SIGNIFICANT ACCOUNTING POLICIES 1 Background KAYCEE INDUSTRIES LIMITED is a manufacturing and trading company in the field of industrial switches, counters, water meters, electrical components, etc. 2 BASIS OF brPERATION OF FINANCIAL STATEMENT a) The financial statements are brpared in accordance with Indian Generally Accepted Accounting Principal (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standard as brscribed under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, and the provision of the Act. b) Use of estimates The brparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities at the date of the financial statements and reported amounts of income and expenses during the year. Actual results could differ from those estimates. 3 REVENUE RECOGNITION: Revenue is recognised when the significant risks and rewards of ownership of the goods have been passed to the buyer and are recorded net of returns, trade discounts, rebates, sales tax & excise duty where ever applicable. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognised when the Company's right to receive dividend is established by the Balance Sheet date. EMPLOYEE BENEFITS I) Short Term Employees Benefits: All short term employee benefits such as salaries, wages, bonus, short term compensated absences, awards, ex gratia, performance pay, medical benefits, which fall due within 12 months of the period in which the employee renders the related service which entitles him to avail such benefits and non accumulating compensated absences are recognized on an undiscounted basis and charged to profit and loss account II) Post Employment Benefit: a) Defined Contribution Plan Company's contribution to the provident fund based on a percentage of salary is made to Provident Fund Trust, which are administered by the trustees. b) Defined Benefit Plan Gratuity: The Company provides the gratuity benefit through annual contributions to a fund managed by the Life Insurance Corporation of India (LIC). Under this plan, the settlement obligation remains with the Company, although the Life Insurance Corporation of India administers the plan and determines the contribution brmium on Projected Unit Credit Method, which is required to be paid by the Company and is debited to the profit and loss account on an accrual basis. Actuarial gains or losses arising during the year are recognized in the profit and loss account. c) Leave encashment is provided for on the basis of an actuarial valuation carried out by an Actuary at the end of each financial year and debited to the profit and loss account. 5 Inventories Inventories of Raw Material, Components, Material in Process, Finished goods, Stores & Packing materials and traded goods are stated 'At Cost or Net Realizable value' whichever is lower. Cost of inventories comprises of cost of purchase, cost of conversion and other cost incurred in bringing the inventory to their brsent location and condition. Company uses FIFO method for valuation. Cost of finished goods includes excise duty. 6 Fixed Assets Tangible Assets Fixed assets are stated at cost less accumulated debrciation, amortization and impairment loss if any. The company capitalizes direct costs including taxes, duty, freight and incidental expenses attributable to the acquisition and installation of fixed assets. Capital work-in-progress is stated at cost. Debrciation Debrciation is provided using the written down value method in accordance with the schedule XIV of the Companies Act, 1956. Fixed assets with estimated useful life of less than 1 year & onetime use are fully debrciated in the year of acquisition. Debrciation on assets acquired or disposed off during the year is provided on a pro-rata basis from/up to the date of acquisition/disposal. 7 Debrciation Debrciation on tangible asset is provided on the straight-line method over the useful lives of assets estimated by the Management, which is as per Schedule II of the Companies Act, 2013. Debrciation on assets purchased / sold during a period is proportionally charged. The Management estimates the useful lives of fixed assets as follows:- 8 Impairment Policy The company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. The recoverable amount is the higher of an asset's net selling price or its value in use. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 9 Investments Investments that are readily realizable and intend to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Long term investments are stated at cost less any diminution in their value, which is other than temporary. Current Investments are stated at lower of cost and market value. Unquoted long term investments are valued at lower of cost or latest available break up value. 10 Research and Development Revenue expenditure on research and development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as an addition to Fixed Assets. 11 Foreign currency transaction Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are restated at year-end rates. The exchange difference on restatement of monetary assets and liabilities and realized gains and losses on foreign exchange transactions other than those relating to fixed assets are recognized in the profit and loss account. Exchange difference in respect of liabilities incurred to acquire fixed assets is adjusted to the carrying amount of such. Fixed assets 12 Segment Reporting Policies Identification of segment is based on the major manufacturing products. 13 Earnings per share Basic and diluted earnings per share are calculated by dividing the net profit/ loss for the year by the weighted average number of equity shares outstanding during the period. 14 Provisions and contingent liabilities A provision is recognized when the company has a brsent obligation resulting from past events and it is probable that an outflow of resources will be required to settle the obligation for which a reliable estimate can be made. Provisions are based on management's best estimate of the amount required to settle the obligation at the balance sheet date. Provisions are reviewed at each balance sheet date and adjusted to reflect revision in estimates The company has decided to provide for doubtful debts if debtors remain outstanding above one year. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. 15 Provision for Taxation a) Provision for Taxation comprises of current and deferred tax and includes any adjustments related to past periods in current and / or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant period. b) Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. c) Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year. The tax effect is calculated on the accumulated timing differences at the end of the accounting period based on brvailing enacted or subsequently enacted tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. d) Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. 16 Estimated value of contracts (Net of Advances) to be executed on capital account and not provided for Rs.Nil (Previous year Rs.Nil). 17 Company has not provided contingent liability of Rs. 3.96 Lacs against Central Excise assessment for year 2007- 2008, and Liability towards pending C forms have not been provided on account of uncertainty. 18 Pakistan unit of the Company continues to be under the control of Pakistan Government. It has not been possible to establish any communication with the said unit so far. Therefore, statement of Assets and Liabilities as at 30th June 1964 based on the last reports received have been incorporated in the Balance sheet as br devaluation rate of rate of exchange. 25 During the year, the company has taken physical verification of fixed assets and noted discrepancy of Rs Nil (W.D.V.) (P. Y Nil ) of Fixed Assets and the same were adjusted and discarded in the books of accounts 26 Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II. Accordingly the unamortised carrying value is being debrciated over the revised/ remaining useful lives. The written down value of Fixed Assets whose lives have expired as at 1st April 2014 have been adjusted, in the opening balance of General Reserves amounting to Rs. 1,034,379/-. 28 The equity shares of the company are listed in Bombay Stock Exchange and company has paid annual listing fees to the stock exchange for the year 2014-2015. 29 During the year the Company has reviewed Accounts Receivable and reversed provision for doubtful debts Rs. 555,034. (P.Y. Provision made.Rs 348,923). 30 Segment wise Reporting as per Note No. 27. 31 In the opinion of the Board Current Assets, Loans & Advances have a value on realization in the ordinary Course of Business at least equal to the amount at which they are stated in accounts and all current liabilities have been provided for. 32 Sundry Debtors and Creditors are subject to confirmation and reconciliation if any. 33 Previous Years figures have been regrouped / rearranged wherever necessary. As per our report of even date attached For N.D. KAPUR & CO. Firm Registration No: 001196N Chartered Accountants For and on behalf of the Board Sd/-Aarti Grover Managing Director Sd/- Raju Grover Director Sd/- S. K. AGRAWAL Partner Mumbai Sd/- Deepak Potdar Chief Financial Officer Sd/- Kamleshwari Bind Company Secretary Date : 30th May 2015 |