Notes to the Financial Statements Accompanying notes to the financial statements 1 Significant accounting policies i) Basis of brparation of financial statements The financial statements are brpared under the historical cost convention in accordance with the generally accepted accounting principles in India. The applicable mandatory Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rule, 2014 of India have been followed in brparation of these financial statements. ii) Use of estimates The brparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Differences between the actual results and the estimates are recognised in the period in which the same are known/materialised. iii) Revenue recognition a. Sales Revenue from sale of goods is recognized when the significant risks and rewards in respect of ownership of products are transferred to the buyer under the terms of contract. Sales are inclusive of excise duty but are net of sales returns, sales tax and rate difference adjustments if any. b. Interest Income Interest on investments is booked on a time proportion basis taking into account the amounts invested and the rate of interest. c. Insurance Claims Insurance and other claims are recognised only when it is reasonably certain that the ultimate collection will be made. d. Export Incentives Export incentives are accrued in the year when the right to receive credit is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization/ utilization of such benefits/ duty credit. e. Other Income Other income is recognized on accrual basis except when realisation of such income is uncertain. iv) Fixed Assets Fixed Assets are stated at cost, net of tax/duty credit availed, if any, after reducing accumulated debrciation until the date of the Balance Sheet. Direct cost are capitalized until the asset are ready for use and include financial cost relating to any borrowing attributable to acquisition. Capital work in progress includes the cost of fixed assets that are not yet ready for the intended use. v) Debrciation & Amortization The Company has provided for debrciation using straight line method for fixed assets lying at Pithampur unit and written down value method for fixed assets lying at Vadodara Unit over the useful life of the fixed assets as brscribed under Part C of Schedule II to the Companies Act, 2013 except in the case of following assets which are debrciated based on useful life derived by technical evaluation: Asset Description Assets Useful life (in Years) Plant and Machinery 20 Leasehold land is amortised over the period of lease. vi) Intangible Assets and amortisation Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized over the estimated period of benefit, not exceeding ten years. vii) Impairment of Assets 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. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the balance sheet date there is an indication that if a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. viii) Inventories Inventories are valued at cost or net realizable value, whichever is lower. The basis of determining cost for various categories of inventories is as follows - Inventories Cost Formula Raw materials -First-In-First-Out basis. Material, traded goods & consumables in transit -At Invoice price. Work-in-process -At raw material cost plus conversion cost, wherever applicable. Finished goods -Cost rebrsents material, labour and manufacturing expenses and other incidental costs to bring the inventory in brsent location and condition. Consumable stores, spares and tools -First-In-First-Out basis. ix) Foreign Currency Transactions Foreign currency transactions are recorded at the rate of exchange brvailing on the date of the transactions. At the year end, all the monetary assets and liabilities denominated in foreign currency are restated at the closing exchange rates. Exchange differences resulting from the translation of such monetary assets and liabilities and also the exchange differences on settlement of foreign currency transactions are recognized in the Statement of Profit and Loss. x) Research & Development Expenditure on the design and production of prototypes relating to research & development has been charged to the Statement of Profit & loss. Capital expenditure relating to research & development is treated as fixed assets. xi) Leases Assets acquired on 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. xii) Taxes on Income a. Current Tax Provision for Income Tax is ascertained on the basis of assessable profit computed in accordance with the provisions of Income Tax Act, 1961. b. Deferred Tax Deferred tax assets and liabilities are recognised for future tax consequence attributable to timing differences between taxable income and accounting income that are measured at relevant enacted tax rates. However, deferred tax assets on the timing differences when unabsorbed debrciation and losses carried forward exist, are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. At each balance sheet date the company reassesses unrecognised deferred tax assets, to the extent they become reasonably certain or virtually certain of realisation, as the case may be. xiii) Employee Benefits a. Post-employment benefits i Defined Contribution plan Company’s contribution paid/payable for the year to defined contribution retirement benefit schemes are charged to Statement of Profit and Loss. ii Defined Benefit plan Company’s liabilities towards defined benefit schemes are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested. The retirement benefit obligation recognized in the balance sheet rebrsents the brsent value of the defined benefit obligation as reduced by the fair value of plan assets. b. Short-term employee benefits. Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period employee renders services. These benefits include special allowance. c. Long term employee benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as an actuarially determined liability at brsent value of the defined benefit obligation at the balance sheet date. xiv) Government Grants State subsidy received from Madhya Pradesh State Industrial Development Corporation for setting up unit in the specified backward area has been credited to Capital State Subsidy Reserves Account. xv)Provisions, Contingent liabilities and Contingent assets The Company recognizes a provision when there is a brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. 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. Contingent assets are neither recognised, nor disclosed. 2 The Company has entered into a contract for purchase of raw material from its supplier wherein there is a commitment to purchase a minimum quantity of material during financial year 2015-16 at agreed prices. 3 Estimated amount of contracts remaining to be executed and not provided for (net of advances) is Rs. Nil (brvious year Rs. 0.99 lacs) 4 Research & Development Research & Development related expenses amounting to Rs. 166 .37 Lacs (Previous year – Rs. 147.10 Lacs) have been debited to respective heads of Account. 5 The Company has obtained certain brmises for its business operations (including furniture and fittings, therein as applicable) under operating leases or leaves and license agreements. These are generally not non-cancellable and range between 11 months to 9 years under leave and licenses or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. 6 Exceptional item of brvious year consist of refund received from excise department. 7 The operations of the company are limited to one segment, namely, Dry Cell Batteries. 8 In the opinion of the management and to the best of their knowledge and belief the value on realization of current assets, loans & advances in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet. 9 Balances of trade receivable and trade payable are subject to confirmation, reconciliation and consequential adjustment, if any. 10 Figures of the brvious year have been regrouped/re-cast wherever necessary. As per our report of even date attached. For K. C. Mehta & Co. Chartered Accountants Vishal P. Doshi Partner Membership No. 101533 For and on behalf of the Board of Directors S. K. Khurana Chairman & Managing Director DIN:00843822Mayur K. Swadia Director DIN:01237189 Susheela Maheshwari Company Secretary & Manager (Legal)Anjan Shah DGM (Finance) Place : Vadodara Date : May 24, 2016 |