Notes on Financial Statements for the year ended March 31, 2015 Note : Corporate Information Jayant Agro - Organics Limited was incorporated on 7th May, 1992 having CIN L24100MH1992PLC066691 is holding company of Ihsedu Agrochem Pvt. Ltd., Ihsedu Itoh Green Chemicals Marketing Pvt. Ltd. and Ihsedu Coreagri Services Pvt. Ltd. and a subsidiary of Jayant Finvest Limited. Company is mainly engaged in manufacturing and trading of castor oil and its derivatives such as oleo chemicals. Note 1: Significant Accounting Policies A. Basis of Accounting The financial statements are brpared to comply in all material respects with the mandatory Accounting Standards notified by Companies (Accounts) Rules, 2014, (as amended) and other relevant provisions of the Companies Act, 2013. The financial statements have been brpared under the historical cost convention on an accrual basis in accordance with the generally accepted accounting principles (Indian GAAP) in India. The accounting policy has been consistently applied by the Company. B. Use of Estimates The brparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and the results of operations during the period. Although these estimates are based upon management's best knowledge of current events, plans and actions, actual results could differ from these estimates. Any revision to accounting estimates and assumptions are recognised prospectively. C. Fixed Assets Tangible assets are stated at cost less accumulated debrciation and net of impairment, if any. Cost comprises the purchase price and any attributable / allocated cost of bringing the asset to its working condition for its intended use. The cost also includes direct costs and other related incidental expenses. Intangible assets are stated at cost less accumulated amortisation and impairment losses, if any. Cost comprises the acquisition price, development cost and any attributable / allocable incidental cost of bringing the asset to its working condition for its intended use. Capital work in progress is stated at cost less impairment losses, if any. Cost comprises of expenditure incurred in respect if capital projects under development and includes any attributable / allocable cost and other incidental expenses. Revenue earned, if any, before capitalisation from such capital projects are adjusted against the capital work in progress. Borrowing costs relating to acquisition/ construction/ development of tangible assets, intangible assets and capital work in progress which takes substantial period of time to get ready for its intended use are also included to the extent they relates to the period till such assets are ready to be put to use. D. Borrowing Costs Borrowing costs that are directly attributable to the acquisition of qualifying asset or for long - term project development are capitalised as part of their costs. Borrowing costs are considered as part of the asset cost when the activities that are necessary to brpare the asset for their intended use are in progress. Other borrowing costs are recognized as an expense, in the period in which they are incurred. E. Debrciation (a) Tangible Assets: Debrciation on assets is provided from the date of asset is put to use on straight line method as per the useful life of the assets estimated by the management or at the rates brscribed under Schedule II of the Companies Act, 2013 whichever is higher. During the year management of the Company estimated the useful life of all the assets, revised the remaining useful life of asset wherever appropriate based on an evaluation. The carrying amount as on April 01, 2014 is debrciated over the revised remaining useful life of the asset. The revised estimated useful life of certain plant and machinery is taken as 25 years from April 1, 2014. Debrciation method, useful life and residual value are reviewed periodically. Leasehold Land is amortized over the period of lease. (b) Intangible Assets: Intangible Asset is amortised using straight line method over the estimated useful life, not exceeding 5 years. Amortisation method, useful life and residual value are reviewed periodically. F. Research and Development Revenue expenditure on research and development is recognized as an expense in the year in which it is incurred and the expenditure on capital assets is debrciated on straight line method at the rates brscribed in Schedule II of the Companies Act, 2013. G. Valuation of Inventories (a) Inventories are valued at lower of cost and net realizable value except for scrap and by-products which are valued at net realizable value. (b) Cost of inventories of finished goods and work-in-process includes material cost, cost of conversion and other costs. (c) Cost of inventories of raw material, material cost of finished goods as well as work-in-process, Chemicals, Packing Materials, stores and spare parts are valued at weighted average cost. (d) The basis of determining the cost of inventory of raw material has been changed from First in First Out to Weighted Average Cost method due to auto computation, which has increased the value of stock by sum of 75,009,276/-. Accordingly, profit has increased to that extent H. Revenue Recognition Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales are recognized when goods are supplied. Turnover includes sale of goods, services, scrap, export incentives and are net of Sales Tax/Value Added Tax, Excise Duty and Service Tax. Dividend income is recognized when right to receive the payment is established by the Balance Sheet Date. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable. I. Accounting of Claims (a) Claims receivable are accounted at the time when such income has been earned by the Company depending on the certainty of receipts. Claims payable if any, are accounted at the time of acceptance. (b) Claims raised by Government Authorities regarding taxes and duties, which are disputed by the Company, are accounted based on the merits of each claim. (c) Central Sales Tax claims and duty drawback claims are accounted on accrual basis J. Foreign Currency Transactions Foreign currency transactions are accounted for at the exchange rates brvailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities on the closing date denominated in foreign currencies are recognized in the Statement of Profit and Loss as per AS 11. In case such monitory items are covered by forward contracts, gain or loss on the same is accounted in the statement of profit and loss as per AS 11. Hedge Reserve: In order to recognize the impact of fluctuation in foreign currency rates arising out of instruments acquired to hedge highly probable forecast transactions, in appropriate accounting periods, the Company applies the principles of recognition set out in the Accounting Standard 30-Financial Instruments - Recognition and Measurement (AS-30) as suggested by the Institute of Chartered Accountants of India. Accordingly, the unrealized gain/(loss) (net) consequent to foreign currency fluctuations, in respect of effective hedging instruments, rebrsented by simple forward covers, to hedge future exports, are carried as a Hedging Reserve and ultimately set off in the statement of Profit and Loss when the underlying transaction arises. K. Sundry Debtors Sundry debtors are stated after writing off debts which are not recoverable. Adequate provision is made for debts if considered doubtful. L. Impairment of Assets Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized in the Statement of Profit and Loss if the carrying amount of an asset exceeds its recoverable amount. M. Employee Benefits Defined Contribution Plan (a) Retirement benefits in the form of contribution to provident fund and pension fund are charged to statement of profit and loss. Company has made appropriate provision for payment of gratuity to those employees which are not covered under the gratuity scheme so managed by LIC. (b) Entitlements to annual leave and sick leave are recognized as and when accrue to the employees. Sick leave can only be availed and annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulation of leave. Provision for compensated absences is based on year end leave balance. Defined Benefit Plan The liability in respect of defined benefit plans and other post-employment benefits is calculated using the Projected Unit Credit Method and sbrad over the period during which the benefit is expected to be derived from employees services. N. Taxes on Income (a) Current Tax Current Tax is determined as the amount of tax payable in respect of taxable income for the year after availing exemptions and deductions at the rates applicable under the Income Tax Act, 1961. (b) Deferred Taxation Deferred tax reflects the tax effects of timing differences between accounting income and the taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the Balance Sheet date. Deferred tax assets are recognized only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets, if any, are reviewed at each Balance Sheet date to reassess realization. (c) Minimum Alternative Tax (MAT) Minimum Alternative Tax credit is recognised as an asset only when and to the extent there is convening evidence that the Company will pay normal income tax during the specified period. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the MAT Credit Entitlement asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will be able to utilise the MAT Credit Entitlement within the period specified under the Income Tax Act, 1961. O. Earnings Per Share (EPS) A basic earning per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value which is the average market value of the outstanding shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period brsented. The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods brsented for any share splits and bonus shares issues, including for changes effected prior to the approval of the financial statements by the Board of Directors. P. Cash Flow Statement Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash 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. Q. Provisions and Contingent Liabilities (a) A provision is recognised when the Company has a brsent obligation as a result of past event/(s); it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. (b) A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably may not, require an outflow of resources. A contingent liability also arises in rare cases where there is a probable liability that cannot be recognised because it cannot be measured reliably. (c) Where there is a possible obligation or a brsent obligation such that the likelihood of outflow of resources is remote, no provision or disclosure is made. R. Proposed Dividend Dividend recommended by the Board of Directors is provided for in the accounts, pending approval at the Annual General Meeting. S. Cash and Cash Equivalents: Cash and cash equivalents comprise cash and cash on deposit with banks and corporations. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents. T. Current / Non-Current Classification All assets and liabilities have been classified as current and non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and services and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities. (a) Where the Company is the Lessee Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating lease. Operating lease payments are recognised as an expense in the statement of profit and loss on straight line basis over the lease term, unless there is another systematic basis which is more rebrsentative of the time pattern of the lease. (b) Where the Company is the Lessor Assets rebrsenting lease arrangements given under operating leases are included in fixed assets. Lease income is recognised in the statement of profit and loss on straight line basis over the lease term, unless there is another systematic basis which is more rebrsentative of the time pattern of the lease. Initial direct costs are recognised immediately in the statement of profit and loss. V. Segment Reporting Identification of Segments The Company's Operating businesses are organised and managed separately according to the nature of products and services provided with each segment rebrsenting a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate. Allocation of common costs Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Unallocable Items Includes general corporate income and expense items which are not allocated to any business segment. Segment Policies The Company brpares its segment information in conformity with the accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole. Note1: During the year, pursuant to Joint Venture Agreement, the company has subscribed to 36,000,000 share warrants of Rs. 5 each issued by Vithal Castor Polyols Pvt. Ltd. a joint venture of the company. These warrants entitle the company to subscribe 36,000,000 equity shares of Rs. 5 each fully paid upon payment at any time after the period of 7 years but on or before 20 years from the date of issue of warrants made by the said associated enterprise during the year. Note 2: Interest income include an amount of Rs.51,995,871/- received from Department of Commercial Tax in Gujarat as interest on VAT refunds. Note 3: Previous Year Figures Previous year figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification. For and on Behalf o Abhay V. Udeshi Chairman Dinesh M. Kapadia Company Secretary Board of Directors Hemant V. Udeshi Managing Director Vikram V. Udeshi Chief Financial Officer Place : Mumbai Date : May 13, 2015 |