NOTES FORMING PART OF FINANCIAL STATEMENTS 1 Significant Accounting Policies 1.1 Basis Of Preparation : These financial statements are brpared in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention (except to include revaluation of land, buildings, plant and machinery situated at its manufacturing facilities at Ranavav, Gujarat) as also on accrual basis. These financial statements have been brpared to comply with the accounting standards brscribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 ofthe Companies (Accounts) Rules, 2014 ('the Accounting Standards') and the relevant provisions of the Act (to the extent notified). In the light of the first proviso to Section 129 (1) of the Act and Schedule III to the Act, the items and terms contained in these financial statements are in accordance with the Accounting Standards as referred to herein. 1.2 Use of Estimates : The brparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting year, the reported amounts of assets and liabilities and the disclosures of contingent liabilities as on the date of the financial statements. Examples of such estimates include useful lives of fixed tangible assets and intangible assets, provision for doubtful debts/ advances, deferred tax, etc. Actual results could differ from those estimates. Such difference is recognised in the year/s in which the results are known / materialised. 1.3 Tangible Assets, Intangible Assets and Capital work-in-progress : i. Tangible Assets are stated at cost and includes amounts added on revaluation, less accumulated debrciation and impairment, if any. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any. ii. 'Cost' for the purpose of valuing fixed assets and capital work in progress comprises of its purchase price and any attributable cost of bringing the asset to its working condition for its intended use (Net of recoverable duties, subsidy received on purchase of asset, etc.). iii. Pre-operative Expenditure and cost relating to borrowed funds attributable to the construction or acquisition upto the date asset is ready for use is included under Capital Work-in-Progress and the same is allocated to the respective fixed assets on its completion forsatisfactory commercial commencement. 1.4 Debrciation / Amortisation : i. Debrciation on tangible fixed assets (other than Jetty and Premium on Leasehold Land) is provided on the "Straight-line Method" as perthe useful lives specified in PartCofSchedule II tothe CompaniesAct, 2013. In view of the period of right to use of 15 years the cost of Jetty is amortised on the "Straight-line Method" over the said period. Addition thereto, is amortised over the residual years of its right to use. Premium on leasehold land of long lease duration is not amortised, being not material. Debrciation on revalued assets are calculated on net replacement value ascertained as at June 30, 1993. The amount equivalent to debrciation provided on the revalued assets as reduced by that of the original cost of the assets is transferred to the General Reserve from Revaluation Reserve, to the extent of availability of the Revaluation Reserve. ii. Intangible assets being computer softwares are amortised on the "Straight-line Method" over a period of 3 years. 1.5 Assets Acquired On Lease / Hire Purchase : i. Assets acquired under leases / hire purchase where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the brsent value of minimum lease payments and a liability is created for an equivalent amount. Each lease / hire purchase rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period. ii. Assets acquired under leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on accrual basis. 1.6 Impairment of Assets : i. As on each Balance Sheet date, if internal / external indicators suggest that an asset may be impaired, the carrying amount of the asset is tested for impairment so as to determine, the provision for impairment loss required, if any. ii. The impairment loss is recognised when the carrying amount of an asset / cash generating unit (CGU) exceeds its recoverable amount. The recoverable amount is determined as the higher of its net selling price (net of material disposal expenses) and the value in use. Value in use is determined as the brsent value of estimated future cash flows from the continuing use of an asset/CGU as stated above and from its disposal at the end of its useful life. iii If there is change in the indication, since the last impairment was recognised, so that the recoverable amount of an asset exceeds its carrying amount, an impairment recognised for an asset in prior accounting period is reversed. 1.7 Investments : Investments those are intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of the investments. Investments other than long-term investments, being current investments, are valued at cost or fair value whichever is lower, determined on an individual basis. 1.8 Inventories : i. Raw materials, Packing materials and Fuels - 'At cost', derived on moving weighted average basis, or net realisable value, whichever is lower. ii. Work-in-process - 'At cost' or net realisable value, whichever is lower. Cost includes all direct costs and other related factory overheads. iii. Finished Goods - 'At cost' or net realisable value, whichever is lower. Cost includes all direct cost, other related factory overheads and excise duty. Traded goods are valued at cost or net realisable value, whichever is lower. iv. Stores and spares - 'At cost' on moving weighted average basis. 1.9 Accounting of Cenvat / VAT Benefits : Cenvat / VAT credit availed under the relevant provisions in respect of Raw materials, Packing materials, Fuels, Stores and spares, Capital goods, etc. is reduced from the relevant cost of purchases. 1.10 Revenue Recognition : i. Sales are accounted on dispatch of goods to customers. Sales figures are inclusive of excise duty, but are net of sales tax, value added tax, sales returns and adjustment in respect of discounts, rate difference, etc. ii. Export Sales are accounted on the basis of bills of lading / mates receipt dates. iii. Export incentives are accounted for on export of goods, if the entitlement can be estimated with reasonable accuracy and conditions brcedent to their claims are fulfilled. iv. Claims for Insurance are accounted on certainty of acceptance thereof by the Insurer. v. Dividend income is recognised based on establishment of the right to receive such income. 1.11 Foreign Currency Transactions : i. Transactions in foreign currency (Monetary or Non-monetary items) are recorded at the exchange rate brvailing on the date of the transaction. ii. Monetary items (i.e. receivables, payables, loans, etc.), which are denominated in foreign currency are translated and reported using the exchange rates brvailing on the date ofthe Balance Sheet. iii. 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. iv. Exchange differences arising on the settlement of monetary items or on reporting at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognised as income or expenses in the year in which they arise. 1.12 Employee Benefits: i. Defined contribution plan: The Company's superannuation scheme and state governed provident fund scheme are defined contribution plans. The contribution paid/payable under the schemes is recognised during the year in which the employees renders the related service. ii. Defined benefit plan - Gratuity : In accordance with applicable Indian Laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employees last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date, carried out by an independent Actuary. Actuarial gain or loss is recognised immediately in the Statement of Profit and Loss as Income or Expense. The Company has an employees gratuity fund managed by the Life Insurance Corporation of India ("LIC"). iii. Compensated Absences : As per policy of the Company, it allows for the encashment of absence or absence with pay to its employees. The employees are entitled to accumulate such absences subject to certain limits, for the future encashment or absence. The Company records an obligation for Compensated absences in the year in which the employees renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent Actuarial valuation. 1.13 Borrowing Costs : i. Borrowing costs that are attributable to the acquisition / construction of qualifying assets, are capitalised, net of income / income earned on temporary investments from such borrowings. Other borrowing costs are charged to the Statement of Profit and Loss as expense in the year in which the same are incurred. ii. Redemption Premium payable on borrowings are included as part of borrowing costs on a periodic cost basis. 1.14 Segment Reporting Policies: i. Primary Segment is identified based on the nature of products, the different risks and returns and the internal business reporting system. Secondary Segment is identified based on the geographic allocation of its customers. ii. The Company brpares its segment information in conformity with the accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole. 1.15 Taxation : i. Tax on income for the current year is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions ofthe Income-taxAct, 1961. ii. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognized as an asset in the Balance Sheet if there is convincing evidence that the Company will pay normal tax during the period specified to avail the MAT credit under the Income-tax Act, 1961, and the resultant asset can be measured reliably. iii. Deferred tax is recognised, subject to consideration of prudence, on timing differences between taxable and accounting income which originates in one period and are capable of reversal in one or more subsequent periods (adjusted for reversals expected during tax holiday period). The tax effect is calculated on accumulated timing differences at the year end based on tax rates and laws enacted or substantially enacted as of the balance sheet date. In the event of unabsorbed debrciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such deferred tax assets. In other situations, deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available to realise such deferred tax assets. The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws. iv. The Company offsets, on a year on year basis, the current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis. 1.16 Provisions, Contingent Liabilities and Contingent Assets : i. Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the Company, has a brsent obligation as a result of a past event, a probable outflow of resources is expected to settle the obligation and the amount of the obligation can be reliably estimated. ii. Reimbursement expected in respect of the expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received. iii. Contingent liability is stated in the case of a brsent obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation, a possible obligation, unless the probability of outflow of resources is remote. iv. Contingent assets are neither recognised, nor disclosed. v. Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date. 2 The accumulated arrears of brference dividend unprovided for the period from November 2000 till the balance sheet date amounted to Rs. 1281.78 lacs (Previous year Rs. 1192.39 lacs), including Rs. 89.39 lacs, (Previous year Rs. 89.39 lacs) for the year. 3 Considering the implementation of the scheme formulated and sanctioned for a sick company and that the net worth ofthe Company is positive, it no longer being a Sick Industrial Company, the accounts of the Company are brpared on a going concern basis. 4 Previous Year's figures have been regrouped / reclassified to conform to the current year's brsentation. As per our Report of even date attached For BANSI S. MEHTA & CO. Chartered Accountants Firm Registration No. 100991W PARESH H. CLERK Partner Membership No. 36148 Mumbai, Dated May 14, 2015 For and on Behalf of the Board of Directors M. N. Mehta Chairman Jay M. Mehta Executive Vice Chairman M. N. Rao Director M. S. Gilotra Managing Director Rakesh H. Mehta ChiefFinancialOfficer Sonali Sanas Vice President (Legal) & Company Secretary Mumbai, Dated May 14, 2015 |