Notes To The Financial Statements - Finolex Industries
OVERVIEWNotes to the financial statements The company is engaged in the businessof manufacturing PVC pipes & fittings,manufacturing of PVC resin and powergeneration. The financial statements are presentedin and all values are rounded to thenearest Lakh ( 00,000), except whenotherwise indicated. The financial statements were authorisedfor issue in accordance with a resolutionof the Board of Directors on May 26,2017.3. Summary of significant accountingpolicies The financial statements of the Companyhave been prepared in accordancewith the Indian Accounting Standards(‘Ind AS’) notified under Section 133 ofthe Companies Act 2013 (‘Act’), readtogether with the Companies (IndianAccounting Standards) Rules, 2015, asamended (‘Rules’). The financial statements have beenprepared on accrual basis and underhistorical cost convention, except forfinancial assets and financial liabilitiesthat have been measured at fair value. For all periods up to and including theyear ended March 31, 2016, the companyprepared its financial statements inaccordance with generally acceptedaccounting principles in India (‘IndianGAAP’), including the AccountingStandards (‘AS’ of ‘Indian GAAP’)specified under Section 133 of theCompanies Act, 2013, read with Rule Fair value is the price that would bereceived to sell an asset or paid to transfer aliability in an orderly transaction betweenmarket participants at the measurementdate. The fair value measurement isbased on the presumption that thetransaction to sell the asset or transferthe liability takes place either in theprincipal market for the asset or liabilityor in the absence of a principal market,in the most advantageous market forthe asset or liability. The principal orthe most advantageous market mustbe accessible by the Company. The fairvalue of an asset or a liability is measuredusing the assumptions that marketparticipants would use when pricing theAnnual Report 2017 117FINANCIAL STATEMENTS2. Basis of Preparation3.1 Fair value measurement The Company measures financialinstruments, such as non-current andcurrent investments, at fair value, at eachbalance sheet date. Fair-value relateddisclosures for financial instruments andnon-financial assets that are measuredat fair value or where fair values aredisclosed in Note 42.Statutory Reports7 of the Companies (Accounts) Rules,2014 and the relevant provisions of theCompanies Act, 2013. These financialstatements for the year ended March 31,2017 are the first financial statementsthat the Company has prepared inaccordance with Ind AS. Refer Note 4 forinformation on first time adoption of IndAS by the Company.STRATEGIC REPORT1. Corporate Information Finolex Industries Limited (‘FIL’ or ‘theCompany’) is a company incorporatedand domiciled in India and its equityshares are listed on Bombay StockExchange and National Stock Exchange.Its registered office is situated at GatNo.399, Village Urse, Taluka Maval,District Pune, India.
Notes to the financial statementsasset or liability, assuming that marketparticipants act in their economic bestinterest. A fair value measurement of a nonfinancial asset takes into account amarket participant’s ability to generateeconomic benefits by using the asset inits highest and best use or by selling itto another market participant that woulduse the asset in its highest and best use.The Company uses valuation techniquesthat are appropriate in the circumstancesand for which sufficient data are availableto measure fair value, maximising theuse of relevant observable inputs andminimising the use of unobservableinputs. All assets and liabilities for which fairvalue is measured or disclosed in thefinancial statements are categorisedwithin the fair value hierarchy, based onthe lowest level input that is significantto the fair value measurement as a whole Level 1 — Quoted (unadjusted)market prices in active markets foridentical assets or liabilities evel 2 — Valuation techniquesLfor which the lowest level inputthat is significant to the fair valuemeasurement is directly or indirectlyobservable evel 3 — Valuation techniquesLfor which the lowest level inputthat is significant to the fair valuemeasurement is unobservable For assets and liabilities that arerecognised in the financial statementsat fair value on a recurring basis, theCompany determines whether transfershave occurred between levels in the118 Finolex Industries Limitedhierarchy by re-assessing categorisation(based on the lowest level input that issignificant to the fair value measurementas a whole) at the end of each reportingperiod. The Company’s management determinesthe policies and procedures for bothrecurring fair value measurement, suchunquoted financial assets measuredat fair value, and for non-recurringmeasurement, such as non-currentassets held for sale. External valuation experts are involvedfor valuation of significant assets andliabilities.3.2 Revenue recognition Revenue is recognised to the extent thatit is probable that the economic benefitswill flow to the Company and revenuecan be reliably measured, regardlesswhen the payment is received. Revenueis measured at the fair value of theconsideration received or receivable,taking into account contractually definedterms of payment and excluding taxes orduty other than excise duty. The Company has concluded that itis the principal in all of its revenuearrangements since it is the primaryobligor in all the revenue arrangements,has pricing latitude, and is also exposedto inventory risk. The specific recognition criteria describedbelow must also be met before revenueis recognised.Sale of goods Revenue from sale of goods is recognisedwhen the significant risks and rewardsof ownership of the goods have passed
3.3 Foreign currencies The Company’s financial statements arepresented in Indian Rupees (‘ ’), whichis its functional currency.3.3.1 Transactions and balances Initial recognition: Transactions inforeign currency are initially recordedat the functional currency spot rate ofexchange at the date the transactionfirst qualifies for recognition. 3.3.2 Translation and exchangedifferences Monetary items: Monetary assetsand liabilities denominated inforeign currencies are translated at When loans or similar assistance areprovided by governments or relatedinstitutions with an interest rate belowthe current applicable market rate,the effect of this favourable interest isregarded as a government grant.3.5 Taxes3.5.1 Current income tax Current income tax assets and liabilitiesare measured at the amounts expectedto be recovered from or paid to thetaxation authorities; on the basis of thetaxable profits computed for the currentaccounting period in accordance withIncome Tax Act, 1961. The tax rates andtax laws used to compute the amount arethose that are enacted at the reportingdate. Current income tax relating to itemsrecognised in other comprehensiveincome or directly in equity is recognisedAnnual Report 2017 119FINANCIAL STATEMENTSDividends Revenue is recognised when theCompany’s right to receive the paymentis established, which is generally whenshareholders approve the dividend.3.4 Government grants Government grants are recognisedwhere there is reasonable assurancethat the grant will be received and allattached conditions will be compliedwith. When the grant relates to anexpense item, it is recognised as incomeon a systematic basis over the periodsthat the related costs, for which it isintended to compensate, are expensed.When the grant relates to an asset, it isrecognised as income in equal amountsover the expected useful life of therelated asset.Statutory ReportsInterest Income For all financial instruments measuredat amortised cost, interest income isrecorded using the effective interestrate (EIR). The EIR is the rate that exactlydiscounts the estimated future cashreceipts over the expected life of thefinancial instrument or a shorter period,where appropriate, to the net carryingamount of the financial asset. Interestincome is included in finance income inthe statement of profit or loss.their respective functional currencyexchange rate prevailing at thereporting date. Exchange differencesarising on settlement or translationof monetary items are recognised instatement of profit or loss.STRATEGIC REPORTto the buyer, usually when goods aredispatched or on delivery, as per theterms of sale. Revenue from the sale ofgoods is measured at the fair value ofthe consideration received or receivable,net of returns and allowances, tradediscounts and volume rebates.OVERVIEWNotes to the financial statements
Notes to the financial statementsin other comprehensive income or inequity, respectively, and not in the Profitor Loss. The Management periodicallyevaluates positions taken in the taxreturns with respect to situations inwhich applicable tax regulations aresubject to interpretation and establishesprovisions where appropriate.3.5.2 Deferred Tax Deferred tax is provided usingthe balance sheet approach ontemporary differences between thetax bases of assets and liabilities andtheir carrying amounts for financialreporting purposes at the reportingdate. Deferred tax liabilities are recognisedfor all taxable temporary differences,except: when the deferred tax liabilityarises from the initial recognitionof goodwill or an asset or liabilityin a transaction that is not abusiness combination and, at thetime of the transaction, affectsneither the accounting profit nortaxable profit or loss; in respect of taxable temporarydifferences associated withinvestments in subsidiaries,associates and interests in jointarrangements, when the timingof the reversal of the temporarydifferences can be controlled andit is probable that the temporarydifferences will not reverse in theforeseeable future. Deferredtaxassetsarerecognised for all deductibletemporary differences, the carry120 Finolex Industries Limitedforward of unused tax credits andany unused tax losses. Deferredtax assets are recognised to theextent that it is probable thattaxable profit will be availableagainst which the deductibletemporary differences, and thecarry forward of unused taxcredits and unused tax lossescan be utilised, except: when the deferred tax assetrelating to the deductibletemporary difference arises fromthe initial recognition of an assetor liability in a transaction that isnot a business combination and,at the time of the transaction,affects neither the accountingprofit nor taxable profit or loss inrespectofdeductibletemporary differences associatedwith investments in subsidiaries,associates and interests in jointarrangements,deferredtaxassets are recognised only tothe extent that it is probable thatthe temporary differences willreverse in the foreseeable futureand taxable profit will be availableagainst which the temporarydifferences can be utilized. The carrying amount of deferredtax assets is reviewed at eachreporting date and reduced tothe extent that it is no longerprobable that sufficient taxableprofit will be available to allow allor part of the deferred tax assetto be utilised. Unrecogniseddeferred tax assets are reassessed at each reporting dateand are recognised to the extent
that it has become probable thatfuture taxable profits will allowthe deferred tax asset to berecovered.3.6 Non-current assets held for sale The Company classifies non-currentassets as held for sale if their carryingamounts will be recovered principallythrough a sale transaction rather thanthrough continuing use. Non-currentassets classified as held for sale aremeasured at the lower of their carryingamount and the fair value less costs tosell (except for financial instruments,which are measured at fair value). Thecriteria for held for sale classificationis regarded met only when the sale ishighly probable and the asset is availablefor immediate sale in its present3.7 Property, plant and equipment The Company has opted to disclose theprevious GAAP (Indian GAAP) carryingvalue of Property, plant and equipment(‘PPE’) as the deemed cost under Ind-ASas at April 1, 2015. Property, plant and equipment andcapital work in progress, are stated atcost, net of accumulated depreciationand accumulated impairment losses, ifany. Cost comprises of purchase price,directly attributable cost of bringing theasset to its working condition for theintended use and and borrowing costs,if the recognition criteria are met. When significant parts of property,plant and equipment are required tobe replaced at intervals; the Companydepreciates them separately based ontheir specific useful lives. Likewise,when a major inspection is performed,its cost is recognised in the carryingamount of the plant and equipmentas a replacement if the recognitioncriteria are satisfied. All other repair andmaintenance costs are recognised in thestatement of profit and loss as incurred. Depreciation is calculated on a straightline basis over the useful lives asspecified in Schedule II to the CompaniesAct, 2013 which are as follows:Annual Report 2017 121FINANCIAL STATEMENTS Deferred tax assets and deferredtax liabilities are offset if a legallyenforceable right exists to set offcurrent tax assets against currenttax liabilities and the deferred taxesrelate to the same taxable entity andthe same taxation authority. Assets and liabilities classified as held forsale are presented separately as currentitems in the Balance Sheet.Statutory Reports Deferred tax relating to itemsrecognised outside profit or loss isrecognised outside profit or loss.Deferred tax items are recognisedin correlation to the underlyingtransaction either in OCI or directlyin equity.condition. Actions required to completethe sale should indicate that it is unlikelythat significant changes to the plan forsale will be made or that the plan willbe withdrawn. Management must becommitted to the sale expected withinone year from the date of classification.STRATEGIC REPORT Deferred tax assets and liabilities aremeasured at the tax rates that areexpected to apply in the year whenthe asset is realised or the liabilityis settled, based on tax rates (andtax laws) that have been enactedor substantively enacted at thereporting date.OVERVIEWNotes to the financial statements
Notes to the financial statementsAsset Useful life(in years)Plant and machineryBuildingFactory BuildingFurniture and fixturesOffice equipment’sVehicles3 to 2560301058 In the case of Captive Power Plant themanagement, based on a technicalevaluation, has estimated the life ofasset to be 25 years which is lowerthan the life prescribed in Schedule –II. An item of property, plant andequipment and any significant partinitially recognised is de-recognisedupon disposal or when no futureeconomic benefits are expectedfrom its use or disposal. Any gain orloss arising on de-recognition of theasset (calculated as the differencebetween the net disposal proceedsand the carrying amount of theasset) is included in the statementof profit and loss when the asset isderecognised. The management undertakes areview of the residual values, usefullives and methods of depreciationof property, plant and equipment atthe end of each reporting period andadjustments are made whenevernecessary.3.8 Leases The determination of whether anarrangement is, or contains, a leaseis based on the substance of thearrangement at the inception date. Thearrangement is assessed for whetherfulfilment of the arrangement is122 Finolex Industries Limiteddependent on the use of a specific assetor assets or the arrangement conveys aright to use the asset or assets, even ifthat right is not explicitly specified in anarrangement.3.8.1 Company as a lessee Finance leases that transfer to theCompany substantially all of the risksand benefits incidental to ownershipof the leased item, are capitalised atthe commencement of the lease atthe fair value of the leased propertyor, if lower, at the present value ofthe minimum lease payments. Leasepayments are apportioned betweenfinance charges and a reduction inthe lease liability so as to achievea constant rate of interest on theremaining balance of the liability.Finance charges are recognised infinance costs in the statement ofprofit or loss. An operating lease is a lease otherthan a finance lease. Operating leasepayments are recognised as anoperating expense in the statementof profit and loss on a straight-linebasis over the lease term.3.8.2 Company as a lessor Leases in which the Company doesnot transfer substantially all therisks and benefits of ownership ofthe asset are classified as operatingleases. Initial direct costs incurredin negotiating and arranging anoperating lease are added to thecarrying amount of the leased assetand recognised over the lease termon the same bases as rental income.Contingent rents are recognised asrevenue in the period in which theyare earned.
Gains or losses arising from derecognition of an intangible asset aremeasured as the difference between thenet disposal proceeds and the carryingamount of the asset and are recognisedin the statement of profit or loss whenthe asset is derecognised.3.11 Financial instruments A financial instrument is any contractthat gives rise to a financial asset of oneentity and a financial liability or equityinstrument of another entity.3.11.1 Financial assets3.11.1.1Classification Financial assets are classified, atinitial recognition, as subsequentlymeasured at amortised cost, fair 3.11.1.3Subsequentmeasurement Forpurposesofsubsequentmeasurement, financial assets areclassified in three categories:a) At amortised costb) At fair value through OtherComprehensiveIncome(‘FVTOCI’)c) At fair value through profit or loss(‘FVTPL’)(a) Financial assets classified asmeasured at amortised cost A financial asset shall bemeasured at amortised cost ifboth of the following conditionsare met: the financial asset is heldwithin a business modelwhose objective is to holdAnnual Report 2017 123FINANCIAL STATEMENTS The intangible assets are amortised overa period of 6 years using straight linemethod. 3.11.1.2Initial recognition andmeasurement Financial assets are recognisedinitially at fair value plus, in the case offinancial assets not classified as fairvalue through profit or loss (‘FVTPL’),transaction costs that are attributableto the acquisition of the financialasset. Financial assets and financialliabilities are recognised in theBalance Sheet when the Companybecomes a party to the contractualprovisions of the instrument. Aregular way purchase or sale offinancial assets shall be recognisedusing trade date or settlement dateaccounting.Statutory Reports3.10 Intangible assets Intangible assets acquired separatelyare measured on initial recognitionat cost. Following initial recognition,intangible assets are carried at costless accumulated amortisation andaccumulated impairment losses, if any.valuethroughcomprehensiveincome (‘FVOCI’) or fair value throughother profit or loss (‘FVTPL’).STRATEGIC REPORT3.9 Borrowings costs Borrowing costs directly attributableto the acquisition, construction orproduction of an asset that necessarilytakes a substantial period of time toget ready for its intended use or saleare capitalised as part of the cost of therespective asset. All other borrowingcosts are expensed in the period in whichthey occur. Borrowing costs consist ofinterest and other costs that an entityincurs in connection with the borrowingof funds.OVERVIEWNotes to the financial statements
Notes to the financial statementsfinancial assets in order tocollect contractual cash flowsand the contractual terms of thefinancial asset give rise onspecified dates to cash flowsthat are solely payments ofprincipal and interest on theprincipal amount outstanding. After initial measurement, suchfinancial assets are subsequentlymeasured at amortised costusing the effective interest rate(‘EIR’) method, less impairment.Amortised cost is calculated bytaking into account any discountor premium on acquisitionand fees or costs that are anintegral part of the EIR. Th
Annual Report 2017 117 Notes to the financial statements OVERVIEW STRATEGIC REPORT S TAT U TOR Y R EPORTS FINANCIAL STATEMENTS 1. Corporate Information Finolex Industries Limited (‘FIL’ or ‘the Company’) is a company incorporated and domiciled in India and its equity shares are lis
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Overview of the Financial Statements The Village's basic financial statements are comprised of three components: 1) entity-wide financial statements; 2) fund financial statements; and 3) notes to the basic financial statements. This report also contains supplementary information in addition to the basic financial statements themselves.
interim financial statements report 04 consolidated interim financial statements 28 financial statements 31 notes to financial statements 37 certification of the condensed consolidated interim financial statements pursuant to art. 154 bis, fifht paragraph, of legislative decree 58/98 and of art. 81 - ter of consob regulation n. 11971/99
