Notes on Financial Statements 1 Significant Accounting Policies a System of Accounting i) The company follows the mercantile system of accounting and recognises income and expenditure on accrual basis. ii) Financial Statements are brpared on historical cost basis, adjusted for revaluation of certain fixed assets done in 1994 and as a going concern. b Fixed Assets Fixed Assets are stated at their cost except for certain fixed assets revalued in 1994 less accumulated debrciation. The company capitalises all costs relating to acquisitions and installation of fixed assets. c Expenditure during construction period Pre-operating Expenditure, Interest on specific borrowings for the project, interest on general (interest bearing) funds of the Company utilized for the purpose of the project upto the date of commencement of commercial production are capitalised pro-rata to the cost of fixed assets. d Impairment of Assets The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount. e Debrciation Debrciation is allocated over the useful life of the asset as specified in part C of Schedule II of the Companies Act 2013. f Revenue Recognition on Sales The Company recognises revenue on the sale of products when the products are delivered to the customers or to the carrier which is when the risks or rewards of ownership pass to the customer. g Research & Development Revenue expenditure on Research & Development are charged to the Profit & Loss Account and capital expenditure are included in Fixed Assets under relevant assets and debrciated on the same basis as other fixed assets. h Borrowing Costs Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the costs of such assets. A qualifying asset is one that takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Profit & Loss account. i Operating Lease Lease of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on accrual basis in accordance with the respective lease agreements. j Deferred Taxes Deferred Income Tax is provided using the liability method on all temporary differences at the Balance Sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available in the future against which these items can be utilized. The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates ( and the tax laws) that have been enacted subsequent to the Balance Sheet date. k Investments Non Current Investments are stated at the cost of acquisition, Current Investments are stated at Cost or Market value whichever is less. l Dividend Received Dividend Income from Investments is recognised in the Profit & Loss Account when the right to receive the dividend is established m Valuation of Inventory Inventories are valued at cost determined on Weighted Average Basis or Net Realisable Value, whichever is lower. Cost of Raw Material Stocks is determined so as to exclude from the cost, taxes and duties which are subsequently recoverable from the taxing authorities. n Employee Benefits (a) Provident Fund: Contributions towards Employees Provident Fund are made to the Employees Provident Scheme in accordance with the statutory provisions. (b) Gratuity: The Company makes annual contribution to a Gratuity Fund administered by LIC. The Company accounts for liability for future gratuity benefits based on actuarial valuation as at the Balance Sheet date, determined every year using the Projected Unit Credit Method by an Actuary appointed by the Company. (c) Leave Encashment: The Company does not allow any accumulation of leave balance or encashment thereof. (d) Deferred Compensation Cost: In respect of Stock options granted persuant to Company's employee stock option scheme, the Company determines the compensated cost based on the intrinsic value method and the compensation cost is amortised on a straight line basis over the vesting period. o Taxation Advance payments of Income Tax, including TDS, where assessments are pending are shown net of the corresponding Provision for Tax for the year. p Foreign Exchange Differences Transactions denominated in foreign currency are recorded at the exchange rate brvailing on the transaction date. Monetary items such as receivables, payables and loans denominated in foreign currency are translated at the exchange rate brvailing at the balance sheet date. Exchange differences arising on foreign currency transactions are recognised as income/ expenditure in the profit and loss account. q Custom duty on Imports Customs duty on Imports is accounted as and when Goods are cleared from the customs authorities. r Earning Per Share Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity share holders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. s Provisions, Contingent Liabilities and Contingent Assets Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if (a) the Company has a brsent obligation as a result of a past event; (b) a probable outflow of resources is expected to settle the obligation; and (c) the amount of the obligation can be reliably estimated. Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in case of : (a) a brsent obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; (b) a brsent obligation when no reliable estimate is possible; and (c) a possible obligation arising from past events where the probability of outflow of resources is not remote. Contingent Assets are neither recognised, nor disclosed. Provision, Contingent Liabilities and Contingent Assets are reviewed at each balance Sheet date. b Terms/Rights attached to Equity Shares The Company has only one class of Equity Shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all brferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. 3 Employee Stock Option Plan The Board at its meeting held on July 30, 2011, approved an issue of Stock Options up to a maximum of 5% of the issued Equity Share Capital of the Company aggregating to 3,18,000 Equity Shares in a manner provided in the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 subject to the approval of the shareholders under Section 81(1A) of the Companies Act, 1956. The Shareholders of the Company at the Annual General Meeting held on September 10, 2011 approved the aforesaid issue of 3,18,000 Equity Shares of the Company under one or more Employee Stock Option Scheme(s). The Compensation & Nomination Committee has approved the following grants to a list of senior level executives of the Company and some of its Subsidiaries in accordance with the Chembond Chemicals Employees' Stock Option Plan, 2012 4 The brvious year figures have been regrouped, reallocated or reclassified wherever necessary to conform to current year classification and brsentation. As per our attached report of even date On behalf of the Board of Directors For M/s Kastury & Talati Chartered Accountants Dhiren P. Talati Partner Membership No. F/41867 Sameer V. Shah Nirmal V. Shah Chairman & Managing Director Vice Chairman & Managing Director Sushil U. Lakhani Director Rashmi S. Gavli Jay Mistry Chief Financial Officer Company Secretary Place : Mumbai, date : 28th May 2016 |