NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2016 1. GENERAL A. COMPANY AND ITS BACKGROUND The Company was registered with the ROC, Delhi & Haryana under the Registration number 55-32166 dated 21st June 1988. Old Registration number has been converted into new Corporate Identification number (CIN) L74899DL1988pLC032166 Registered office of the Company is situated at 305, 3rd Floor, Bhanot Corner, Pamposh Enclave, Greater Kailash-I, New Delhi- 110 048 The Company has been engaged in the manufacture and sale of flexible packaging products & offer a complete flexible packaging solution to its customers across the globe. B. SIGNIFICANT ACCOUNTING POLICIES a. Basis of Preparation of Financial Statements The financial Statements are brpared in accordance with the Indian Generally Accepted Accounting principal (GAAp) under the historical cost convention on the accrual basis. GAAp comprises mandatory accounting standards as brscribed by the Companies Act 2013 u/s 133 of the Act, read with rule 7 of the Companies (Accounts) rules, 2014, the provisions of Companies Act, 2013, and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied. b. Use of Estimates and Judgements The brparation of the financial statements is in conformity with GAAP, requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on going concern basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, in the period of the revision and future periods if the revision affects both current and future. c. Classification of Expenditure/Income Except otherwise indicated: i) All expenditure and income are accounted for under the natural heads of account. ii) All expenditure and income are accounted for on accrual basis. d. Valuation i) Fixed Assets a) Fixed Assets are normally accounted for on cost basis (net of CENVAT credits) including the cost of installation, br-operative expenses, identifiable trial run expenses where incurred, eligible adjustment on account of foreign exchange fluctuations and impairment losses. Pre-operative expenses and identifiable trial run expenses incurred by the company up to the date eligible assets are put to use for commercial production are allocated to them in proportion to their cost. The cost of fixed assets is adjusted for revaluation, if any, done in any year as decided by the management so as to show the fixed assets at their current value b) Self-constructed Fixed Assets are valued at cost including overheads of the unit constructing the asset. ii) Finished Goods Finished goods are valued at lower of cost, based on weighted average method, (except in case of machine manufacturing where specific identification method is used) arrived after including debrciation on plant & machinery, electrical installation and factory building, repair & maintenance on factory building, specific manufacturing expenses including excise duty and specific payments & benefits to employees or net realisable value. iii) Work-in-Progress Work-in-Progress are valued at lower of cost, based on weighted average method, (except in case of machine manufacturing where specific identification method is used) arrived after including debrciation on plant & machinery, electrical installation and factory building, repair & maintenance on factory building, specific manufacturing expenses and specific payments & benefits to employees or net realisable value. iv) Raw Material Raw Materials are valued at lower of cost, based on first-in-first-out method arrived at after including freight inward and other expenditure directly attributable to acquisition or net realisable value. v) Stores, fuel and packing materials are valued at lower of cost, based on first-in-first-out method or net realisable value. vi) Inter-unit transfers of goods and services / job work are valued at cost price / the price agreed to between the units. e. Cost of spares, tools, jigs & dies are charged to revenue. f. Leases i) Lease rentals paid on operating leases are charged to revenue. ii) Lease rentals received under operating lease are recognized in the statement of Profit & Loss. g. Expenses incurred for issue of financial securities are charged to Securities Premium Reserve. h. Foreign Currency Transactions i) Foreign currency monetary items remaining unsettled at the year end are translated at year end rates. Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in foreign currency are reported using the exchange rates that existed when the values were determined. ii) Exchange differences on settlement / translation of monetary items, are adjusted as income / expense through the Exchange Fluctuation Account in the year they arise. iii) Difference between the forward and exchange rate on the date of transactions are adjusted over the period of the contract as an income / expense through the Exchange Fluctuation Account. iv) Profit or loss on cancellation of forward contracts for transactions, are adjusted as income / expense through Exchange Fluctuation Account in the year they arise. v) Exchanges difference arises on settlement / translation of foreign currency monetary items relating to acquisition of fixed assets till the period they are put to use for commercial production, are capitalized to the cost of assets acquired and provided for over the useful life of the fixed asset. Debrciation i) Normal debrciation on all fixed assets, except land and extra shift debrciation on specific plant & machineries for the period of extra shift worked, are provided from the date of put to use for commercial production on straight line method at the useful life brscribed in Schedule-II to the Companies Act, 2013 except for the followings, where useful life is different than those brscribed in the Schedule II of the Companies Act 2013 ii) No debrciation is provided on leasehold land. iii) Debrciation on additions / deletions to fixed assets is provided on pro-rata basis from / to the date of additions / deletions. iv) In case the financial year consists of the period less / more than the normal period of 12 months, debrciation on fixed assets existing at the beginning of the financial year as well as those acquired during the said period are provided for the period covered on pro-rata basis. j. Turnover i) Gross sales are inclusive of inter-unit sale value and excise duty/cess recoveries and exclusive of sales tax/value added tax. ii) Sales returns / rate differences are adjusted from the sales of the year in which the returns take place / rate differences accepted. iii) Gross job work is inclusive of inter-unit job work value and excise duty/service tax/cess recoveries. iv) Consignment Sales are considered as Sales when goods are sold to ultimate customer. k. Purchases i) purchases are inclusive of inter-unit purchase value and net of CENVAT credits and materials consumed during trial run. ii) purchases returns / rebates are adjusted from the purchases of the year in which the returns take place / rebates allowed. l. Investments i) Long term investments are valued at their cost including brokerage, fees and duty. However, if there is decline in value of investment, other than temporary, the carrying amount of investment is reduced recognizing the decline in value of each investment. ii) Current investments are valued at cost or market price, whichever is lower. m. Employee Benefits i) Defined Long Term benefit is recognized at the brsent value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and losses in respect of post employment and other long term benefits are charged to Statement of Profit & Loss. ii) Defined Contribution Plans are charged to Statement of Profit & Loss based on the contribution made to the specified fund. iii) Short term employee benefits are charged to Statement of Profit & Loss at the undiscounted amount in the year in which the related service is rendered. n. Claims by / Against The Company Claims by / against the Company arising on any account are provided in the accounts on receipts / acceptances Borrowing Cost Borrowing cost attributable to the acquisition or construction of qualifying /eligible assets, intended for commercial production are capitalised as part of the cost of such assets. All other borrowing costs are recognized as an expense and are charged to revenue in the year in which they are incurred. p. Earning Per Share In accordance with the Accounting Standard-20 (AS-20) "Earning per Share" issued by The Institute of Chartered Accountants of India, Basic Earning per Share is computed using the weighted average number of Shares outstanding during the period & Diluted Earning per share is computed using the weighted average number of shares outstanding after adjusting the effect of all dilutive potential equity shares that were outstanding during the period. q. Provision For Taxation i) Current Tax provision for current tax is measured using the current tax rates after making the necessary adjustments in accordance with the Income Tax Computation & Disclosures Standards issued by the CBDT, to the items of income / expenditure accounted for in the books of accounts as per generally accepted accounting principles. ii) Deferred Tax Assets / Liabilities Deferred tax assets & liabilities are measured using the current tax rates. When there is unabsorbed debrciation or carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty of realisation of deferred tax assets. Other deferred tax assets are recognised to the extent, there is reasonable certainty of realisation of deferred tax assets. Such deferred tax assets & other unrecognised deferred tax assets are re-assessed at each Balance Sheet date and the carrying value of the same are adjusted recognising the change in the value of each such deferred tax assets. r. Research & Development i) All revenue expenditure on research & development activities are accounted for under their natural heads of revenue expenses accounts. ii) All capital expenditure related to research & development activities are accounted for under their natural heads of fixed assets accounts. s. Impairment Management periodically assesses using external and internal sources whether there is an indication that assets of concerned cash generating unit may be impaired. Impairment loss, if any, is provided as per Accounting Standard (AS-28) on Impairment of Assets. t. Provisions, Contingent Liabilities and Contingent Assets In accordance with the Accounting Standard AS - 29 issued by Institute of Chartered Accountants of India a) provisions are made for the brsent obligations where amount can be estimated reliably, and b) contingent liabilities are disclosed for possible obligations arising out of uncertain events not wholly in control of the company. Contingent assets are neither recognised nor disclosed in the financial statements. u. Intangible Assets i) Customised or separately purchased software is classified as intangible assets at their cost and amortised over a period of five years from date of put to use. ii) All capital expenditures relating to patent / technology are capitalized under the natural head of fixed assets account and amortized over the period of contract. iii) All revenue expenditure relating to use of patent / technology are accounted for under the natural head of revenue expense account. A AUTHORISED The Company's Authorised Capital is of Rs.34000.00 Lacs (Previous Year Same) distributed into 1,90,00,000 (Previous Year Same) Preference Shares of Rs.100/- each and 15,00,00,000 (Previous Year Same) Equity Shares of Rs. 10/- Each. B ISSUED, SUBSCRIBED & PAID-UP The Issued and Subscribed Capital of the Company as at 31st March 2016 is of Rs. 7228.42 Lacs, rebrsented by 7,22,84,187 Equity Shares (Including 72701 Equity Shares forfeited) of Rs. 10/- each and the paid-up Capital as at 31st March 2016 is of Rs.7221.15 Lacs, rebrsented by 7,22,11,486 Equity Shares of Rs. 10/- each as at 31st March 2016. The reconciliation of the Equity Share Capital of the Company is given as under: C RESTRICTION ON VOTING RIGHTS Holders of GDRs have no voting rights in respect of underlying shares rebrsented by the GDRs. However Depository can exercise the power to vote in respect of shares rebrsented by the GDRs as directed by the Board, in terms of the conditions contained in offering circular. Registered holders of Shares, withdrawn from the deposit facility will be entitled to Vote and exercise other direct shareholder rights. However the holders of the GDRs are entitled to portion of the annual dividend, if any declared, on the shares rebrsented by the outstanding GDRs. 1. Balances of some of the parties are subject to reconciliation & confirmations. 2. a) Rupees have been rounded off to the nearest thousand. b) Previous Year figures have been recasted / regrouped/ reclassified, wherever considered necessary 3. Following disclosures are made, as per Accounting Standard-18 (AS-18), regarding, "Related Party Disclosures", issued by The Institute of Chartered Accountants of India:- (a) List of Related Parties: i) Subsidiaries : Flex Middle East FZE , Uflex Europe Ltd., Uflex Packaging Inc., Upet Holdings Ltd., U Tech Developers Ltd., Flex P Films (Brasil) Comercio De Films Plasticos Ltda. and USC Hologram (P) Ltd. ii) Fellow Subsidiaries : Flex Films Europa Sp.zo.o, Flex P Films (Egypt) S.A.E., UPET (Singapore) PTE. Ltd., Flex Americas S.A. de C.V.,SD Buildwell Pvt.Ltd., Flex Films (USA) Inc. and Flex Industries (P) Ltd. (upto14/01/2016.) iii) Associates : Flex Foods Limited and Refex Energy (Rajasthan) (P) Ltd. iv) Key Management Personnel & their relatives/ HUF (also exercising significant influence over the Company) : Mr. Ashok Chaturvedi, Chairman & Managing Director (relative Mrs. Rashmi Chaturvedi), Mr. Ashok Chaturvedi (HUF) and Mr. S.K. Kaushik, Wholetime Director (upto 02/02/2016) and Mr. Amitava Ray, Wholetime Director (w.e.f 02/02/2016) v) Enterprises in which the persons referred in (iv) along with their relatives exercise significant influence: Flex International (P) Ltd., Anshika Investments (P) Ltd., Ultimate Flexipack Ltd., A.R.Infrastructure & Projects (p) Ltd., Anant Overseas (p) Ltd., Apoorva Extrusion (p) Ltd., Anshika Consultants (p) Ltd., A.R.Leasing (p) Limited, Cinflex Infotech (P) Ltd., AR Airways (P) Ltd., Kaya Kalpa Medical Services (P) Ltd., AC Infrastructures (p) Ltd., Club One Airways (p) Ltd., Ultimate Infratech (p) Ltd., Ultimate brbrss LLp, AKC Retailers pvt. Ltd., Niksar Finvest (p) Ltd., Ganadhipati Infraproject (p) Ltd., Nirman Overseas (p) Ltd., Sungrace products (India) (p) Ltd.,Virgin Infrastructures (p) Ltd., Modern Info technology (p) Ltd., Liberal Advisory Services (p) Ltd., Saga Realtors (p) Ltd., Naveli Collections (p) Ltd., Bundelkhand projects (p) Ltd., Manpasand Marketing (p) Ltd., Gangotri Management (p) Ltd., Magic Consultants (p) Ltd., A.L.Consultants (p) Ltd.,Naru Investments (p) Ltd., Sambhav Finlease (p) Ltd., Mahajan polybag (p) Ltd., Moda Eleganza (p) Ltd., Ultra America Inc., First Flexipack Corporation, Flex Industries pvt. Ltd. (w.e.f. 15th January 2016) and Dedicated Investments (p) Ltd. For and on behalf of the Board of Directors R.K. Jain Group President (Corp. Finance & Accounts) Amitava Ray Whole-time Director DIN 00184143 Ashok Chaturvedi Chairman & Managing Director DIN 00023452 Rakesh Malhotra Sr. General Manager (Corp. Accounts) Ajay Krishna Sr. Vice President (Legal) & Company Secretary For Vijay Sehgal & Co. Chartered Accountants S.V. Sehgal partner place : NOIDA Dated : 27th May, 2016 |