NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2015 1. Company Information: Hitech Plast Limited (the Company) is a public limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India, namely the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Company is engaged in manufacturing of the rigid plastic containers specially catering to customers relating to Paints, Lube and Pharmacy products as well as export market. 2. Significant Accounting Policies: 2.1 Basis of brparation of consolidated financial statements (a) Basis of Accounting: The Financial Statements have been brpared in accordance with Generally Accepted Accounting Principles (GAAP) in India and brsented under the historical cost convention on accrual basis of accounting to comply with the accounting standards brscribed in the Companies (Accounting Standards) Rules, 2006 (as amended) and with the relevant provisions of the Companies Act, 1956 and relevant enacted provisions of the Companies Act, 2013 to the extent applicable. (b) Use of Estimates: The brparation of Financial Statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of income and expenses during the period. (c) Current/Non Current Classification: Any asset or liability is classified as current if it satisfies any of the following conditions: i. it is expected to be realized or settled or is intended for sale or consumption in the Company's normal operating cycle; ii. it is expected to be realized or settled within twelve months from the reporting date. iii. in the case of an asset, ¦ it is held primarily for the purpose of being traded; or ¦ it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date. iv. in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months from the reporting date. All other assets and liabilities are classified as non-current. For the purpose of current / non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as 12 months. This is based on the nature of services and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents. 2.2. Tangible and Intangible Assets (a) Tangible Fixed Assets Tangible fixed assets are carried at the cost of acquisition or construction, less accumulated debrciation and impairment. The cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related to the acquisition or construction of the respective assets. Expenses directly attributable to new manufacturing facility during its construction period are capitalized. Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalised under relevant tangible asset heads. Profit or Loss on disposal of tangible assets is recognised in the Statement of Profit and Loss. (b) Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss, if any. The cost of intangible assets acquired in an amalgamation in the nature of purchase is reflected at their fair value as at the date of amalgamation. Profit or Loss on disposal of intangible assets is recognised in the Statement of Profit and Loss. Goodwill Goodwill arising on the acquisition of a business rebrsents the excess of the cost of acquisition over the Company's interest in the net fair value of the identifiable assets and liabilities of the business recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and any accumulated impairment losses. The unamortised carrying value of goodwill is tested for impairment as at each balance sheet date. For the purpose of impairment testing, goodwill is allocated to each of the Company's cash-generating units that are expected to benefit from the synergies of the business combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised in goodwill is not reversed in a subsequent period. On disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. (c) Capital Work in Progress & Capital Advances Cost of assets not ready for intended use, as on balance sheet date, is shown as capital work in progress. Advances given towards acquisition of fixed assets outstanding at each balance sheet date are disclosed as Long Term Loans and Advances. (d) Debrciation and Amortisation Debrciation on fixed assets is provided on Straight Line Method, except Building, which is debrciated on Written Down Value Method. The details of estimated useful life for each category of assets are as under: Building : 40 years Plant & Machinery* : 9.67 Years Moulds : 4 years Computer : 5 years Vehicle : 5 years * Useful life of Plant and Machinery is considered based on triple shift working. In respect of other assets, the useful life is considered as specified in Part C of the Schedule II to the Companies Act, 2013. Leasehold land and leasehold improvements are amortised over the primary period of lease. Goodwill on amalgamation is amortised over a period of five years. Purchase cost, user license fees and consultancy fees for major software and patent are amortised over a period of three years. (e) Impairment At Balance Sheet date, an assessment is done to determine whether there is any indication of impairment in the carrying amount of the Company's fixed assets. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds it recoverable amount. An assessment is also done at each Balance Sheet date whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. If any such indication exists the asset's recoverable amount is estimated. The carrying amount of the fixed asset is increased to the revised estimate of its recoverable amount so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of impairment loss is recognized in the statement of profit and loss for the year. After recognition of impairment loss or reversal of impairment loss as applicable, the debrciation charge for the asset is adjusted in future periods to allocate the asset's revised carrying amount, less its residual value (if any), on straight line basis over its remaining useful life. 2.3 Revenue Recognition Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. The amount recognised as sale is exclusive of sales tax/VAT and are net of returns. Sales are stated gross of excise duty as well as net of excise duty; excise duty being the amount included in the amount of gross turnover. The excise duty related to the difference between the closing stock and opening stock is recognised separately as part of changes in inventories of finished Goods and work in progress. • Revenue from service is recognised as per the completed service contract method. • Processing income is recognised on accrual basis as per the contractual arrangements. • Dividend income is recognised when the right to receive payment is established. • Interest income is recognised on the time proportion basis. 2.4 Lease Accounting Assets taken on operating lease: Lease rentals on assets and brmises taken on operating lease are recognised as expense in the Statement of Profit and Loss on an accrual basis over the lease term. 2.5 Inventory Raw materials, work in progress, finished goods, packing materials, stores, spares and consumables are carried at the lower of cost and net realisable value. The comparison of cost and net realisable value is made on an item-by-item basis. Damaged, unserviceable and inert stocks are valued at net realizable value. In determining cost of raw material, packing material, stores, spares and consumables, weighted average cost method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their brsent location and condition. Cost of finished goods and work-in-progress includes the cost of raw materials, packing materials, an appropriate share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their brsent location and condition. Fixed production overheads are allocated on the basis of normal capacity of production facilities. 2.6 Investments Investments are classified into current and non-current investments. Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as non-current investments. However, that part of non-current investments which are expected to be realised within twelve months from balance sheet date is also brsented under "Current Assets" under "Current portion of non-current investments". Current investments are stated at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments. Non-current investments are stated at cost. A provision for diminution in the value of non-current investments is made only if such a decline is other than temporary in the opinion of the management. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is recognised in the Statement of Profit and Loss. 2.7 Transaction in Foreign Currency (a) Initial recognition Transactions in foreign currencies entered into by the Company are accounted at the exchange rates brvailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss. (b) Measurement of foreign currency items at the Balance Sheet date Foreign currency monetary items of the Company are restated at the closing exchange rates. Non-monetary items are recorded at the exchange rate brvailing on the date of the transaction. Exchange differences arising out of these translations are charged to the Statement of Profit and Loss. (c) Forward exchange contracts The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes. The brmium or discount arising at the inception of forward exchange contract is amortised and recognised as an expense/income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the period in which the exchange rates change. Any Profit or Loss arising on cancellation or renewal of such forward exchange contract is also recognised as income or expense for the period. 2.8 Trade Receivables Trade Receivables are stated after writing off debts considered as bad. Adequate provision is made for debts considered doubtful. 2.9 Employee Benefits A. Short Term Employee Benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognised in the period in which the employee renders the related service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid. B. Post-employment benefits (a) Defined contribution plans Defined contribution plans are Providend Fund Scheme and Employee State Insurance Scheme. The Company's contribution to defined contribution plans are recognised in the Statement of Profit and Loss in the financial year to which they relate. The Company contributes to the Government administered provident funds on behalf of its employees. (b) Defined benefit plans Defined benefit gratuity plan. The Company operates a defined benefit gratuity plan for employees. The contribution is paid to a separate entity (a fund), towards meeting the Gratuity obligation. The cost of providing defined benefits is determined using the Projected Unit Credit method with actuarial valuations being carried out at each Balance Sheet date. Past service cost is recognised immediately to the extent that the benefits are already vested, else is amortised on a straight-line basis over the average period until the amended benefits become vested. The defined benefit obligations recognised in the Balance sheet rebrsent the brsent value of the defined benefit obligations as adjusted for unrecognized actuarial gains and losses and unrecognized past service costs and as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognised rebrsenting the unrecognized past service cost plus the brsent value of available refunds and reductions in future contributions to the plan. The Company brsents the above liabilities as current and non-current in the balance sheet as per actuarial valuation by the independent actuary; however, the entire liability towards gratuity is considered as current as the Company will contribute this amount to the gratuity fund within the next 12 months. C. Other long term employee benefits: Entitlements to annual leave are recognised when they accrue to employees. Annual leave can be availed or encashed subject to a restriction on the maximum number of accumulation of leave. The Company determines the liability for such accumulated leaves using the Projected Unit Credit method with actuarial valuations being carried out at each Balance Sheet date. The Company brsents this liability as current and non-current in the balance sheet as per actuarial valuation by the independent actuary. 2.10 Research and Development Research and Development expenditure of a revenue nature is expensed out under the respective heads of accounts in the year in which it is incurred. Fixed Assets utilised for research and development are capitalised and debrciated in accordance with the polices stated for Tangible Fixed Assets and Intangible Assets. 2.11 Provision for Taxation Tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961) and Deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred Tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed debrciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date to reassess realisation. 2.12 Provisions and Contingencies The Company creates a provision when there exists a brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a brsent obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made. 2.13 Earnings Per Share The Basic and Diluted Earnings Per Share ("EPS") is computed by dividing the profit after tax for the year by weighted average number of equity shares outstanding during the year. 2.14 Proposed Dividend Dividend recommended by the Board of directors is provided for in the accounts, pending approval at the Annual General Meeting. 2.15 Borrowing Cost Borrowing cost includes interest, amortisation of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, if any, directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised. All other borrowing costs are expensed in the period they occur. 2.16 Cash and Cash Equivalents Cash and cash equivalents include cash & cheques in hand, bank balances, demand deposits with banks and other short-term highly liquid investments where the original maturity is three months or less. 2.17 Government Grant and Subsidies Grants in the nature of subsidy which are non-refundable are credited to the statement of profit and loss, on accrual basis, where there is reasonable assurance that the Company will comply with all the necessary conditions attached to them. Grants in the nature of subsidy which are refundable are shown as liabilities in the Balance Sheet. 2.18 Measurement of EBITDA The Company has elected to brsent earnings before interest (finance costs), tax, debrciation and amortisation (EBITDA) as a separate line item on the face of the Statement of Profit and Loss for the year. The Company measures EBITDA on the basis of profit/(loss) from continuing operations. 37 Legal and Professional expenses include Rs. 8.61 Lacs towards merger of Clear Mipak Packaging Solutions Limited into the Company. 42. Segment Reporting. As the Company business activity falls within a single primary business segment viz. "Plastic Containers", the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", as brscribed in the Companies (Accounting Standards) Rules, 2006, is not applicable. As on 31st March, 2015 the capital employed in the reportable segment was Rs. 21,500.86 Lacs (31st March, 2014: Rs. 15,548.69 Lacs). 43. During the year the Company is eligible for Industrial Promotion Subsidy under the Package Scheme of Incentive (PSI) 2007. Accordingly, in terms of the Accounting Standard (AS 12) "Accounting for Government Grants" as specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014, the Company is eligible for an incentive of Rs. 61.51 Lacs (Previous Year - Rs. Nil) and the same is accounted on accrual basis. 44. As a part of the strategy to consolidate the operations in line with our core business, the Company has discontinued its tea packaging business at Aurangabad in January, 2015. 45. As a part of consolidation initiatives, the Dadra plant of the Company, has been shifted and merged with the plant situated at Naroli (D&NH). This will help in improving operational efficiency. 47. The Utilisation of Securities Premium Account as stated in Note 46 above would not involve either a diminution of liability in respect of unpaid share capital or payment of paid up share capital and the provisions of Section 101 of the Act will not be applicable. 48. In view of amalgamation the figures for the year ended March 31, 2015 are not comparable to the brvious year. 49. The brvious year's figures have been re-grouped / re-classified wherever necessary to correspond with the current year's classification/ disclosure. As per our report of even date For Manubhai & Shah Chartered Accountants FRN:106041W Kshitij M. Patel Partner M.No.045740 For and on behalf of the Board of Directors Hitech Plast Limited CIN: L28992MH1991PLC168235 Ashwin S. Dani Chairman DIN:00009126 Malav A. Dani Managing Director DIN:01184336 Bharat I. Gosalia Chief Financial officer Namita R. Tiwari Company Secretary Mumbai 30th November, 2015 |