1. SIGNIFICANT ACCOUNTING POLICIES (i) BASIS OF ACCOUNTING AND brPARATION OF FINANCIAL STATEMENTS The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") as applicable. The financial statements have been brpared on accrual basis under the historical cost convention except for certain fixed assets that are carried at revalued amounts. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year. The Ministry of Corporate Affairs has notified the Companies (Accounting Standards) Amendment Rules, 2016 vide its notification dated March 30, 2016. The said notification read with Rule 3(2) of the Companies (Accounting Standards) Rules, 2006 is applicable to accounting period commencing on or after the date of notification, i.e., April 01, 2016. (ii) USE OF ESTIMATES The brparation of financial statements in conformity with the Indian GAAP requires the management of the Company to make estimates and assumptions that affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to contingent liabilities. The management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise. (III) FIXED ASSETS Fixed assets are stated at cost of acquisition or construction less accumulated debrciation except for certain fixed assets which are revalued and are therefore, stated at their revalued book values. Cost of acquisition or construction is inclusive of freight, duties, taxes, incidental expenses and interest on loans attributable to the acquisition of qualifying assets, up to the date of commissioning of the assets. The Company has adopted the provisions of para 46A of AS 11 "The Effect of Changes in Foreign Exchange Rates", accordingly exchange differences arising on restatement/settlement of long term foreign currency monetary items related to acquisition of debrciable fixed assets are adjusted to the cost of the respective assets and debrciated over the remaining useful life of such assets. The basis for revaluation is current cost of debrciated assets at the time of revaluation. If the revaluation shows an increase in the value of a category of assets, the same is added to the historical value net of any decline in value of any asset of that category; any such decrease is expensed. The decline in value of any individual asset in a category is charged to revenue over the remaining useful life of that asset and further corresponding adjustment has been made on the amount withdrawn from the revaluation reserve uptill March 31, 2014. Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Company's fixed assets. If any indication exists, an asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value based on an appropriate discount factor. Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately. Capital Work in Progress: Project under which tangible/ intangible fixed assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable interest. (iv) DEbrCIATION AND AMORTISATION a. Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. b. Debrciation on tangible fixed assets has been provided on the straight line method on the basis of useful life of assets determined by the Company which are different from the useful life as brscribed in Schedule II of the 2013 Act. The useful life of the assets have been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc and are as under: Roads - 40 - 50 years Buildings - 30 - 60 years Plant & Machinery - 2 - 30 years Furniture & Fixtures - 15 years Office Equipment - 3 - 20 years Vehicles - 4.75 years c. Debrciation is calculated on a pro rata basis except that, assets costing upto Rs. 5,000 each are fully debrciated in the year of purchase. d. On assets sold, discarded, etc. during the year, debrciation is provided upto the date of sale/discard. e. In case of perpetual leases, no write off is made in respect of leasehold land and in other nature of leases, leasehold land is amortised over the period of the lease. f. Intangible assets are amortised over their estimated useful life considering the terms of the business purchase agreements on straight line method as follows:- Goodwill - 10 years Trademarks/Brand - 10 - 30 years Technical Knowhow - 10 - 30 years Software - 3 years Other intangibles - 2.5 - 10 years (v) FOREIGN CURRENCY TRANSACTIONS AND TRANSLATIONS Transactions in foreign currencies are recorded on initial recognition at the exchange rate brvailing on the date of the transaction. Exchange differences arising on settlement/restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss. The exchange differences arising on settlement/ restatement of long term foreign currency monetary items are capitalised as part of the debrciable fixed assets to which the monetary item relates and debrciated over the remaining useful life of such assets. If such monetary items do not relate to acquisition of debrciable fixed assets, the exchange difference is amortised over the maturity period/upto the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss. The unamortised exchange difference is carried in the Balance Sheet as "Foreign currency monetary item translation difference account" net of the tax effect thereon, where applicable. The Company uses foreign exchange forward and option contracts to hedge its exposure to movements in foreign exchange rates relating to certain firm commitments and highly probable forecast transactions. The Company designates such contracts in a cash flow hedge relationship by applying the principles set out in Accounting Standard (AS) - 30 - "Financial Instruments: Recognition and Measurement". Forward and option contracts are fair valued at each reporting date. The resultant gain or loss from these contracts that are designated and effective as hedges of future cash flows are recognised directly in Cash Flow Hedge Reserve under Reserves and Surplus, net of applicable deferred income taxes and the ineffective portion is recognised immediately in Statement of Profit and Loss. Amount accumulated in Cash Flow Hedge Reserve are reclassified to the Statement of Profit and Loss in the same periods during which the forecasted transaction affects the profit and loss. Hedge Accounting is discontinued when the hedging instrument expires, or is sold or terminated or exercised or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in Cash Flow Hedge Reserve is retained there until the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss is immediately transferred from the Cash Flow Hedge Reserve to the Statement of Profit and Loss. Contracts that are not designated as hedges of future cash flows are fair valued at each reporting date and the resultant gain or loss is recognised in the Statement of Profit and Loss (vi) RESEARCH & DEVELOPMENT Expenditure on Research & Development of products is included under the natural heads of expenditure in the year in which it is incurred except which relate to development activities whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes. Such costs are capitalised if they can be reliably measured, the product or process is technically and commercially feasible and the Company has sufficient resources to complete the development and to use or sell the asset. Capital expenditure on research and development includes the cost of materials, direct labour and an appropriate proportion of overheads that are directly attributable to brparing the asset for its intended use and is treated in the same manner as expenditure on other fixed assets and debrciated as per Company policy. (vii) INVENTORIES Inventories are valued at cost or net realisable value, whichever is lower. The basis of determining the cost for various categories of inventory are as follows: Stores, spares and - Weighted average rate raw materials Stock in trade, Stock - Direct cost plus in process and appropriate share of finished goods overheads and excise duty, wherever applicable By products - At estimated realisable value (viii) INVESTMENTS Long term investments are valued at cost unless there is a decline in value other than temporary. Current investments are stated at lower of cost or fair value. (ix) EMPLOYEE BENEFITS Company's contributions paid/payable during the year to provident fund administered through Regional Provident Fund Commissioner, Superannuation Fund and Employees' State Insurance Corporation are recognised in the Statement of Profit and Loss. Provision for gratuity, compensated absences, provident fund for certain category of employees administered through a recognised provident fund trust and long term retention pay are determined on an actuarial basis at the end of the year and charged to Statement of Profit and Loss for each year. (x) BORROWING COSTS Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction/ development of the qualifying asset up to the date of capitalization of such asset is added to the cost of the assets. (xi) PROVISIONS AND CONTINGENT LIABILITIES The Company recognised a provision when there is a brsent obligation as a result of past events and it is more likely than not that an outflow of resources would be required to settle the obligation and a reliable estimate can be made. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a brsent obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. (xii) REVENUE RECOGNITION Sale of goods is recognised, net of returns and trade discounts on the transfer of significant risks and rewards of ownership to the buyer which generally coincides with the dispatch of goods to customers. Gross sales are inclusive of excise duty and net of value added tax/sales tax. Other income includes interest income which is accounted on accrual basis, dividend income is accounted for when the right to receive is established. (xiii) RESERVES a. Revaluation reserve rebrsents the difference between the revalued amount of the assets and the written down value of the assets on the date of revaluation net of withdrawals therefrom. b. Capital receipts are credited to capital reserve. c. Cash flow hedge reserve rebrsents the gain or loss arising out of adjusting the hedging instruments to mark to market net of applicable deferred income taxes a. The income tax liability is provided in accordance with the provisions of the Income-tax Act, 1961. b. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. c. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability. Short Term Borrowings Short term borrowing are payable in one installment within one year. For foreign currency denominated short term loans taken during the year the interest rates are LIBOR plus interest rate sbrad, ranging from -0.10% to 0.50%. For rupee denominated short term loans taken during the year interest rate is at 7.40% to 9.70%. 3. Segment Reporting A. Business Segments Based on the guiding principles laid down in Accounting Standard (AS) - 17 "Segment Reporting", the Company's business segments include: • Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development • Chemicals and Polymers business: includes refrigerant gases, chloromethanes, pharmaceuticals, fluorochemicals & allied products, engineering plastics business and its research and development. • Packaging Film Business includes polyester films. Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable. In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under: a) Segment revenue and expenses Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments. b) Segment assets and liabilities Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets/liabilities can be directly attributed to individual segments, the carrying amount of certain assets/liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis. 4. The Company has established a combrhensive system of maintenance of information and documents as required by transfer pricing legislation under section 92D for its international transactions as well as specified domestic transactions. Based on the transfer pricing regulations/policy, the transfer pricing study for the year ended March 31, 2016 is to be conducted on or before due date of the filing of return and the company will further update above information and records based on the same and expects these to be in existence latest by that date. Management believes that all the above transactions are at arm's length price and the aforesaid legislations will not have impact on the financial statement, particularly on the amount of tax expense and provision for taxation. 8. Previous year's figures have been regrouped/reclassified, wherever necessary, to correspond with the current year's classification/ disclosure. For and on behalf of the Board of Directors Arun Bharat Ram Chairman (DIN - 00694766) Vinayak Chatterjee Director (DIN - 00008933) Ashish Bharat Ram Managing Director (DIN - 00671567) Anoop K Joshi President, CFO & Company Secretary Kartik Bharat Ram Deputy Managing Director (DIN - 00008557) Place : Gurgaon Date : 10 May 2016 |