NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH,2015 1 CORPORATE INFORMATION Binani Industries Limited is a public limited company (herein after called 'Company') domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is listed on the Bombay Stock Exchange(BSE), National Stock Exchange(NSE) and the Calcutta Stock Exchange (CSE). 2 SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements of the Company have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP). The Companies has brpared these financial statements to comply in all material respects with the Accounting Standards specified under section 133 of the Companies Act 2013 (' the 2013 Act") read with Rule 7 of the Companies ( Accounts) Rules 2014. The Financial Statements have been brpared on an accrual basis and under the historical cost convention. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year. All assets and liabilities have been classified as current or non-current as per the Group's normal operating cycle and other criteria set out in the Revised Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Group has ascertained its operating cycle as upto twelve months for the purpose of current - non-current classification of assets and liabilities. USE OF ESTIMATES The brparation of the financial statements, in conformity with the generally accepted accounting principles, requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainties about these assumptions and estimates could result in the outcomes requiring adjustment to the carrying amount of assets or liabilities in future periods. REVENUE RECOGNITION Income from Services Management Services fees and royalty income are recognised on accrual basis (net of Service Tax). Interest income Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Sale of investments Income from sale of investments is recognised on transfer of underlying instruments. Dividend income Income from Dividend is recognised when the right to receive payment is established. FIXED ASSETS Fixed Assets are stated at cost, net of accumulated debrciation / amortization and accumulated impairment loss, if any. Interest and Finance costs, if any in respect of loan for financing Fixed Assets, are capitalised till the date the assets are ready for use. However tangible assets having individual value below Rs. 5,000/- are debrciated @ 100% except mobile phones, which are charged to revenue, considering their useful life to be less than one year. Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits arising from the existing assets beyond its brviously assessed standard of performance. DEbrCIATION AND AMORTISATION Debrciation on plant and machinery (except office equipments and transport equipment) is provided on Straight Line Method on the basis of the useful life in the manner brscribed as per Schedule II of The Companies Act, 2013. Debrciation on other fixed assets, office equipments and transport equipments is provided on Written Down Value Method on the basis of the useful life in the manner brscribed as per Schedule II of The Companies Act, 2013. Intangible assets are amortised on a straight line basis over the estimated useful economic life. Expenditure on major computer software is amortised over the period of expected benefit not exceeding five years. IMPAIRMENT OF FIXED ASSETS At the end of each reporting period, the Company determines whether a provision should be made for impairment loss on assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard 28 on “Impairment of Assets” issued by the ICAI. An impairment loss is charged to the Statement of Profit and Loss in the period in which, an asset is identified as impaired, when the carrying value of the asset exceeds its recoverable value. The impairment loss recognised in the earlier accounting periods is reversed, if there has been a change in the estimate of recoverable amount. INVESTMENTS Investments that are readily realisable and intended to be held for not more than a year from the date of investment made are classified as Current investments. All other investments are classified as Non Current investments. Current investments are carried at lower of cost or fair value determined on an individual investment basis. Hitherto, non current investments were carried at cost, however pursuant to a Scheme of Amalgamation approved by the Hon'ble High Court of Calcutta, from 31st March 2014 onwards, the Company shall be stating its non current investments at their fair value and classify the same as "investments available for sale as financial assets". Provision is made to recognize any diminution other than temporary in the value of such investments. FOREIGN CURRENCY TRANSACTIONS Transactions in foreign currencies are accounted at the exchange rate brvailing on the date of each transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognized in the Statement of Profit and Loss. In case of forward contracts (non speculative), the brmium / discount are dealt with in the Statement of Profit and Loss over the period of contracts. Exchange differences arising on long term foreign currency monetary items are accumulated in the "Foreign Currency Monetary Item Translation Difference Account" and amortised over the remaining life of the concerned Monetary item. Exchange differences arising on a monetary item, that in substance forms part of the Company's net investment in a non-integral foreign operation are accumulated in a "Foreign Currency Translation Reserve Account" until the disposal of the net investment, at which time these would be transferred to the Statement of Profit and Loss. EMPLOYEE BENEFITS i) Short Term Employee Benefits – All employee benefits payable within twelve months of rendering the service are recognized in the period in which the employees render the related services. ii) Post Employment/Retirement Benefits – Defined Contribution Plans such as Provident Fund etc. are charged to the Statement of Profit and Loss, as incurred. Defined Benefit Obligation Plans – The brsent value of the obligation under such plans, is determined based on an actuarial valuation, using the Projected Unit Credit Method. Actuarial gains and losses arising on such valuation are recognized immediately in the Statement of Profit and Loss . In case of gratuity, which is funded with the Life Insurance Corporation of India, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans, to recognize the obligation on net basis. BORROWING COSTS Borrowing costs which are directly attributable to acquisition, construction or production of a qualifying asset are capitalized as a part of the cost of that asset. Other borrowing costs are recognised as expenses in the period in which they are incurred. INCOME TAX Income tax is accounted in accordance with AS-22 'Accounting for taxes on income', issued under Accounting Standards Rules 2006, which includes current tax and deferred tax. Deferred income tax reflect the impact of the current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available except that deferred tax assets arising due to unabsorbed debrciation and losses are recognised if there is virtual certainty that sufficient future taxable income will be available to realise the same. CONTINGENT LIABILITY A provision is recognised when an enterprise has a brsent obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote. 2MANAGEMENT SERVICES FEES : The Company is providing corporate support services related to Accounting, Finance, Treasury, Forex / Commodity Risk Management, Purchases , Audit, Taxation, Corporate Strategy, Media Services, Credit Rating, Legal Services, Market Research, Quality Control, Project Management etc. to its subsidiaries / step down subsidiaries namely Binani Cement Limited (BCL), Binani Zinc Limited (BZL), and step down subsidiaries Goa Glass Fibre Limited (GGFL) on payment of monthly Management Service Fees by the subsidiaries. However during the current year the Company has not charged Management Service Fee from BZL and GGFL w.e.f April 01, 2014 till 31st March, 2015 and from BCL pursuant to restructuring package sanctioned under the Joint Lenders Forum w.e.f. December 13, 2014 till 31st March, 2015. 3 ROYALTY INCOME: The company had entered into agreements with its principal subsidiaries viz Binani Cement Limited (BCL), Binani Zinc Limited (BZL), BT Composite Limited ( BTCL) and step down subsidiaries Goa Glass Fibre Limited (GGFL) for grant of the use of the marks, corporate name, logo etc. , in consideration of payment of Royalty. However, during the year the company has not charged royalty from BZL and BTCL w.e.f April 01, 2014 till 31st March, 2015 and from BCL pursuant to restructuring package sanctioned under the Joint Lenders Forum w.e.f. December 13, 2014 till 31st March, 2015. Consequently no payments are made to Promoters. 4 In accordance with the accounting policies applicable to erstwhile WIEL and to the Company as a successor to WIEL, being accounting policies adopted as per the Scheme of Amalgamation approved by the Hon’ble High Court at Calcutta on 18th March 2014, the Company has applied AS 30, the Accounting Standard on Financial Instruments: Recognition and Measurement, issued by the Institute of Chartered Accountants of India (ICAI), and pursuant thereto has as on March 31, 2014, being the date of conclusion of the first Accounting Year post the provisions of AS 30 becoming applicable to the Company, classified the investments as “available for sale financial assets” and has accordingly, measured such investments at fair value as on that date (except for those investments whose fair value cannot be reliably measured, which investments in accordance with AS 30 are continued to be measured at cost and their cost is considered as the fair value). Accordingly, the current portion of long term investments has been fair valued and regrouped under non current investments as on 31st March 2015.The consequential net reduction in the fair value amounting to Rs. 32,642.99 Lacs has been recorded as forming part of the BRR of the Company. 5 The Company had given guarantees to banks and financial institutions in the earlier years on behalf of various subsidiaries including one step down subsidiary, for the purpose of expansion projects and working capital requirements. The outstanding aggregate balances of these guarantees is Rs. 4,92,102.64 Lacs as on 31st March 2015. Further, till the financial year ended March 31, 2015, these entities were honouring the commitments in respect of servicing and /or repayment of their debt obligations. The lenders (Banks and Financials Institutions) of Binani Cement Ltd and 3B Binani Glass Fibre Sarl have, restructured the term loans during the year. Binani Zinc Limited has applied to BIFR for registering as sick industrial company and the relief package including restructuring of the term loans will be considered in the current year. In view of the above and in the opinion of the management, these are not expected to result into any financial liability to the Company. 6 Export Import Bank of India (Exim Bank) has sanctioned the restructuring package in March 2015. The company has approached for certain amendments in the sanctioned package. Pending consideration and confirmation by the Bank, the accounting has been done based on the existing sanctioned package. 37 The Company had initiated the process of identifying the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Since no intimation has been received from the suppliers regarding their status under the said Act as at 31st March 2015, disclosures relating to amounts unpaid as at the year end, if any, have not been furnished. In the opinion of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. 7 No events or transactions have occurred since the date of Balance Sheet or are pending that would have a material effect on the financial statements for the year ended, other than those reflected or fully disclosed in the books of accounts. 8 Previous year’s figures have been regrouped / reclassified wherever necessary. The accompanying notes are integral part of the financial statements. As per our report of even date attached For Kanu Doshi Associates Chartered Accountants Firm Registration No. 104746W Jayesh Parmar Partner Membership No: 45375 For and on behalf of Board of Directors K. K. Saraf President & Company Secretary Visalakshi Sridhar Chief Financial Officer Braj Binani Chairman Place: Mumbai Date : 30th May, 2015 |