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163
Notes
to the Consolidated Financial Statements
Note 1 Significant Accounting Policies
(continued)
iii) Group companies:
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency
as follows:
a) assets and liabilities are translated at the closing rate at the date of that Balance Sheet
b) income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the dates of the transaction)
c) all resulting exchange differences are recognised in Other Comprehensive Income
When a foreign operation is sold, the associated exchange differences are reclassified to the Statement of Profit
and Loss, as part of the gain | (loss) on sale. Goodwill and fair value adjustments arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
iv) Transition to Ind AS:
The Group 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.
d) Revenue recognition:
i)
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 Group. 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.
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 Group 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 the sales are made with a credit term which is consistent
with market practice.
e) 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. 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 entity 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 asset is reviewed
at each Balance Sheet date. 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.