SIGNIFICANT ACCOUNTING POLICIES & NOTES TO FINANCIAL STATEMENTS 1 HISTORY: Apt Packaging limited established in 1980 (earlier known as Anil Chemicals and Industries Limited till 19.06.2008) engaged in manufacturing of co extruded plastic tubes used for packaging. The facility was set up in the Aurangabad, Maharashtra in the year 1996 and a new unit has been put up in the state of Uttarakhand in the year 2010. The new unit is eligible for various incentives of excise, income tax and other for a period of 10 years. The chemical division of the Company was de-merged into a new Company in the year 2008. The Company has been registered as a sick Company by Board for Industrial and Financial Reconstruction, New Delhi (BIFR) vide order dated 21.11.2013. The draft rehabilitation scheme submitted by Punjab National Bank as Operating Agency is pending with BIFR. The company is a public limited company incorporated and domiciled in India and its registered office is at Aurangabad, Maharashtra.The company has its primary listing on Mumbai Stock Exchange. 2 SIGNIFICANT ACCOUNTING POLICIES: a) General: These financial statements are brpared in accordance with Indian Generally Accepted Accounting Principles (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 standards as brscribed under Section 133 of the Companies Act, 2013 ("the Act") read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. b)Use of Estimates: The brparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include computation of percentage of completion which requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended, provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed tangible assets and intangible assets. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements c) Provision of Contingent Liabilities & assets A provision is recognized if, as a result of a past event, the Company has a brsent legal obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also 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 in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made Contingent assets are neither reognised nor disclosed in the financial statements. d) Fixed Assets, Debrciation, Amortization and Impatrement: Tangible Assets i) Fixed Assets are stated at cost of acquisition net of Cenvat, inclusive of inward freight, duties and taxes and incidental expenses related to acquisition. As per the practice and on the basis of technical evaluation report expenses incurred on trial runs, know-how, development, modernization, de-bottlenecking of plant and equipment and adjustment arising from exchange rate variation relating to borrowings attributable to the fixed assets, are capitalized. ii) Debrciation and amortization Debrciation on tangible assets is provided on the straight-line method. Debrciation id provided based on useful life of the assets as brscribed in schedule II of Companies Act, 2013 except in respect of the plant and machineries where useful life is different than those brscribed in schedule II are used. Debrciation for assets purchased / sold during a period is proportionately charged Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its " use. 1 For these classes of assets, based on internal assessment and independent technical evaluation carried out by external valuers, the Management believes that the useful lives as given above best rebrsent the period over which the Management expects to use these assets. Hence the useful lives for these assets i.e. 10 to 18 years is different from the useful lives asbrscribed under Part C of Schedule II of the Companies Act 2013. Debrciation and amortization methods, useful lives and residual values are reviewed periodically, including at each financial year end. iii) Debrciation on addition is being provided on pro-rata basis from the following month of such additions. iv) Debrciation on assets sold, discarded or demolish during the year is being provided at their rates up to the month in which such assets are sold, discarded or demolished. v) Normal debrciation is provided on addition on account of exchange variation of foreign currency loans in the following years. vi) Rates of debrciation for plant and machinery of the co-extruded tube division is considered as continuous process plant. vii) Premium on leasehold land h35 been amortized (written off) proportionately over the period of lease. . viii) The fixed assets specifically Land, Building and Plant & Machinery of the company have been valued from the approved valuer at a reasonable interval in order to comply with the requirement of AS-28. Impairment aspect of Fixed Assets for other assets, they are stated at residual value. Intangible Assets Softwares purchased (intangible assets) for computers are debited to profit & loss account under the sub head miscellaneous expenditure in the year of purchase. e) Foreign Currency Transactions a) The transactions denominated in foreign currency are recorded at the exchange rate brvailing at the time of transactions. Monitory items denominated in foreign currency at year-end are translated at rates brvailing on the last day of the Financial Year. b) Foreign Currency Loans for acquisition of fixed assets are converted at the rate brvailing on the date of Balance Sheet The fluctuation is adjusted in the cost of fixed assets. 0 Investments: Non current Investments are stated at cost and appropriate diminution except temporarily nature in the value of quoted investment is being provided for. g) Inventories: i. Inventories are valued at lower of cost and net realizable value except packing material, stores & spares, semi finished goods and work in progress which are valued at cost. ii. Cost is computed on the basis of FIFO. In case of finished Goods and goods in process, cost includes material cost (at year end), labour and overhead expenses inclusive of debrciation. iii. Inventory verified, valued and certified by management. h) Sales and Income Recognition i. Sales are stated and recognized on dispatches at Gross value i.e. inclusive of all taxes and freight charged to customers. ii. Gross sales includes inter unit sale of finished and semi-finished, goods. Inter unit transfers of raw materials, consumables, stores and spares are transferred at cost and not included in sales. iii. Traded Goods (Inclusive of Transportation thereon) accounted on dispatch to customer basis on gross value and grouped under sales iv. Dividend and interest on investment are accounted for as and when right to receive basis accrued in favour of company. i) Cenvat (Modvat): Cenvat (Modvat) Credit availed on fixed assets is adjusted to the cost of the asset. Other Cenvat (Modvat) Credit availed is set off with the purchase cost. Cenvat of Service Tax availed is set-off with the respective services. Unutilized balance is shown under the head "Other Current Assets." j) Retirement Benefits: i. Contribution to the Provident Fund is made monthly as per the provisions of the Provident Fund Act. ii. The provision of Gratuity for employees and Directors are recognized and accounted for on the basis of Actuarial Valuation made by authorized assessor. iii. Leave encashment is determined on the basis of leave rules of the company. and accounted on accrued basis, k) Government Grants: Grants in nature of project capital subsidy are credited to capital reserve. 1) Misc. Expenditures: Misc. brliminary and broperative expenses are written off over a period of five years, m) Prior period items etc. Prior period expenses/income, non-recurring and extra-ordinary items having material impact disclosed in financial statement separately. n) Cash flow statement: Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a noncash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated o) Taxes on Income: Deferred tax is recognized on timing difference between the accounting income and taxable income for the year that originates in one period and is capable of reversal in one or more subsequent period. Such deferred tax is quantified using the tax rate and laws enacted or substantively enacted as on the Balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. I p) Borrowing Costs: In case of period of construction / installation of the qualifying fixed assets is which takes more than a year, borrowing costs that are directly attributable to the acquisition / construction of the are capitalized as part of respective asset, up to the date of acquisition / completion of construction. Other borrowing costs are recognized as expenses in the period in which they are incurred 3. The company has received notice from Income Tax Department regarding short payment and short deduction of TDS / TCS along with interest thereon up to financial year 2014-2015 of Rs. 18.26 Lacs out of the same 6.51 has been provided in the accounts and being an undisputed amount and balance for disputed amount of Rs. 11.75. The company has been advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision is considered necessary. 4. The management has recomputed the useful life of plant and machineries which has been independently evaluated by chartered engineer and accordingly remaining written down value has been allocated to remaining useful life considering same as continuous process plant. The revised estimated total life of plant & machineries is 10-18 years as against 18 years earlier. The debrciation on all other fixed assets have been recomputed and provided in the accounts in accordance to Schedule II of Companies Act, 2013. Due to revised useful life considered for fixed assets the debrciation expenses for the year ended on 31,03.2015 is increased by Rs. 41.67 Lacs which have been charged to profit and loss account. The management has discarded plant and machineries mainly consisting of tools and dies having gross block of Rs* 249.24 Lacs. The remaining written down value as on 31.03.2014 of these were NIL hence no amount has charged to profit and loss account under the head debrciation. 5. Hon'ble Board for Industrial and Financial Reconstruction (BIFR) while discharging the Company from Sick Industrial Companies Act (SICA) vide order dated 16.06.2011 has ordered to implement the unimplemented portion of the Sanctioned Scheme as yet by all concerned. The unimplemented portion of the Sanctioned Scheme is as under |