1 CORPORATE INFORMATION Dai-ichi Karkaria Ltd. ("DIKL") / ("the Company") was incorporated on 13th May, 1960 under the laws of the Republic of India and has its registered office at Mumbai (Maharashtra). DIKL is engaged in manufacturing of Specialty Chemicals. The Company has a joint venture with CTI Chemicals Asia Pacific Pte. Ltd., Singapore. The manufacturing activities of the Company are carried out from its plants located at Kasarwadi and Kurkumbh., Pune (Maharashtra) 2 SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of accounting and brparation of financial statements The financial statements are brpared under the historical cost convention in accordance with the generally accepted accounting principles (GAAP) and applicable Accounting Standards notified under Accounting Standards specified under Section 133 of the Companies Act, 2013. The financial statements have been brpared on accrual basis under the historical cost convention except for categories of fixed assets at Kasarwadi Plant as on 1 April 1993, that are carried at revalued amounts. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year. 2.2 Use of estimates The brparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise. 2.3 Inventories Inventories are valued at lower of cost and net realizable value, on the weighted average basis. Work in progress, Semi finished goods and Finished goods are valued on absorption costing basis. Due allowance is made for slow moving and obsolete stocks. 2.4 Cash and cash equivalents (for purposes of Cash Flow Statement) Cash comprises cash on hand. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition). 2.5 Cash flow statement Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. 2.6 Debrciation and amortisation Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Asset costing Rs. 5,000/- or less are fully debrciated in the year of purchase. Debrciation on fixed assets has been provided on written down value method for assets at Kasarwadi, Pune and HO and on the straight-line method for fixed assets at Kurkumbh, Pune as per the useful life brscribed in Schedule II to the Companies Act, 2013. Debrciation on certain assets located at Kasarwadi aquired prior to April 1, 1993 which are stated at revalued amounts and for which incremental debrciation which was hitherto adjusted out of revaluation reserve, has with effect from brvious financial year, pursuant to the enactment of 2013 Act, been debrciated in full without any such adjustment out of revaluation reserve. Intangible assets are amortised over their estimated useful life on written down value method. Lease/hold land is amortised over the duration of the lease. 2.7 Revenue recognition Sale of goods Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax. 2.8 Other income Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive is established. 2.9 Fixed Assets (Tangible / Intangible) Fixed assets, except Free Hold Land and certain assets located at Kasarwadi plant, are carried at cost less accumulated debrciation / amortisation and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and debrciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on fixed assets after its purchase / completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its brviously assessed standard of performance. Fixed assets acquired in full or part exchange for another asset are recorded at the fair market value or the net book value of the asset given up, adjusted for any balancing cash consideration. The Company revalued certain assets located at Kasarwadi plant as on 1 April, 1993. The revalued assets are carried at the revalued amounts less accumulated debrciation until March 31, 2014 and impairment losses, if any. Increase in the net book value on such revaluation was credited to "Revaluation reserve account" except to the extent such increase is related to and not greater than a decreased arising from a revaluation / impairment that was brviously recognised in the statement of Profit & Loss in which case such amount is credited to the statement of Profit & Loss. Decrease in book value on revaluation is charged to statement of Profit & Loss except where such decrease relates to a brviously recognised increase that was credited to the revaluation reserve, in which case the decrease is charged to the revaluation reserve to the extent the reserve has not been subseqeuntly reversed or utilised. Capital work-in-progress Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest. 2.10 Foreign currency transactions and translations Transactions in foreign currency are recorded at exchange rates brvailing on the date of the transaction. Year end balance of monetary items is restated at closing rates. Exchange difference arising on restatement or settlement is charged to Statement of Profit and Loss. Non-monetary items of the Company are carried at historical cost. Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss. Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortised over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense in the period in which such cancellation or renewal is made. 2.11 Export incentives Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same. 2.12 Investments Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties. 2.13 Employee benefits Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences. Defined contribution plans The Company's contributions to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employee. Defined benefit plans For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet rebrsents the brsent value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the brsent value of available refunds and reductions in future contributions to the schemes. Long term Compensated absences Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the brsent value of the defined benefit obligation as at the balance sheet date 2.14 Segment reporting The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. 2.15 Leases Lease arrangements where the risks and rewards 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 on a straight-line basis. 2.16 Earnings per share Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. 2.17 Taxes on income Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability. 2.18 Research and development expenses All revenue expenditure is charged to Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product's technical feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and debrciated in accordance with the policies stated for Fixed Assets. 2.19 Impairment of assets The carrying amounts of tangible fixed assets are reviewed for impairment if events or changes in the circumstances indicate that the carrying value of the asset may not be recoverable. If there are indicators of impairment, an assessment is made to determine whether the asset's carrying value exceeds its recoverable amount. Whenever the carrying value of an asset exceeds its recoverable amount, impairment is charged to statement of profit and loss. 2.20 Provisions and contingencies A provision is recognised when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements. 2.21 Service tax input credit Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilising the credits. 2.22 Proposed Dividend Proposed dividend as at the year end (including corporate dividend tax thereon), is provided for if recommended by the Board, and is subject to approval of members. 2.23 Operating Cycle Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current. Note 30 Disclosures under Accounting Standards 30.1 Employee benefit plans (A) Defined contribution plans The Company provides Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 63,23,467 (brvious year Rs. 59,78,451) for Provident Fund contributions and Rs. 2,64,751 (brvious year Rs. 4,25,739) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes. Note 3 Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. For and on behalf of the Board of Directors S. F. Vakil Kavas Chairperson and Managing Director Patel Adi Jehangir Director Keki Elavia Anil Director Naik Nitin Nimkar Director Kavita Director Thadeshwar Chief Financial Officer Company Secretary Place : Mumbai Date : May 14, 2016 |