SIGNIFICANT ACCOUNTING POLICIES

1 Basis of Preparation

The financial statements of the company have been brpared in accordance with the generally accepted accounting principles in India (Indian GAAP). 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 Rule 7 of the Companies (Accounts) Rules 2014. The financial statements have been brpared on an accrual basis and under the historical cost convention

The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year, except for the change in accounting policy as explained under Note 1.5.

2 The Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.

3 Revenue Recognition :

a) Sales :
Sales are recognized on despatch of products to customers, which generally coincides with transfer of ownership. Sales are net of returns, trade discounts and allowances.

b) Montreal Protocol compensation :
The Company is eligible to receive compensation from Multilateral Fund under the Montreal Protocol for phasing out the production of Chlorofluorocarbons and supply of Carbon Tetra Chloride to non feed stock sector. The aforesaid compensation is received in periodic installments subject to meeting certain conditions stipulated in the Protocol and accordingly the compensation is accounted only after complying with such conditions and ensuring that there is no uncertainty in this regard.

c) Income from Certified Emission Reduction (CER) :
The Company is entitled to receive Carbon Credits towards CER from United Nations Framework Convention for Climate Change (UNFCCC).

Income from CER is reckoned when the company is entitled to such credits, which occurs
- on incineration of HFC 23 at Mettur
- on production of steam from Waste Heat Recovery Boiler at Karaikal.

d) Income from partnership firm
Share of income from partnership firm is recognized on receipt of the partnership firms audited statement of profit and loss acccount for the year, disclosing the company's share of income after income tax.

4 Valuation of assets :

a) Inventories are valued at lower of cost and net realisable value. Cost is determined on weighted average basis and comprises all applicable costs incurred for bringing the inventories to their brsent location and condition and includes appropriate overheads wherever applicable.

b) Fixed assets are valued at cost excepting certain land, buildings and plant and machinery in respect of PVC division which are stated at revalued amounts.

Intangible assets are valued at cost and amortized on a straight line basis over their estimated useful lives.

c) An impairment loss is recognised whenever the carrying amount of an asset exceeds the recoverable amount.

d) Investments
Long Term Investment:
At cost, or lower of cost where there has been any diminution in value, other than temporary.
Short Term Investment:
Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis.

5 Debrciation / Amortisation :

Debrciation on fixed assets is provided on the straight line method as per useful life specified in Schedule II of the Companies Act, 2013.

Effective 01.04.2015, componentisation of fixed assets is mandatory under Companies Act, 2013.As per this requirement, major components that are separately identifiable and which have useful life different from that of the main asset, have been capitalised separately and debrciated over their useful life.

The additional debrciation impact on account of componentisation is Rs 705 lacs for the year. However there is a reduction in Repair & Maintenance expenses during the year 2015-16 on account of componentisation of Rs 362 lacs resulting in a net decrease in Profit before tax of Rs. 343 Lacs. Consequently the WDV of Plant and Machinery as on 31.03.2016 is lower by Rs 343 lacs.

6 New Project expenses / Borrowing costs :

Salaries and related costs, travel and other direct costs relating to new projects incurred prior to their commencement of operation are capitalised.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the asset. These borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as adjustment to interest.

7 Employee Benefits :

Short term employee benefits including accumulated compensated absence are recognized as an expense as per the Company's Scheme based on expected obligations on undiscounted basis.

Post Retirement benefits comprise of employees' provident fund and gratuity which are accounted for as follows:

(a) Provident Fund
This is a defined contribution plan and contributions made to the fund are charged to revenue. The Company has no further obligations for future provident fund benefits other than annual contributions.

(b) Gratuity
This is a defined benefit plan and the Company's Scheme is administered by Life Insurance Corporation of India. The liability is determined based on the actuarial valuation using projected unit credit method as at Balance Sheet date.

Actuarial gains and losses, comprising of experience adjustments and the effects of changes in actuarial assumptions, are recognized immediately in the Statement of Profit and Loss as income or expense.

8 Foreign currency transactions :

Foreign currency transactions are recorded at the rate of exchange brvailing on the date of the respective transactions.

Monetary assets and liabilities denominated in foreign currency are converted at Contracted / year end rates as applicable.

Exchange differences arising on settlement / conversion are adjusted to Statement of Profit and Loss except to the extent indicated in note 1.6.

Wherever forward contracts are entered into, the exchange difference is dealt with in the Statement of Profit and Loss. Realised gains or losses on cancellation of forward contracts are recognized in the Statement of Profit and Loss of the year in which they are cancelled.

9 Income tax :

Provision for current tax is made based on the liability computed in accordance with the relevant tax rates and tax laws. Deferred tax is accounted for by computing the tax effect of the timing differences which arise during the year and reverse out in the subsequent periods. Deferred tax is calculated at the tax rates enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only if there is a reasonable certainty and virtual certainty with respect to unabsorbed debrciation and business loss, that they will be realised.

10 Research and Development :

Revenue expenditure on research and development is charged as an expense in the period in which it is incurred.

11 Hire purchase / Leased Assets

Operating lease charges are charged to Statement of Profit and loss on straight line basis.

In the case of Hire Purchase, brsent value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as hire purchase liability. The principal component of the hire purchase is adjusted against the hire purchase liability and the interest component is charged to Statement of Profit and Loss.

12 Provisions and Contingent Liabilities

Provisions are recognised when the Company has a brsent obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a brsent obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

13 Use of Estimates

The brparation of financial statements in conformity with accounting principles generally accepted in India requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the Balance Sheet date, reported amount of revenues and expenses for the year and disclosure of contingent liabilities as of the Balance Sheet date. The estimates and assumptions used in these financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the financial statements. Actual results could differ from these estimates.

Disclosure as per AS15 revised - Defined Benefit Plans

					Rs. Lacs
	Gratuity
	2015-16	2014-15	2013-14	2012-13	2011-12
Present value of obligation at the beginning of the year	2074.26	2132.80	2097.29	1988.34	1869.14
Interest cost	166.52	170.62	167.78	159.07	149.53
Current service cost	110.89	109.29	115.73	124.43	119.11
Transfer of obligations	-	-	-	2.66	+
Benefits paid	(490.31)	(345.35)	(220.39)	(254.70)	(179.95)
Actuarial (gain) / loss on obligation	(12.70)	6.90	(27.61)	77.49	30.51
Present value of obligation at the end of the year	1848.66	2074.26	2132.80	2097.29	1988.34
Fair value of plan assets at the beginning of the year	2101.73	2136.80	2115.77	2004.88	1853.11
Expected return on plan assets	141.57	171.28	174.52	176.73	164.32
Contributions	98.94	139.00	67.48	183.45	167.62
Benefits paid	(490.31)	(345.35)	(220.39)	(254.71)	(179.95)
Actuarial gain / (loss) on plan assets	-	-	(0.58)	5.42	(0.22)
Fair value of plan assets at the end of the year	1851.93	2101.73	2136.80	2115.77	2004.88
Amounts recognised in the balance sheet
Present value of obligation as at the end of the year	1848.66	2074.26	2132.80	2097.29	1988.34
Fair value of plan assets at the end of the year	1851.93	2101.73	2136.80	2115.77	2004.88
Funded status of the plan - (asset) / liability	(3.27)	(27.47)	(4.00)	(18.48)	(16.54)
Amounts recognised in the statement of profit and loss
Current service cost	110.89	109.29	115.73	124.43	119.11
Interest cost	166.52	170.62	167.78	159.07	149.53
Expected return on plan assets	(141.57)	(171.28)	(174.52)	(176.73)	(164.32)
Net actuarial (gain) / loss recognised in the year	(12.70)	6.90	(27.03)	72.07	30.73
Expenses recognised in the statement of profit and loss	123.14	115.53	81.96	178.84	135.05
Principal actuarial assumptions
Discount rate	8.00%	8.00%	8.00%	8.00%	8.00%
Salary escalation	8.00%	8.00%	8.00%	8.00%	8.00%
Expected return on plan assets	8.35%	9.00%	9.40%	9.40%	8.00%
Attrition rate	1% - 3%	1% - 3%	1% - 3%	1% - 3%	1% - 3%

Note:
Fund is maintained with Life Insurance Corporation of India

The Company is principally engaged in a single business segment viz, Chemicals and operates in one geographical segment. Accordingly there are no separate reportable segments as per Accounting Standard 17 on "Segment Reporting".