Atul Ltd Annual Report 2016-17

Atul Ltd | Annual Report 2016-17

Notes

to the Financial Statements

Note 1 Significant Accounting Policies

(continued)

ii) Transactions and balances:

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of

the transactions. Foreign exchange gain | (loss) resulting from the settlement of such transactions and from the

translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally

recognised in profit or loss except that they are deferred in equity if they relate to qualifying cash flow hedges.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit

and Loss, within finance costs. All other foreign exchange gain | (loss) are presented in the Statement of Profit and

Loss on a net basis within other income | (expense).

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at

the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are

reported as part of the fair value gain | (loss).

Transition to Ind AS:

The Company has opted to continue the Accounting Policy availed under para 46 A of Accounting Standard - 11 ‘The

effects of changes in foreign currency rates’ of IGAAP inserted vide Notification dated December 29, 2011 issued by

Ministry of Corporate Affairs, Government of India. Paragraph D13AA of Ind AS 101 allows an entity to continue

this Accounting Policy availed under IGAAP for all outstanding long-term foreign currency monetary items as on

March 31, 2016. Consequently foreign exchange difference on account of long-term foreign currency borrowings

utilised to acquire a depreciable asset is adjusted in the cost of the depreciable asset, which will be depreciated over

the balance life of the asset.

c) Revenue recognition:

Timing of recognition:

Revenue from sale of goods is recognised when all the significant risks and rewards of ownership in the goods are

transferred to the buyer as per the terms of the contract, there is no continuing managerial involvement with the

goods, the amount of revenue can be measured reliably and it is probable that future economic benefits will flow to

the entity and specific criteria have been met for each of the activities of the Company. This generally happens upon

dispatch of the goods to customers, except for export sales which are recognised when significant risk and rewards

are transferred to the buyer as per the terms of contract. Revenue from services is recognised in the accounting period

in which the services are rendered.

Eligible export incentives are recognised in the year in which the conditions precedent are met and there is no

significant uncertainty about the collectability.

ii) Measurement of revenue:

Revenue is measured at the fair value of the consideration received or receivable, after the deduction of any trade

discounts, volume rebates and any taxes or duties collected on behalf of the Government which are levied on sales

such as sales tax, value added tax, etc. Revenue includes excise duty as it is paid on production and is a liability of the

manufacturer, irrespective of whether the goods are sold or not. Discounts given include rebates, price reductions and

other incentives given to customers. The Company bases its estimates on historical results, taking into consideration

the type of customer, the type of transaction and the specifics of each arrangement. Accumulated experience is used

to estimate and provide for the discounts and returns. The volume discounts are assessed based on anticipated annual

purchases. No element of financing is deemed present as sales are made with a credit term which is consistent with

market practice.

d) Income taxes:

The income tax expense or credit for the period is the tax payable on the taxable income of the current period based on the

applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences

and unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the

reporting period. The Management periodically evaluates positions taken in tax returns with respect to situations in which

applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts

expected to be paid to the tax authorities.

Minimum Alternate Tax (‘MAT’) under the provisions of the Income Tax Act, 1961 is recognised as current tax in the

Statement of Profit and Loss. The credit available under the Act in respect of MAT paid will be recognised as an asset only

when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for

which the MAT credit can be carried forward for set off against the normal tax liability. Such an asset is reviewed at each

Balance Sheet date.