1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) Nature of Operations The Company is a manufacturer of Insoluble Sulphur, Sulphuric Acid and Oleum. The Company has manufacturing facilities at Dharuhera (Haryana) and at Mundra SEZ (Gujarat). Insoluble Sulphur produced by the Company is sold globally. (B) Basis of Accounting The financial statements have been brpared to comply with the Accounting Standards referred to in section 133 and other relevant provisions of The Companies Act, 2013 .The financial statements have been brpared under the historical cost convention on accrual basis. The accounting policies have been consistently applied by the Company unless otherwise stated. (C) Use of Estimates The brparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known/materialize. (D) 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. (E) Revenue Recognition (i) Revenue from sales is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, which generally coincides with the delivery. (ii) Revenue (other than sale) is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. (F) Fixed Assets Fixed assets are stated at cost or at revalued amount less accumulated debrciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. The carrying amounts are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing, value in use, the estimated future cash flows are discounted to their brsent value at the weighted average cost of capital. (Also refer Note No. 10(ii)) (G) Debrciation Tangible Assets Debrciation on Fixed Assets has been provided on straight line method with reference to the economic useful life of its fixed assets as brscribed in Schedule II to the Companies Act,2013 except in case of Motor Vehicles, whose useful life is considered 5 Years instead of 8 Years. Debrciation on machinery spares is provided retrospectively from the date the related assets are put to use. Debrciation on additions to or on disposal of assets is calculated on pro-rata basis. Leasehold land is being amortised over the period of lease tenure. Additions to Fixed Assets on leased land and brmises are amortised over the lease period. Intangible Assets Debrciation of Intangible assets is allocated on a systematic basis over the best estimate of their useful life and accordingly software is amortised on straight line basis over the period of five years or license period wherever is lower. (H) Expenditure on new projects, substantial expansion and during construction period Expenditure directly relating to construction activity is capitalised. Indirect expenditure incurred during construction period is capitalised as part of the indirect construction cost to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction period, which is not related to the construction activity nor is incidental thereto is charged to the Statement of Profit & Loss. Income earned during construction period is deducted from the total of the indirect expenditure. All direct capital expenditure on expansion is capitalised. As regards indirect expenditure on expansion, only that portion is capitalised which rebrsents the marginal increase in such expenditure involved as a result of capital expansion. Both direct and indirect expenditure are capitalised only if they increase the value of the asset beyond its originally assessed standard of performance. Expenditure during construction/installation period is included under capital work-in-progress and the same is allocated to respective Fixed Assets on the completion of its construction. (I) Investments Long term (Non-Current) Investments are stated at cost . The Company provides for diminution, other than temporary, in the value of Long term Investments. Current Investments are valued at lower of cost or fair value. (J) 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. All exchange differences arising from such conversion including gain or loss on cancellation of foreign currency forward covers are included in the Statement of Profit & Loss except exchange difference arising on long term foreign currency monetary items in so far as they relate to the acquisition of debrciable capital assets are capitalised (refer note No. 10(ii)). Premium / Discount on forward covers, covered under AS-11(i.e. The Effects of Changes in Foreign Exchange Rates) are recognised over the tenure of the contract. (K) Inventories Inventories are valued at lower of Cost and Net Realisable value.The cost of finished goods is determined by taking material, labour and related factory overheads including debrciation. Cost is determined on weighted average cost. Further the cost for Work-in-Progress includes material cost, stagewise direct cost and other related manufacturing overheads including debrciation. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Net realisable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and to make the sale. (L) Retirement and other employee benefits 1. Retirement benefits in the form of Provident Fund and Superannuation Scheme, which are defined contribution plans, are charged to the Statement of Profit & Loss of the year when the contributions to the respective funds are due. 2. Gratuity and Leave encashment which are defined benefits, are accrued based on actuarial valuation at the balance sheet date carried out by an independent actuary using the projected unit credit method. 3. Gratuity and Superannuation liability is being contributed to the respective funds formed by the Company. (M) Taxation Current tax is measured at the amount expected to be paid to the revenue authorities, using the applicable tax rates and laws. Deferred tax for timing differences between the book and taxable Income for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred Tax Assets arising from temporary timing differences are recognised to the extent there is reasonable certainty that the assets can be realised in future and the same is reviewed at each Balance Sheet date. 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. (N) Borrowing Cost Borrowing Cost attributable to the acquisition or construction of qualifying fixed assets, are capitalised as part of the cost of such assets upto the date of commencement of commercial production/put to use of plant. Other Borrowing costs are charged to revenue. (O) 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. (P) Derivatives Outstanding derivatives contracts, other than those covered under AS-11, at the year end are marked to market rate, and loss, if any, are accounted for in the Statement of Profit & Loss. As prudent accounting policy, gain on marked to market at the end of year are not accounted for. (Q) Cash & Cash Equivalents Cash & Cash Equivalents comprises Cash on hand, Balances with Banks and Deposits with Banks maturing with in three months from the Balance Sheet date. (R) Provisions A provision is recognised when an enterprise has a brsent obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions except those disclosed elsewhere in the notes to the financial statements, are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. (S) Contingent Liabilities A disclosure is made for possible or brsent obligations that may but probably will not require outflow of resources or where a reliable estimate cannot be made, as a contingent liability in the financial statements. 2. Previous year figures have been regrouped to conform current year figures In terms of our Report of even date attached. For SINGHI & CO. Chartered Accountants Firm Regn. No. 302049E B.K. SIPANI Partner Membership No. 088926 For and on behalf of the Board of Directors ARVIND GOENKA Managing Director O.P. DUBEY Director P.K. MAITY Company Secretary ANURAG JAIN Chief Financial Officer Date : 30th May, 2016 Place : New Delhi |