SCHRADER DUNCAN LIMITED Notes to the Financial Statements for the year ended 31st March, 2016 Significant Accounting policies and Notes to Accounts Note 1 Corporate Information Schrader Duncan Limited is a manufacturer & trader of tyre tube valves and accessories, fluid power and automation products. The Company has its manufacturing unit situated in Ranjangaon (near Pune). The Company is a Public Limited Company and is listed on the Bombay Stock Exchange (BSE). Note 2 Significant Accounting Policies 2.1 Basis of brparation of financial statement The financial statements have been brpared under historical cost convention, on accrual basis of accounting and in accordance with the generally accepted accounting principles in India and the provision of the Companies Act, 2013. The company has brpared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules,2014. 2.2 Use of estimates The brparation of financial statement requires estimates and assumptions to be made that affect the reported amount of Assets and Liabilities on date of the financial statement and reported amount of revenues and expenses during reporting period. Difference between actual results and estimates are recognized in the period in which results are known/materialized. 2.3 Classification of Assets and Liabilities as Current and Non Current All assets and liabilities are classified as current or non-current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months has been considered by the Company for the purpose of current/ non-current classification of assets and liabilities. 2.4 Revenue Recognition Sale of goods Domestic sales are recognized on dispatch of the goods, and are net of Sales Tax/ MVAT. Export sales are recognized on shipment, on the basis of the Bills of Lading. Sale of services Revenue from services is recognized on rendering of services in accordance with the Contractual arrangements. Dividend income is recognized when the right to receive payment is established. 2.5 Fixed Assets (a) Tangible Assets Tangible fixed assets are stated at cost less accumulated debrciation/ amortization and impairment, if any. Direct costs including the purchase price and any attributable costs of bringing the asset to its working condition for its intended use are capitalized when fixed assets are ready for use. (b) Intangible Assets Intangible Assets resulting in future economic benefits where the cost can be reliably measured are capitalized. Intangible assets are stated at cost less accumulated debrciation/ amortization and impairment. 2.7 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 recoverable amount of the cash generation 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 exist, the recoverable amount is reassessed and the assets is reflected at the recoverable amount. 2.8 Foreign Currency Transactions Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Monetary items related to foreign currency transactions are restated at year end exchange rates. Exchange differences arising on concluded transactions during the year are debited/credited in the Statement of Profit and Loss. 2.9 Investments Non-Current Investments are stated at cost. The provision for diminution in the value of non-current investment is made only if such decline is other than temporary. Current Investments are stated at lower of cost and fair value. 2.10 Valuation of Inventory Inventories are valued at lower of cost and Net realizable value. Cost of raw materials, stores and spares are determined on a weighted average basis. Cost of work-in-progress includes raw material cost determined on a weighted average basis, labour charges and proportionate factory overheads. Cost of finished goods includes raw material cost determined on a weighted average basis, labour charges, proportionate factory overheads and excise duty. 2.11 Segment Reporting The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Primary Segments are identified based on the nature of products and services, the different risks and returns and the internal business reporting system. Revenue, Expense, Assets and Liabilities, which relate to the Company as a whole and could not be allocated to segments on a reasonable basis, have been classified as unallocated. Secondary segment is identified based on geography by location of customers i.e. in India and outside India. Inter-segment revenue have been accounted for based on the transaction price agreed to between the segments, which is primarily market based. 2.12 Employee Benefits I. Short Term Employee Benefits All employee benefits payable within 12 months of rendering of services are classified as short term employee benefits. All Short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees. II. Long Term Employee Benefits All employee benefits other than short term employee benefits are classified as long term employee benefits. The Company has both defined contribution and defined benefits plan. a) Defined Contribution Plan Provident fund Each eligible employee and the Company make an equal contribution at a percentage of the basic salary specified under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The Company has no further obligations under the plan beyond its periodic contributions. The Company's contribution towards this fund is charged to the Statement of Profit and Loss. Superannuation Superannuation Contribution is based on a percentage of basic salary payable to eligible employees for the period of service. The Company's contribution is made to a trust which is managed by Holding Company, and is charged to the Statement of Profit and Loss. b) Defined Benefit Plan Gratuity, which is a defined benefit scheme is funded with LIC on projected credit unit method on the basis of an actuarial valuation done at the year end and is charged to the Statement of Profit & Loss. III. Other Long Term Employee Benefits Accrued leave is a long term employee benefit. Compensated absences are provided based on actuarial valuation as at Balance Sheet date and is recognized in the Statement of Profit & Loss. 2.13 Taxation (a) Current Tax Current tax is determined as the amount of tax payable in respect of taxable income for the year under the provisions of the Income Tax Act, 1961 of India. (b) Deferred Tax Deferred Tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future however, where there is unabsorbed debrciation and carried forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty backed by the convincing evidence of realization of such assets. Deferred tax assets are reviewed as at each Balance Sheet date and are appropriately adjusted to reflect the amount that is reasonably or virtually certain to be realized. (c) Minimum Alternate Tax (MAT) Credit Entitlement Minimum Alternate Tax (MAT) Credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period. 2.14 Borrowing Cost Borrowing cost directly attributable to the acquisition or construction of qualifying assets are capitalized. Other borrowing costs are recognized as expenses in the period in which they are incurred. In determining the amount of borrowing costs eligible for capitalization during the period, any income earned on the temporary investments of those borrowing is deducted from cost incurred. 2.15 Operating Leases Lease rent in respect of assets taken on operating lease are charged to Statement of Profit & Loss as per the terms of lease agreements. 2.16 Provisions, Contingent Liability 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. When 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 recognized nor disclosed in the financial statement. Note 2.1 Capital and other commitments: Estimated amount of Contracts remaining to be executed on capital account 2,721,213 4,169,527 (net of advances) and not provided for. Note 3 Other Notes on Accounts Note3.1 The Company in its Board Meeting held post the Balance Sheet date has decided to discontinue its Tube Valve product line of ABU Division as the same is not viable, which is a Discontinuing Operation post the Balance Sheet date. The other products of the Company shall continue to be in operation. As a result, the company has identified the assets pertaining to the Tube Valve product and provided an estimated impairment loss of Rs.25,000,000 against these assets under Debrciation and Amortization (including Impairment Loss) and additional loss if any, will be provided as and when incurred as per accepted accounting convention. Note 3.2 During the year as per Guidance Note on Minimum Alternative Tax (MAT) credit issued by the Institute of Chartered Accountants of India (ICAI) and based on review of its financial and tax position, the Company has written down MAT credit available of Rs. 85.50 lacs. Note 3.3 In the Opinion of the management and to the best of its knowledge and belief, the value on realization of current assets, loans, advances and payment of current liabilities and provisions in the ordinary course of business would not be less/ more, than the amount at which they are stated in the Balance sheet. Note 3.4 Previous year figures have been regrouped/rearranged wherever necessary to conform to this year classification. In terms of our Report of even date attached. For and on behalf of the Board For SINGHI & CO. Chartered Accountants Firm Reg. No. 302049E Nikhil Singhi Partner Membership No. 061567 Shantanu Parvati Whole-time Director A Goenka Director Rajib Kumar Gope Company Secretary Vinayak Patil CFO Place : Mumbai Date: 25th May, 2016 |