Notes on Financial Statements for the year ended 31st March, 2015 I. SIGNIFICANT ACCOUNTING POLICIES I a) Basis for brparation of financial statement The financial statements have been brpared under historical cost convention and on accrual basis of accounting. The Company has brpared these financial statements in accordance with the Generally Accepted Accounting Principles in India and to comply in all material respects with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The accounting policy adopted in brparation of the financial statements are consistent with those followed in brvious year. b) Method of Accounting The Company follows the mercantile system of accounting. c) Revenue recognition of Income & Expenditure i) Revenue from sales of products is recognized on transfer of all significant risk and rewards of ownership of the product on to customer, which is generally on dispatch of goods. Sales are stated net of deductions during the year and exclusive of Value Added Tax and excise duty. ii) Purchases are recognized when ownership of goods is transferred and inclusive of all statutory levies but excluding excise duty & value added tax iii) Job work charges are accounted for on completion of job basis. iv) Interest income is recognized on time proportion basis. v) All items of Income & Expenses are accounted for on accrual basis. d) Services Tax & Cenvat Credit i) Services Tax on GTA is accounted on accrual basis. ii) Cenvat Credit on input services is recognized on the date of the booking of the Invoice. e) Fixed Assets Fixed Assets are stated at cost net of Cenvat, other set-offs, accumulated debrciation and impairment loss if any. Cost includes all expenses incurred to bring the asset to its brsent location and condition. i f) Capital Work in Progress The capital Work in progress is stated at cost plus br operative expenses. g) Debrciation i) Debrciation on Fixed Asset at Mumbai Office is provided on written down value as per the rates brscribed under the schedule II of the Companies Act, 2013. ii) Debrciation on Fixed Assets at Nagothane Factory Unit is provided on straight-line method as per the rates brscribed under Schedule II of the Companies Act, 2013. h) Inventories i) Raw Materials are valued at cost or net realizable value whichever is less. Cost is arrived at using FIFO Method and comprises of all expenditure including expenses incurred in bringing the inventories to the brsent condition and situation. It does not include Excise Duty and VAT. ii) Work in progress is valued at cost or net realizable value whichever is lower. Cost consists of average cost of Raw material and conversion cost up to the stage of process completed. iii) Finished goods are valued at cost or net realizable value whichever is less. Cost consists average cost of Raw material, conversion cost and excise duty. iv) Stores and Spares are valued at cost exclusive of Excise Duty & VAT credit taken. v) Scrap is valued at the net realizable value. i) Foreign Currencies Transaction a) Transactions in foreign currency are recorded at the exchange rates brvailing on the date of the transaction. b) Monetary items denominated in foreign currency are restated at the exchange rate brvailing on the balance sheet date. c) The exchange differences on realization or on restatement are adjusted to : i) Carrying cost of fixed assets, if they relate to fixed assets and ii) Profit and loss account in other cases d) In case of forward contracts, the exchange difference are dealt with in the profit and loss account over the period of the contracts except in respect of liabilities incurred for acquiring fixed assets in which case, the difference are adjusted in their carrying cost. j) Employee Benefit Liability in respect of employee benefits are accounted for as follows : A. Short-term employee benefits are recognized as expenses at undiscounted amount in the Statement of Profit and Loss of the year in which the relevant services is rendered. B. Retirement Benefit i) Retirement benefit in the form of Provident Fund, which are defined Contribution plans, are accounted on accrual basis and charged to the Statement of Profit and Loss of the year. ii) The liability in respect of accumulated leave is accounted on accrual. iii) The Company has taken a Group Gratuity cum Life Insurance policy with Life Insurance Corporation of India (LIC) for all eligible employees. The liability is actuarially assessed by LIC and accounted on accrual basis. k) Borrowing Cost Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. All other borrowed cost is charged to Statement of Profit and Loss. I) Taxation: i) Current fax is determined as the amount of tax payable in respect of taxable income lor the year, computed in accordance with the applicable provisions of income tax Act, 1961. ii) Deferred lax resulting from timing difference between taxable and accounting income is accounted tor using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deterred lax Asset is recognized and carried forward only it there is reasonable certainty of its realisation. m) Impairment of assets Impairment of assets is ascertained in each balance sheet date in respect of cash generating units. An impairment loss is recognized whenever carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value based on an appropriate discount factor. n) Provisions, Contingent Liabilities and Contingent Assets i) A provision is recognized based on a reliable estimate when there is a brsent obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. ii) Contingent liabilities, if material, are disclosed by way of notes to accounts. Contingent assets are neither recognized nor disclosed in the financial statements. II NOTES TO ACCOUNTS 1) Contingent Liabilities i) Counter Guarantee given to the Bank lor the performance guarantee given by them of Rs 32.77 Lacs (P.Y. Rs.38.45 Lacs). ii) Disputed sales tax liability of Rs 65,57,957/- for F.Y 2004-05- (P.Y.65,57.957). iii) Letters of Credit outstanding of Rs 1,65,09,702/- (P.Y. 1.83.72,886). iv) There are some labour related matters pending in the Labour Court at Raigad and Mumbai. The Company's Liability towards such matters cannot be ascertained.. v) The Company had imported certain items under the Duty Free Advance Authorisation Scheme. The total value of the Bond given is Rs 2,03,01,500/-. The Company was unable to complete its export obligation in respect of such imports. The Company has applied to the Directorate General of Foreign Trade for granting extension of the time period for fulfillment of its export obligation. The approval tor the same is awaited. 2) Sales Tax Deferment Unsecured loan includes Interest free Sales Tax Deferment of Rs. 1,84,71,727/-. Out of this, a sum of Rs 7,49,146/- (P. Y. Rs 11,25,092/-) is due within the immediate next year. Rs.39,402/- is payable in next year as annual installments lill year 2016-17. 3) Segment Reporting The Company has only one reportable segment i.e. Cold drawn Seamless Pipes and I ubes. Hence requirement of Accounting Standard. AS-17 "Segment Reporting" are not applicable. 4) Impairment of Assets There is no such impairment of assets at the year ended on 31.03.15 in terms of Accounting Standard, AS - 28. Hence company has not made any provision for impairment loss. 5) Dues to Micro, Small and Medium enterprises The Company has not received any intimation from 'suppliers' regarding their status under the Micro, Small and Medium enterprises Development Act, 2006 and hence disclosures, if any relating to amount unpaid as at the year end together with interest paid/payable as required under the said Act have not been furnished. 6) In the Opinion pi Board the i urrent assets, loans & advances are approximately el the value stated iii he balance sheet il realized in the ordinary courses ol business. 7) Till the financial year 2013-14, the Company has charged debrciation as per rates provided under schedule XIV of Companies Act, 1956. With effective from 01st April, 2014, the Company has charged debrciation on its assets based on the useful life as stipulated under schedule II of Companies Act, 2013. Based on the transitional provision as provided in Note 7(b) of the Schedule II, Rs. 3,08,016/- (Net of Tax) has been adjusted against opening balance of retained earnings. 8) Trade Receivables, Trade Payables, Advance from Customers and Loans & Advances, the balances under these heads have been shown as per books of accounts and are subject to reconciliation and adjustment, if any. 9) Previous year's figures have been regrouped, wherever necessary to make them comparable with those of current year. Figures in the brackets rebrsent figures for the brvious year. 10) Previous year audit was conducted by auditors other than KCPL AND Associates LLP. For K C P L And Associates LLP Chartered Accountants Firm Reg. No. 119223W Mahavir Jain Partner M. No. 121275 For and on behalf of Board (M. P. Jalan) Chairman & Managing Director (Vivek)alan) Executive Director Place: Mumbai Date: 30th May, 2015 |