
Employee benefit liabilities such as salaries, wages and bonus, etc. that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at an undiscounted amount expected to be paid when the liabilities are settled.
Post-employment benefit plans:Defined Contribution Plans
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans. The contribution paid / payable under the schemes is recognised during the period in which the employees render the related services.
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company''s gratuity scheme is a defined benefit plan. The Company recognises the defined benefit liability in Balance sheet. The present value of the obligation under such defined benefit plan and the related current service cost and, where applicable past service cost is determined based on an actuarial valuation
done using the Projected Unit Credit Method by an independent actuary, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligations are measured at the present value of the estimated future cash flows.
Re-measurements, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) is reflected immediately in Other Comprehensive Income in the Statement of Profit and loss. All other expenses related to defined benefit plans are recognised in Statement of Profit and Loss as employee benefit expenses. Re-measurements recognised in Other Comprehensive Income will not be reclassified to Statement of Profit and Loss hence it is treated as part of retained earnings in the Statement of Changes in Equity.
The Company measures certain financial instruments at fair value at each reporting 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 to/ by the Company
All financial instruments for which fair value is recognised or disclosed 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) prices in active markets for identical assets or liabilities.
Level 2: valuation techniques for which the lowest level input that has a significant effect on the fair value measurement are observable, either directly or indirectly.
Level 3: valuation techniques for which the lowest level input which has a significant effect on the fair value measurement is not based on observable market data.
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 reassessing 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.
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 recognized initially at fair value. In the case of financial assets not recorded at Fair Value Through Profit or Loss (FVTPL), transaction costs that are directly attributable to the acquisition of the financial asset are added to the fair value. Transaction costs of financial assets carried at FVTPL are expensed in the Statement of Profit and Loss.
For purposes of subsequent measurement, financial assets are measured in their entirety at either amortized cost or fair value, depending on the classification of financial asset.
? Financial Assets at amortized cost:
A Financial Asset is measured at the amortized cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠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 amortized cost using the effective interest rate (EIR) method. Amortized 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 amortization and losses arising from impairment are recognized in the Statement of Profit & Loss. The amortized cost of the financial asset is also adjusted for loss allowance, if any.
A Financial Asset is measured at fair value through other comprehensive income if both the following conditions are met:
⢠The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
⢠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 fair value and changes therein are recognized directly in other comprehensive income, net of applicable taxes.
FVTPL is a residual category for Financial Assets.
Any Financial Asset, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the company may elect to designate a Financial 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'').
Financial Assets included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit & Loss.
Derecognition of Financial Assets:
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Any gain or loss on de-recognition is recognized in the Statement of Profit and Loss.
Impairment of financial assets:
In accordance with Ind AS 109, the company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
? Financial assets that are debt instruments, and are measured at amortised cost e. g. Loans and trade receivables.
? The company follows ''simplified approach'' for recognition of impairment loss allowance on Trade receivables that do not contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Financial liabilitiesInitial recognition and measurement:
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
All financial liabilities are initially measured at fair value deducted by, in the case of financial liabilities not recorded at fair value through profit or loss, transaction costs that are attributable to the liability.
Financial liabilities are classified as measured at amortised cost using the effective interest method. The Company''s financial liabilities include trade payables, borrowings and other financial liabilities.
Under the effective interest method, the future cash payments are exactly discounted to the initial recognition value using the effective interest rate. The cumulative amortization using the effective interest method of the difference between the initial recognition amount and the maturity amount is added to the initial recognition value (net of principal repayments, if any) of the financial liability over the relevant period of the financial liability to arrive at the amortized cost at each reporting date. The corresponding effect of the amortization under effective interest method is recognized as expense over the relevant period of the financial liability in the Statement of Profit and Loss.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the Derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid is recognized in the Statement of Profit and Loss.
Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the net amount presented in the Balance Sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
3.11 Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are carried at cost/deemed cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of investment is assessed and an impairment provision is recognised, if required immediately to its recoverable amount. On disposal of such investments, difference between the net disposal proceeds and carrying amount is recognised in the statement of profit and loss.
3.12 Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short- term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Inventories are stated at lower of cost and net realizable value. Costs comprise the direct materials and includes all duties, taxes and other expenses incurred to bring the inventories to their present location and condition except those taxes which are subsequently recoverable from the taxing authorities. Net realizable value is the price at which the Inventories can be realized in the ordinary course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling and distribution.
Raw Materials are valued ''at Cost'' or Net Realisable whichever is lower on FIFO basis.
Finished goods are valued at the lower of cost and NRV. Cost includes the cost of direct materials, direct labor, and a systematic allocation of variable and fixed manufacturing overheads based on normal operating capacity.
Semi-Finished Goods have been valued at Raw Material cost increased by a proportion of overheads and semi-finished goods of job work valued at cost of own raw materials involved in the process increased by overheads in consonance with the stage of completion as certified by the management.
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at the exchange rate prevailing on the balance sheet date.
Exchange differences arising on settlement of transactions and translation of monetary items are recognized in the statement of Profit or Loss except to the extent, exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowings, are capitalized as part of borrowing costs.
3.15 Revenue RecognitionRevenue from Contract with Customer
Revenue from contracts with customers is recognized when control of the goods or services is transferred to the customer, at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company generally satisfies its performance obligations and recognizes revenue at a point in time when the products have been shipped or delivered to the specified location, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. The sale of products includes related ancillary services, if any.
The Company assesses its contracts to determine whether there are other promises that represent separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of any significant financing components, and consideration payable to the customer (such as returns and trade discounts).
Revenue is recognized only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. A refund liability (or provision) is recognized for expected volume discounts and returns payable to customers in relation to sales made until the end of the reporting period. A receivable is recognized when the goods are delivered, as this is the point in time that the Company''s right to consideration becomes unconditional, requiring only the passage of time before the payment is due.
Domestic sales are recognized at transaction prices & consideration receivable in terms of above net of sales returns and Goods and Service Tax (GST).
Revenue from the sale of scrap is recognized at a point in time when control of the scrap is transferred to the buyer.
Interest income is recognized using the Effective Interest Rate (EIR) method. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument to the gross carrying amount of the financial asset. Interest income is presented under "Other Income" in the Statement of Profit and Loss".
The benefits accrued under the duty drawback scheme and other schemes as per the Import and export Policy in respect of Exports under the said scheme are recognized when there is a reasonable assurance that the benefit will be received and the company will comply with all attached conditions. The above benefits have been included under the head ''Export Incentives''.
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Insurance claims are accounted for on an accrual basis only when the realization of the claim is virtually certain, which typically occurs when the claim is formally accepted or admitted by the insurance company.
Other Items of Income not connected directly with the operations of the Company are disclosed under "Other Non Operational Income" under the head "Other Income" depending on certainty of accrual / realization of the same.
Basic earnings per share is computed using the net profit for the year attributable to the shareholders'' and weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed using the net profit for the year attributable to the shareholders'' and weighted average number of equity shares.
The Company recognizes a liability to make cash distributions to equity holders when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a final dividend is authorized when it is approved by the shareholders at the Annual General Meeting. An interim dividend is authorized when it is approved by the Board of Directors. A corresponding amount is recognized directly in equity. Dividends declared after the reporting period but before the financial statements are approved for issue are not recognized as a liability at the reporting date, but are disclosed in the notes to the financial statements.
Dividends declared and paid by the Company are based on the profits available for distribution as reported in the statutory standalone financial statements prepared in accordance with Ind AS.
Under the provisions of Section 123 of the Companies Act, 2013, the declaration and payment of dividends are permitted out of profits for the current year or previous financial year(s) after providing for depreciation in accordance with Schedule II to the Act. In the event of an absence or inadequacy of profits in any financial year, the Company may declare dividends out of free reserves, subject to compliance with the conditions prescribed under the Companies (Declaration and Payment of Dividend) Rules, 2014.
Accordingly, the total comprehensive income reported in these financial statements may not be entirely distributable as dividends.
Cash flows are reported using the indirect method, whereby profit for the period 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.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets up to the assets are substantially ready for their intended use. The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee, upfront fee) are amortised in the year in which they occur.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred.
With respect (Ind AS - 108 Segment Reporting), the Management of the Company is of the view that the products offered by the Company are in the nature of Bulk Drug Intermediates and its related products, having the same risks and returns, same type and class of customers and regulatory environment. Hence, the business of production and sale of Bulk Drug Intermediates and its related products belong to one business segment only.
Government grants are recognised at its fair value, where there is a reasonable assurance that such grants will be received and compliance with the conditions attached therewith have been met.
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received. Grants received less amounts credited to the statement of profit and loss at the reporting date are included in the balance sheet as deferred income.
GST is a destination-based tax and is levied at the point of supply. It is collected on sale of goods and services on behalf of Government and is remitted by way of payment or adjustment of credit on input goods or services.
Accordingly, Purchases & Sales are accounted net of GST. Similarly, other items of expenditure on which credit for GST is available ore items or revenue on which GST is chargeable are also accounted net of GST elements.
GST Accounts are created under Balance Sheet Groupings for liability towards GST collected on Sales / Other Revenue and asset towards GST paid on purchases or other expenditure for which credit is available. For Each month, as applicable, the GST liability is worked out after offsetting the credit available against the GST collected and balance is reflected as an Asset or Liability.
When items of income and expense within statement of profit and loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the company for the period, the nature and amount of such material items are disclosed separately as exceptional items
3. Significant Accounting Policies:
3.1 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non- current
classification as per Company''s normal operating cycle. The operating cycle is the time between the
acquisition of assets and their realisation in cash and cash equivalents. The Company has identified
twelve months as its operating cycle.
An asset is treated as current when it is:
? Expected to be realised or intended to be sold or consumed in normal operating cycle
? Held primarily for the purpose of trading
? Expected to be realised within twelve months after the reporting period, or
? Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
? It is expected to be settled in normal operating cycle
? It is held primarily for the purpose of trading
? It is due to be settled within twelve months after the reporting period, or
? There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.
All other liabilities are classified as non-current.
3.2 Property, Plant & Equipments
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price,
borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its
working condition for the intended use but are net of tax credits (GST) availed, including borrowing
costs capitalized on qualifying assets. Any trade discount and rebates are deducted in arriving at the
purchase price. Subsequent costs are included in the asset''s carrying amount or recognized as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Company.
All other repair and maintenance costs are recognized in statement of profit or loss as incurred.
Subsequent measurement (depreciation and useful lives)
Property, Plant and Equipment are subsequently measured at cost less accumulated
depreciation and impairment losses, if any.
Depreciation on property, plant and equipment has been provided using straight line method using rates
determined based on management''s assessment of useful economic lives of the asset upon the asset
being put to use.
Followings are the estimated useful lives of various category of assets used which are aligned with useful
lives defined in schedule II of Companies Act, 2013:
An item of property, plant and equipment and any significant part initially recognized is de- recognized
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or
loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is recognized in the statement of profit and loss, when
the asset is de-recognized.
Capital work-in-progress (CWIP)
Cost of property, plant and equipment not ready for use as at the reporting date are disclosed as
capital work-in progress. At the point when a item is started to be operated for its intended use, the
accumulated cost are transferred to appropriate category of Property Plant and Equipment &
Depreciation is commenced.
Investment property
Property that is held for long term rental yield or for capital appreciation or both, and that is not
occupied by the Company, is classified as Investment property. Investment properties measured
initially at cost including related transitions cost and where applicable borrowing cost. Subsequent
expenditure is capitalised to the assets carrying amount only when it is probable that future economic
benefits associated with the expenditure will flow to the entity and the cost of the item can be measured
reliably. All other repairs and maintenance costs are expensed when incurred.
3.3 Intangible assets
Recognition and Measurement
Intangible assets are recognised when the asset is identifiable, is within the control of the company, it is
probable that the future economic benefits that are attributable to the asset will flow to the company
and cost of the asset can be reliably measured.
Expenditure on research activities is recognised in the statement of profit and loss as incurred.
Development expenditure is capitalised only if the expenditure can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are probable and the
company intends to and has sufficient resources to complete development and to use or sell the asset.
Intangible assets acquired by the company that have finite useful lives are measured at cost less
accumulated amortisation and any accumulated impairment losses. Intangible assets with indefinite
useful lives are not amortised, but are tested for impairment annually, either individually or at the cash¬
generating unit level.
Subsequent Measurement
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in
the specific asset to which it relates.
Amortisation
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its
residual value. Amortisation is recognised in statement of profit and loss on a straight-line basis over
the estimated useful lives of intangible assets from the date that they are available for use, since this
most closely reflects the expected pattern of consumption of the future economic benefits embodied in
the asset.
The estimated useful lives for current and comparative periods are as follows:
Operating Software 10 Years
3.4 Leases
The Company determines whether an arrangement contains a lease by assessing whether the fulfilment
of a transaction is dependent on the use of a specific asset and whether the transaction conveys the
right to control the use of that asset to the Company in return for payment.
The Company as lessee
The Company accounts for each lease component within the contract as a lease separately from non¬
lease components of the contract and allocates the consideration in the contract to each lease
component on the basis of the relative stand-alone price of the lease component and the aggregate
stand-alone price of the non-lease components. The Company recognises right- of-use asset
representing its right to use the underlying asset for the lease term at the lease commencement date.
The cost of the right-of-use asset measured at inception comprises of the amount of initial measurement
of the lease liability adjusted for any lease payments made at or before the commencement date.
Certain lease arrangements include options to extend or terminate the lease before the end of the lease
term. The right-of-use assets and lease liabilities include these options when it is reasonably certain that
such options would be exercised.
The right-of-use assets are subsequently measured at cost less any accumulated depreciation,
accumulated impairment losses, if any and adjusted for any re- measurement of the lease liability. The
right-of-use assets are depreciated using the straight-line method from the commencement date over
the shorter of lease term or useful life of right-of-use asset.
Right-of-use assets are tested for impairment whenever there is any indication that their carrying
amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and
loss.
Lease liability is measured at the present value of the lease payments that are not paid at the
commencement date of the lease. The lease payments are discounted using the interest rate implicit in
the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company
uses incremental borrowing rate. The lease liability is subsequently remeasured by increasing the
carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the
lease payments made and remeasuring the carrying amount to reflect any reassessment or lease
modifications. The Company recognises the amount of the re-measurement of lease liability as an
adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to
zero and there is a further reduction in the measurement of the lease liability, the Company recognises
any remaining amount of the re-measurement in statement of profit and loss.
Variable lease payments not included in the measurement of the lease liabilities are expensed to the
statement of profit and loss in the period in which the events or conditions which trigger those
payments occur.
In a sale and lease back transaction, the Company measures right-of-use asset arising from the
leaseback as the proportion of the previous carrying amount of the asset that relates to the right-of-use
retained. The gain or loss that the company recognises in the statement of profit and loss is limited to
the proportion of the total gain or loss that relates to the rights transferred to the buyer.
The Company as lessor
Operating lease:
Rental income from operating leases is recognised in the statement of profit and loss on a straight- line
basis over the term of the relevant lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying value of the leased asset and
recognised on a straight-line basis over the lease term.
Finance lease
When assets are leased out under a finance lease, the present value of minimum lease payments is
recognised as a receivable. The difference between the gross receivable and the present value of
receivable is recognised as unearned finance income. Lease income is recognised over the term of the
lease using the net investment method before tax, which reflects a constant periodic rate of return.
3.5 Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets to
determine whether there is any indication of impairment. If any such indication of impairment exists,
then the asset''s recoverable amount is estimated. For impairment testing, assets are grouped together
into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or cash generating units (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs
to sell. Value in use is based on the estimated future cash flows, discounted to their present value using
a discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation or amortisation,
if no impairment loss had been recognised.
3. Significant Accounting Policies:
3.1 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non- current classification. An asset is treated as current when it is:
? Expected to be realised or intended to be sold or consumed in normal operating cycle
? Held primarily for the purpose of trading
? Expected to be realised within twelve months after the reporting period, or
? Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
? It is expected to be settled in normal operating cycle
? It is held primarily for the purpose of trading
? It is due to be settled within twelve months after the reporting period, or
? There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
3.2 Property, Plant & Equipments
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use but are net of tax credits (GST) availed, including borrowing costs capitalized on qualifying assets. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company.
All other repair and maintenance costs are recognized in statement of profit or loss as incurred.
Subsequent measurement (depreciation and useful lives)
Property, Plant and Equipment are subsequently measured at cost less accumulated depreciation and impairment losses, if any.
Depreciation on property, plant and equipment has been provided using straight line method using rates determined based on managements s assessment of useful economic lives of the asset upon the asset being put to use.
Derecognition
An item of property, plant and equipment and any significant part initially recognized is de- recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the statement of profit and loss, when the asset is derecognized.
Capital work-in-progress (CWIP)
Cost of property, plant and equipment not ready for use as at the reporting date are disclosed as capital work-in progress.
Investment property
Property that is held for long term rental yield or for capital appreciation or both, and that is not occupied by the Company, is classified as Investment property. Investment properties measured initially at cost including related transitions cost and where applicable borrowing cost. Subsequent expenditure is capitalised to the assets carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
3.3 Intangible assets
Recognition and Measurement
Intangible assets are recognised when the asset is identifiable, is within the control of the company, it is probable that the future economic benefits that are attributable to the asset will flow to the company and cost of the asset can be reliably measured.
Expenditure on research activities is recognised in the statement of profit and loss as incurred. Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the company intends to and has sufficient resources to complete development and to use or sell the asset.
Intangible assets acquired by the company that have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cashgenerating unit level.
Subsequent Measurement
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
Amortisation
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognised in statement of profit and loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
The estimated useful lives for current and comparative periods are as follows:
Operating Software 10 Years
3.4 Leases
The Company determines whether an arrangement contains a lease by assessing whether the fulfilment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to control the use of that asset to the Company in return for payment.
The Company as lessee
The Company accounts for each lease component within the contract as a lease separately from non- lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The Company recognises right- of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception comprises of the amount of initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date.
Certain lease arrangements include options to extend or terminate the lease before the end of the lease term. The right-of-use assets and lease liabilities include these options when it is reasonably certain that such options would be exercised.
The right-of-use assets are subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re- measurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
Lease liability is measured at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications. The Company recognises the amount of the re-measurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.
Variable lease payments not included in the measurement of the lease liabilities are expensed to the statement of profit and loss in the period in which the events or conditions which trigger those payments occur.
In a sale and lease back transaction, the Company measures right-of-use asset arising from the leaseback as the proportion of the previous carrying amount of the asset that relates to the right-of-use retained. The gain or loss that the company recognises in the statement of profit and loss is limited to the proportion of the total gain or loss that relates to the rights transferred to the buyer.
The Company as lessor Operating lease:
Rental income from operating leases is recognised in the statement of profit and loss on a straight- line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognised on a straight-line basis over the lease term.
Finance lease
When assets are leased out under a finance lease, the present value of minimum lease payments is recognised as a receivable. The difference between the gross receivable and the present value of receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
3.5 Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication of impairment exists, then the asset''s recoverable amount is estimated. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3. Significant Accounting Policies:
3.1 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non- current classification. An asset is treated as current when it is:
? Expected to be realised or intended to be sold or consumed in normal operating cycle
? Held primarily for the purpose of trading
? Expected to be realised within twelve months after the reporting period, or
? Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
? It is expected to be settled in normal operating cycle
? It is held primarily for the purpose of trading
? It is due to be settled within twelve months after the reporting period, or
? There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
3.2 Property, Plant & Equipments
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use but are net of tax credits (GST) availed for the relevant element in the cost. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company.
All other repair and maintenance costs are recognized in statement of profit or loss as incurred.
Subsequent measurement (depreciation and useful lives)
Property, Plant and Equipment are subsequently measured at cost less accumulated depreciation and impairment losses, if any.
Depreciation on property, plant and equipment has been provided using straight line method using rates determined based on management''s assessment of useful economic lives of the asset.
Followings are the estimated useful lives of various category of assets used which are aligned with useful lives defined in schedule II of Companies Act, 2013:
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Derecognition
An item of property, plant and equipment and any significant part initially recognized is de- recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the statement of profit and loss, when the asset is derecognized.
Capital work-in-progress (CWIP)
Cost of property, plant and equipment not ready for use as at the reporting date are disclosed as capital work-in progress.
Investment property
Property that is held for long term rental yield or for capital appreciation or both, and that is not occupied by the Company, is classified as Investment property. Investment properties measured initially at cost including related transitions cost and where applicable borrowing cost. Subsequent expenditure is
capitalised to the assets carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
The company has decided not to charge any depreciation on such properties.
3.3 Intangible assets Recognition and Measurement
Intangible assets are recognised when the asset is identifiable, is within the control of the company, it is probable that the future economic benefits that are attributable to the asset will flow to the company and cost of the asset can be reliably measured.
Expenditure on research activities is recognised in the statement of profit and loss as incurred. Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the company intends to and has sufficient resources to complete development and to use or sell the asset.
Intangible assets acquired by the company that have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level.
Subsequent Measurement
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
Amortisation
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognised in statement of profit and loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
The estimated useful lives for current and comparative periods are as follows:
Software 10 Years
3.4 Leases
The Company determines whether an arrangement contains a lease by assessing whether the fulfilment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to control the use of that asset to the Company in return for payment.
The Company as lessee
The Company accounts for each lease component within the contract as a lease separately from non- lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The Company recognises right- of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception comprises of the amount of initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date.
Certain lease arrangements include options to extend or terminate the lease before the end of the lease term. The right-of-use assets and lease liabilities include these options when it is reasonably certain that such options would be exercised.
The right-of-use assets are subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re- measurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
Lease liability is measured at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications. The Company recognises the amount of the re-measurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the remeasurement in statement of profit and loss.
Variable lease payments not included in the measurement of the lease liabilities are expensed to the statement of profit and loss in the period in which the events or conditions which trigger those payments occur.
In a sale and lease back transaction, the Company measures right-of-use asset arising from the leaseback as the proportion of the previous carrying amount of the asset that relates to the right-of-use retained. The gain or loss that the company recognises in the statement of profit and loss is limited to the proportion of the total gain or loss that relates to the rights transferred to the buyer.
The Company as lessor
Operating lease:
Rental income from operating leases is recognised in the statement of profit and loss on a straight- line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognised on a straight-line basis over the lease term.
Finance lease:
When assets are leased out under a finance lease, the present value of minimum lease payments is recognised as a receivable. The difference between the gross receivable and the present value of receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
3.5 Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication of impairment exists, then the assetâs recoverable amount is estimated. For impairment testing, assets are grouped together into the smallest
group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
5. Notes Forming Part of the Balance Sheet and Statement of Profit and Loss annexed thereto:
1. General Information of the Company:
Chemcrux Enterprises Limited (âthe companyâ) was incorporated in April 1996 to undertake the business of manufacturing or processing of Bulk Drug Intermediates like Para Chloro Benzoic, Ortho Benzoic Acid, and Lasamide etc.
The Company started its business activities in the year 2000-01 by taking over the running business of M/s. Chemcrux, a partnership firm of the promoters, as a going concern. The Company made its Initial Public Offering in March, 2017. The Company was listed on the Bombay Stock Exchange (SME).
2 . Significant Accounting Policies:
I. Basis of Accounting:
The accounts of the Company are prepared under the Historical Cost Convention and using the accrual method of accounting unless otherwise stated hereinafter, in accordance with the provisions of Companies Act, 2013(''the Actâ) to comply in all material aspects, with the mandatory accounting standards specified u/s. 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 in conformity with accounting principles generally accepted in India. Accounting Policies, not specifically referred to, are consistent and in consonance with generally accepted accounting principles.
II. Use of Estimates:
The Preparation and Presentation of Financial Statements as per the above bases required the management to make estimates and assumptions that may affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the balance sheet and the reported amounts of incomes and expenses during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from those estimated.
III. Fixed Assets & Depreciation :
Tangible Assets are stated at cost, net of tax / duty credits availed, if any, wherever applicable, less accumulated depreciation/ impairment losses, if any. Cost includes original cost of acquisition, including incidental expenses related to such acquisition and installation.
Intangible assets are stated at cost or acquisition less accumulated amortization and impairment loss, if any. Intangible assets are recognized only if it is probable that the expected future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. Capital work-in-progress comprises of the cost of assets that are not ready for their intended use at the reporting date.
IV. Depreciation
Depreciation on assets is being provided on the Straight Line Method on the basis of useful lives specified in Part C of Schedule II to the Companies Act, 2013. Depreciation on additions during the year as well as in case of assets sold during the year has been provided pro-rata on the basis of number of days for which the asset was used during the year Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the company for its use.
V. Inventories:
Raw Materials are valued ''at Cost'' on FIFO basis. ''Cost'' includes all duties, taxes and other expenses incurred to bring the inventories to their present location and condition. Finished products are valued at lower of cost and net realizable value. Semi-Finished Goods have been valued at Raw Material cost increased by a proportion of overheads and semi-finished goods of job work valued at cost of own raw materials involved in the process increased by overheads in consonance with the stage of completion as certified by the management.
VI. Employee Benefits:
Short term Employees Benefits:
All employee benefits payable wholly within 12 months after the end of period in which the employees render the related services are classified as short term employee benefits and recognized as expenses in the period in which the employees rendered the related services. The company recognizes the undiscounted amount of short term employees benefits expected to be paid (including compensated absences) in exchange for services rendered, as a liability.
ii) Post-employment benefits:
a) Defined contribution plans: the company''s contribution under the employees'' provident fund scheme, general Labor welfare fund scheme and employees'' state insurance scheme are defined contribution plans. The contribution paid / payable under the schemes is recognized during the period in which the employees rendered the related services.
b) Defined Benefits Plans: The employees'' gratuity fund scheme is Company''s defined benefit plan. The Company has taken Group Gratuity Policy for future payment of gratuity. The present value of the obligation under this defined benefit plan is determined based on the Actuarial Valuation Certificate. Company has made provision for gratuity in the books of account on the basis of actuarial valuation carried out by an independent actuary at the balance sheet date.
The Company has obtained the Actuarial Valuation Certificate for leave encashment and made the required provision in the books of accounts.
VII. Revenue Recognition:
Revenue is recognized on transfer of property in goods or on transfer of significant risks and rewards of ownership to the buyer, for a consideration, without the seller retaining any effective control over the goods.
Export sales are accounted at their CIF value based on the actual realization in Indian Rupees according to the realization certificates of the Banks
Other items of income such as Interest, Claims etc are accounted on accrual basis (depending on certainty of realization) and disclosed under the head âOther Incomeâ
VIII. Foreign Currency Transactions:
i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.
ii) Monetary items denominated in foreign currencies at the year-end are restated at the year-end rates.
iii) In case of Forward Foreign Exchange Contracts, the difference between the year-end rate and the rate on the date of the contract is recognized as exchange difference.
iv) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.
IX. Borrowing Costs:
According to AS-16, borrowing costs that are directly attributable to the acquisition of qualifying assets are to be capitalized for the period until the asset is ready for its intended use. A qualifying asset being, an asset that necessarily takes a substantial period of time to get ready for its intended use. Other borrowing costs are to be recognized as an expense in the period in which they are incurred.
X. Investments:
Investments that are readily realizable and intended to be held for not more than one year from the date on which such investments are made, classified as Current Investments. All other investments are classified as Non-current Investments. Current investments are carried at lower of cost and fair value. Non-current investments are carried at the cost.
However, provision for diminution is made to recognize a decline, other than temporary in the value of Non-current Investments, such reduction being determined and made for each Investment individually.
XI. Taxes on Income:
Provision for Current tax is made, based on tax estimated to be payable as computed under the various provisions of the Income Tax Act, 1961.
Deferred tax is recognized, subject to prudence, on timing differences between taxable income and accounting income that originate during the year and are capable of being reversed in one or more subsequent periods. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that future taxable income will be available against which such deferred tax assets can be realized. Deferred Tax Liabilities / Assets are quantified using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date.
XII. Contingencies/Provisions:
Provisions requiring a substantial degree of estimation in measurement are recognized, if in the opinion of the Management, there is a probability that a present obligation as a result of past events will result in an outflow for the Company in the future. Contingencies, the outcome of which is not certain, have been disclosed in these notes as Contingent Liabilities. Contingent Assets are neither recognized nor disclosed in the financial statements. A provision is recognize when the company has a present obligation as a result of the past events and it is probable that an outflow of resource will be required to settle the obligation in respect of which a reliable estimate can be made.
XIII. Impairment of Assets:
Assessment of Impairment of Assets (as covered under AS-28 Impairment of Assets) is done as at the Balance Sheet Date considering external and internal impairment indicators. If there is an indication that an asset may be impaired, its recoverable amount is estimated and the impairment loss duly provided for.
XIV. Earnings per share:
Basic earnings per share is computed by dividing the net profit or loss for the period attributable to shareholders by the total number of equity shares outstanding during the period. 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 equity shares outstanding during the year are adjusted for the effects of all dilutive potential Equity Shares.
(d) The Company has a single class of equity shares having par value of Rs. 10/- per equity share. All shares rank pari passu with refrence to all rights relating thereto. The dividend proposed, if any, by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all the preferential amounts, in proportions to their shareholding.
(f) The Board of Directors, in its meeting held on May 29,2018 have proposed a Final Dividend of 2.5% i.e Rs.0.25 per equity share for the Financial Year ended 31st March, 2018. The said proposal is subject to the approval of the shareholders at the Annual General Meeting to be held on 27/09/ 2018 and if approved would result in a Cash Outflow of Rs 14,85,327 approximately including Corporate Dividend Tax.
(c) The Company has paid dividend for FY 2016-17 in current year amounting to Rs. 12,34,070 and Rs. 6000is representing the amount of unpaid dividend as on 31st March, 2018.
* Sundry Creditors are as per books and have not been corroborated by circulation / confirmation of balances. ** Sundry Creditors for Raw Materials do not include any amount outstanding to Micro & Small Enterprises. The above information has been compiled in respect of parties to the extent they could be identified as Micro and Small Enterprises on the basis of information collected and available with the Company and same has been relied upon by the auditors regarding Other Sundry Creditors, the Company does not have information regarding their status as Micro & Small Enterprises
The Company deals with various Micro and Small Enterprises on mutually accepted terms and conditions. Accordingly, no interest is payable if the terms are adhered to by the Company. Consequently, no interest has been paid or is due and no provision for interest payable to such units is required or has been made under Micro, Small and Medium Enterprises Development Act, 2006.
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