SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Accounting These financial statements are brpared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. Insurance/Other Claims are recognised only when it is reasonably certain that the ultimate collection will be made. GAAP comprises mandatory 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 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) Revenue Recognition I. Revenue from the sale of goods is recognized at the time of transfer of substantial risks and reward of ownership to the buyers under the term of contract, usually on the delivery of the goods. II. Revenue is recognized based on the nature of the activity to the extent it is probable that the economic benefit will flow to the company and the revenue can be reliably measured with the reasonable certainty of its recovery. III. The revenue in respect of Export benefits are recognized on post export basis at the rate at which the entitlement accrues and is included in the turnover. (c) Fixed Assets/Capital work in progress I. Fixed Assets are stated at cost of acquisition less accumulated debrciation and impairment loss, if any. All realized and unrealized gains and losses on foreign exchange contracts including rollover brmium which are attributable to fixed assets are capitalized. II. Expenditure during construction / erection period is included under capital work in progress and are allocated to the respective fixed assets on completion of construction / erection. (d) Intangible Assets Intangible Assets are being recognised if the future economic benefits attributable to the assets are expected to flow to the Company and the cost of the asset can be measured reliably. (e) Borrowing Costs Borrowing costs attributable to acquisition / construction of qualifying assets are capitalised with the respective assets, till the date of commercial use of the assets and other borrowing costs are charged to the Profit and Loss Account. (f) Investments Long-term investments are stated at cost less provision for permanent diminution in the value of such investments. Current investments are stated at lower of cost and net realisable value. (g) Debrciation / Amortisation Debrciation on fixed assets at manufacturing plant at Khatima and Bazpur is provided on Written Down Value Method (WDV) as per life brscribed in Schedule II to the Companies Act, 2013 except for Plant and Machinery running on continuous process basis, where based on internal assessment and independent technical evaluation carried out by external valuer the management believes that the useful life of 18 years best rebrsent the period over which management expects to use these assets. Hence the useful life for such assets is different from the useful lives as brscribed under Part C of Schedule II of the Companies Act 2013. Debrciation on fixed assets at Head Office at NOIDA is provided on Straight Line Method (SLM) at the life brscribed in Schedule II to the Companies Act, 2013. Leasehold land is amortised over the period of lease. Plant & Machinery pertaining to the Plastic film lines and Polyester resin plant has been considered as continuous process as per technical assessment. Intangible assets are amortised over the period of its useful life on Written Down Value Method (WDV) basis. (h) Foreign Currency Transactions Foreign currency transactions are accounted at exchange rate on the date of transaction. Monetary assets and liabilities relating to foreign currency transactions are stated at exchange rate brvailing at the end of the year and exchange difference in respect thereof is charged to Profit and Loss Account except foreign exchange gain/loss on reporting of long-term foreign currency monetary items for debrciable assets are capitalized Gains / losses on foreign exchange derivative contracts like structured options, forward and swap to hedge interest rate risk and foreign currency risk are recognised in the Profit and Loss Account except those which are attributable to fixed assets which are treated (including gain / loss on rollover charges) cost of the assets. Investment in equity shares of foreign subsidiary companies are stated at the exchange rate at on transaction date. Unrealised Gain/Loss relating to translation of net investment in form of monetary items in non integral operations are recognised in the Foreign Currency Translation Reserves. (i) Expenditure incurred on Research & Development Revenue expenditure on Research & Development is charged to Statement of Profit & Loss and Capital expenditure is added to fixed assets. (j) Inventories Inventories are valued as follows:- (i) Raw Materials and Stores & Spares : At lower of cost and net realisable value. (ii) Stock in process and finished goods : At lower of cost and net realisable value. Cost for the purpose of valuation has been determined as under:- (i) Raw material and Stores & Spares are valued at weighted average cost (ii) Finished Goods and Stock in Process are valued at cost of conversion and other cost incurred in bringing the inventories to brsent location and condition. (k) Employee Benefits: (i) Defined-contribution plans: Contributions to the Employees' Regional Provident Fund and Superannuation Fund are recognised as defined contribution plan and charged as expenses during the period in which the employees perform the services. (ii) Defined-benefit plans: Retirement benefits in the form of Gratuity and Leave Encashment are considered as defined benefit plan and determined on actuarial valuation at the balance sheet date. Actuarial Gains and Losses are recognised immediately in the Profit & Loss Statement. Gratuity is funded through a trust for which a policy with Life Insurance Corporation of India has been taken. (iii) Short term employee benefits: Short term benefits are charged off at the undiscounted amount in the year in which the related service is rendered. (l) Government Grants Grants relating to Fixed Assets are shown as deduction from the gross value of the Fixed Assets and those of the nature of Project Capital subsidy are credited to Capital Reserve. Other Government grants are credited to Profit and loss account or deducted from the related expenses. (m) Provision for Tax Current tax is determined as the amount of tax payable in respect of estimated taxable income for the year and in accordance with the provisions as per Income Tax Act 1961. Deferred tax is recognised using the enacted / subsequently enacted tax rates and laws as on the Balance Sheet date, subject to the consideration of virtual/ reasonable certainty of realisation in respect of deferred tax assets, on all timing differences, between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. (n) Leases Assets acquired under finance lease, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the lower of the fair value and the brsent value of the minimum lease payments at the inception of the lease term and are disclosed in the Fixed Assets. Lease payments are apportioned between the finance charges and the reduction of lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Lease arrangement where the risks and rewards are incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss. (o) Impairment The carrying amount of the Company's assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment of asset. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of Net selling price and value in use. Post impairment, debrciation is provided on the revised carrying value of the assets over the remaining useful life of asset. Reversal of Impairment loss recognised in prior periods is recorded when there is an indication that the impairment losses recognised from the assets no longer exists or have deceased. (p) Provisions, Contingent Liabilities and Contingent Assets A provision is made/ recognised, based on the management estimate required to settle the obligation at balance sheet date, when the Company has a brsent obligation as a result of past event and it is possible that an outflow embodying economic benefit will be required to settle the obligation. Contingent liabilities, if material, are disclosed by way of notes. Contingent assets are not recognised or disclosed in the Financial Statement. NOTE : 2 OTHER EXPLANATORY NOTES A. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of Advances of Rs. 21.28 Lacs (Previous Year - Rs. 195.24 Lacs)) - Rs. 130.36 Lacs. (Previous Year - Rs. 1,777.82 Lacs). B. Export incentives amounting to Rs. 1,625.71 Lacs (Previous Year - Rs. 2,142.88 Lacs) are accounted for on accrual basis and have been credited to Raw Materials Consumption Account. C. The revenue expenditure of Rs. 256.28 Lacs (Previous Year - Rs. 243.65 Lacs) and capital expenditure of Rs. 0.79 Lacs (Previous Year - Rs. 0.03 Lacs) on Research & Development are charged to the respective heads of account. D. Capital work in progress includes equipments not yet installed, construction / erection material, construction / erection work in progress, machinery at site and / or in transit, advance to suppliers and other br-operative expenses pending allocation / capitalization. Pre-operative expenses pending allocation / capitalization are: E. As per Accounting Standard – 17 on Segment Reporting, segment information has been provided in Notes to Consolidated Financial Statements. F. Remuneration paid / provided to Mr. Pranay Kothari, Whole Time Director for FY 2014-15 amounting to Rs. 207.60 Lacs (including contribution to Superannuation fund and Provident Fund) as per Special Resolution passed by the members on September 30, 2013, exceeds the ceiling on Managerial Remuneration as per Section 197, read with Companies (Appointment & Remuneration of Managerial Personnel) Rules of the Companies Act, 2013, for which application for waiver from Ministry of Corporate Affairs, Government of India is in process. G. Debtors over six months include overdue debtors aggregating to Rs. 31.95 Lacs (Previous Year - Rs. 31.95 Lacs) (net of provision of Rs. Nil (Previous Year - Nil)) where Company has initiated legal or other necessary action for recovery. H. (i) The provision for current income tax is after considering various benefits and allowances available to the Company under the provisions of Income Tax Act, 1961, as assessed by the management and is net of Deemed Tax Credit Entitlement in respect of overseas subsidiary company of Rs. Nil (Previous Year - Rs. 35.62 Lacs) ii) On reassessment of deferred tax, liability written back amounting to Rs. Nil (Previous Year - Rs. 782.74 Lacs) (iii) Income Tax assessment in respect of certain years are in process and for certain years some additions have been made. In respect of additions made / disallowances, in some cases the Company has filed appeals with authorities, pending decisions no provisions has been considered necessary by the management. I. During the current year, the Company has computed the Debrciation based on useful life of the fixed assets as brscribed under Schedule II of the Companies Act 2013 and in case of certain assets useful life as assessed by independent technical evaluation carried out by external valuer. The company has decided to charge full amount of debrciation in respect of certain assets whose life have been expired (life as per the Schedule II) to Statement of Profit and Loss in line with option given in notification no. G.S.R. 627 (E) dated 29th August 2014 issued by Ministry of Corporate Affairs. Had there not been any change in the useful life of the Fixed Assets the Profit would have been higher by Rs. 979.87 Lacs for the year ended March 2015. J. In accordance with the provisions of Accounting Standard on Impairment of Assets (AS - 28), the management has made assessment of assets considering the business prospects related thereto and, accordingly, no provision on account of impairment of assets is considered necessary in these accounts. K. Previous Year's figures have been re-grouped/re-classified accordingly. L. Figures in the Balance Sheet, Profit & Loss Account and Cash Flow Statement have been exbrssed in Rs. Lacs with two decimals. As per our report of even date attached For Lodha & Co., Chartered Accountants (Firm Regn. No : 301051E) N. K. Lodha Partner Membership No. 85155 Place : New Delhi Date : May 30, 2015 Pranay Kothari Executive Director DIN: 00004003 Brij Kishore Soni Director DIN: 00183432 Manish Gupta Chief Financial Officer Ashok Kumar Gurnani Company Secretary Place : NOIDA Date : May 30, 2015 |