Notes to financial statements for the year ended 31st March, 2015 1. SIGNIFICANT ACCOUNTING POLICIES 1.1 Basis of Preparation of Financial Statements The financial statements are brpared in accordance with the GAAP in India under the historical cost convention, except for certain fixed assets which were revalued, on accrual basis of accounting in accordance with the applicable Accounting Standards as brscribed under Section 133 of the Companies Act, 2013 ('Act') read with rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and other accounting principles generally accepted in India, to the extent applicable. 1.2 Use of Estimates The brparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements and the reported amount of revenues and expenses during the reported period. Difference between actual results and estimates are recognized in the period in which the results are known/ materialised. 1.3 Fixed Assets Fixed Assets, other than those revalued, are stated at their cost of acquisition or construction as the case may be and including all related acquisition/installation expenses and borrowing cost as per Accounting Standard (AS) 16. Subsidy received on Fixed Assets is credited to the cost of respective fixed assets. Assets revalued are stated at their revalued amount. Cost/revalued amount so ascertained is adjusted for accumulated debrciation/amortization and provision for impairment. 1.4 Debrciation Debrciation on Fixed Assets is provided on 'Straight Line Method' in accordance with the provisions of Schedule II to the Companies Act, 2013 except for leasehold land and intangible assets. Leasehold Land is amortised over the period of lease. Debrciation attributable to apbrciation due to revaluation of fixed assets (other than leasehold land) is provided over the remaining useful life of the asset in accordance with Schedule II to the Companies Act, 2013 and equivalent amount is withdrawn from Revaluation Reserve and credited to Statement of Profit and Loss. In case of impaired assets, debrciation is charged on the adjusted cost net of impairment. Intangible Assets are amortised over a period of ten years under the straight line method of amortisation. 1.5 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 the recoverable amount of the cash generating unit to which the asset belongs is less than the carrying amount, the carrying amount is reduced to the 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 a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. 1.6 Capital work in progress Capital Work in Progress comprises cost of fixed assets yet to be commissioned and/or in transit, borrowing cost and incidental expenditure during construction period. Expenditure during construction period is allocated to the respective Fixed Assets on completion of the construction period. 1.7 Investments Long term investments (non current) are carried at cost and provision, if necessary, is made for decline other than temporary in their value. Current investments are carried at lower of cost and market/fair value. 1.8 Inventories Stock of raw materials and chemicals are valued at lower of cost (weighted average) or net realizable value. Stores and spares are valued at lower of cost (FIFO basis) or net realizable value. Stock of work in process is valued at estimated cost. Finished goods (including stock in transit or at port) are valued at lower of cost (determined on Direct cost method) or net realizable value. Stock of trading items is valued at lower of cost (weighted average) or net realizable value. Stock of waste and scrap are valued at estimated realizable value. Stock transferred to other divisions of the company is valued at transfer price. Import entitlements/licenses are valued at estimated realizable value. 1.9 Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the Notes. Contingent Assets are neither recognized nor disclosed in the financial statements 1.10 Revenue Recognition i) Sales are recognized in respect of (a) Exports on shipment of consignment; and (b) others on dispatches of consignment from company brmises. Sales are inclusive of excise duty but net of sales tax, returns and discounts.Duty Drawback is accounted for on the basis of export sales effected during the year. ii) Revenue is accounted for on accrual basis when its collection or receipt is reasonably certain. iii) All expenses are accounted for on accrual basis. However the claims are recognised on settlement. 1.11 Government Grants Capital subsidy received under Tannery Modernisation Scheme (TMS) is credited to Capital Reserve. Revenue Grants are recognized in the Statement of Profit & Loss in accordance with the related Scheme and in the period in which those accrued. 1.12 Retirement Benefits Contributions are made to the Provident Fund and Superannuation Funds on actual liability basis. Provision for gratuity liability is made at the end of the year on the basis of actuarial valuation . Provision for leave encashment is made on the basis of total liability of all eligible employees as per the company's scheme. 1.13 Foreign Currency Translations i) The reporting currency of the company is Indian rupees. ii) Outstanding foreign currency assets and liabilities are translated at the exchange rate brvailing at the Balance Sheet date. Gains or losses on these assets and liabilities relating to the acquisition of fixed assets are adjusted to the cost of such fixed assets and those relating to other accounts are recognized in the statement of profit and loss. Exchange Difference arising as a result of transactions settled during financial year are included in sales. 1.14 Intangible Assets Intangible assets are stated at cost of acquisition less accumulated amortization and accumulated impairement losses (if any). 1.15 Earning Per Share (EPS) Earning per share is calculated in accordance with the procedure laid out in AS-20 on Earning Per Share. 1.16 Excise Duty Excise duty is accounted for as and when paid on clearance of goods from bounded brmises. No provision is made for excise duty in respect of finished products lying in bounded brmises since major sales comprises of export sales. 1.17 Borrowing Cost Borrowing costs that are attributable to the acquisition/construction of qualifying assets are capitalized as part of cost of such assets. A qualifying asset is an asset that requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred. 1.18 Taxation Provision for tax on income for the year (i.e. Current Tax) is made after considering the various deductions/reliefs admissible under the Income Tax Act, 1961. Provision for tax effect of timing differences between taxable income and accounting income (i.e. Deferred Tax) is made in accordance with the provisions of AS-22 on Accounting for Taxes on Income. 1.19 Prior Period Items Prior period items, if material, are disclosed separately. 1.20 Cash Flow Statement Cash flow statement is brpared in accordance with the "Indirect Method" brscribed in AS -3 on Cash Flow Statements. 2. The Company's operation brdominantly comprises only one segment i.e. Leather and Leather Products; hence provisions of AS-17 on Segment Reporting is not applicable. 3. During the year under consideration no borrowing cost has been capitalized by the company in accordance with the provisions of AS-16 on Borrowing Costs. 4. The company has incurred Research & Development expenses during the year, the same are immaterial and no future economic benefit will accrue, therefore no expenses have been capitalized. 5. Disclosure in terms of AS-28 The management has carried out an exercise of identifying the assets that may have been impaired, during the year, in respect of each cash generating unit. On the basis of review carried out by the management, there was no impairment loss on fixed assets during the year. 6. Disclosure in terms of AS-29 The company has recognised contingent liabilities as disclosed in Note 39 above and as such no provision is required to be made. No provision was outstanding as at the beginning and at the end of the year. 7. Confirmation of Balances with Sundry debtors, creditors, loans and advances and other parties have not been received in few cases. 8. Certain assets of erstwhile Super Agro-Tech Limited (SATL) acquired pursuant to the scheme of amalgamation sanctioned by Hon'ble High Court of Judicature at Allahabad, included in the books of the company remain under the name of SATL pending completion of the certain formalities. Further to aforesaid certain land at Banthar, Unnao though used for the business purposes of the company is lying registered in the name of one of the director of the company. 9. Other Liabilities includes Rs. 2,93,10,000 being advance money received against sale of land at Dehradoon. 10 . The current assets, loans and advances are approximately of the values stated, if realised in the ordinary course of business. The provisions for all known liabilities adequate and not in excess of the amount considered reasonably necessary. 11. The figures of the brvious year have been regrouped/rearranged wherever necessary in order to make them comparable with the figures of the current year. Figures have been rounded off to the nearest rupee. Figures in brackets pertain to brvious year As per our report of even date For Kapoor Tandon & Co., Chartered Accountants Firm Reg. No. 000952C (R.P. Gupta) Partner M.No. 070904 For and on behalf of the Board of Directors Mohd. Imran Director (Finance) Iqbal Ahsan Joint Managing Director Iftikharul Amin Managing Director R.K. Awasthi Company Secretary Place : Kanpur Dated : 30.05.2015 |