SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS 1 BACKGROUND: Ishan Dyes and Chemicals Ltd. was incorporated on 26th July 1993 under the Companies Act,1956.The company is engaged into the business of manufacturing Copper Phthalocyanine Crude Blue (CPC Blue) and Pigment Blues.The products of the company are also exported and well established in the domestic market. 2 SIGNIFICANT ACCOUNTING POLICIES: i. BASIS OF brPARATION OF FINANCIAL STATEMENTS "The accounts have been brpared to comply in all material aspects with applicable accounting principles in India, the Accounting Standards notified in the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. Current / Non-current classification The Revised Schedule VI to the Act requires assets and liabilities to be classified as either Current or Non-current. An asset is classified as current when it satisfies any of the following criteria: (a) it is expected to be realized in, or is intended for sale or consumption in, the entity's normal operating cycle; (b) it is held primarily for the purpose of being traded; (c) it is expected to be realized within twelve months after the balance sheet date; or (d) it is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the balance sheet date. All other assets are classified as non-current. A liability is classified as current when it satisfies any of the following criteria: (a) it is expected to be settled in the entity's normal operating cycle; (b) it is held primarily for the purpose of being traded; (c) it is due to be settled within twelve months after the balance sheet date; or (d) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date. All other liabilities are classified as non-current. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out above which are in accordance with the revised Schedule VI to the Act." ii. USE OF ESTIMATES The brparation of the financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialize. iii. TANGIBLE ASSETS Fixed Assets are stated at cost of acquisition / construction or book value and includes amounts added on revaluation less accumulated debrciation and impairment loss, if any. iv. INTANGIBLE ASSETS Intangible Assets are generally stated at cost of acquisition net of recoverable taxes less accumlated amortisation/ depletion. v. INVESTMENTS Current Investments are carried at lower of cost and fair value. Long term investments are carried at cost. However, when there is a decline, other than temporary, the carrying amount is reduced to recognise the decline. vi. DEbrCIATION Effective 1st April 2014, the Company debrciates its Fixed Assets over the useful life in the manner brscribed in Schedule II of the Act, as against the earlier practice of debrciating at the rates brscribed in Schedule XIV to the Companies Act, 1956. (i) In case of br-owned assets, the useful life is estimated on a case to case basis. (ii) Debrciation on additions to the assets or on sale/discardment of assets, is calculated prorata from the month of such addition or upto the month of such sale/discardment, as the case may be. (iii) Based upon the future projections, the Company has estimated the economic useful life of the assets and accordingly the assets have been debrciated. vii. INVENTORIES The inventory is valued as follows: (i) Raw Materials At Cost First in First out. (ii) Stores and Spare parts At Cost First in First out. (iii) Finished Goods Valued at lower of cost or Net Relisable Value (iv) Work in Process At cost by using absorption cost method As per normal practices the cost of finished goods includes all direct cost and normal fixed overheads. However, it does not include selling and distribution cost. Value of stock of finished goods at the date of Balance Sheet includes duties and taxes if any applicable. viii. RETIREMENT BENEFITS 1) GRATUITY The Trustees of Ishan Dyes and Chemicals Limited Employees' Gratuity Fund has a fund arrangement (cash accumulation policy) with Life Insurance Corporation of India (LIC) to administer its gratuity benefit scheme. The contributions towards the said funds which are as determined by LIC are charged to revenue each year. Company ascertains the Liability towards Gratuity at the year-end and provision for the differential amount between the liability determined on Actuarial Valuation and Fund balance is provided in the books of account. 2) PROVIDENT FUND Liability is determined on the basis of contribution as required under the statute/rules. ix. CENVAT CREDIT CENVAT Credit is accounted on accrual basis on purchase of materials. x. FOREIGN CURRENCY TRANSACTIONS "Transactions in foreign currencies are recorded at the exchange rates brvailing on the date of transaction. Monetary items are translated at the year-end rates. The exchange difference between the rate brvailing on the date of transaction and on the date of settlement as also on translation of monetary items at the end of the year is recognised as income or expense, as the case may be. Any brmium or discount arising at the inception of the forward exchange contract is recognized as income or expense over the life of the contract." xi. REVENUE RECOGNITION Revenue / Income is recognised when no significant uncertainty as to determination or realisation exists. xii. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS : Provision involving substantial degree of estimation in measurement is recognised when there is brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in notes, if any. Contingent Assets are neither recognised nor disclosed in the financial statement. xiii. BORROWING COSTS Borrowing costs that are attributable to the acquisition, construction or productionof qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue. xiv. TAXES ON INCOME Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to/ recovered from the tax authorities, using the applicable tax rates. Deferred income tax reflect the current period timing differences between taxable income and accounting income for the period and reversal of timing differences of earlier years/ period. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future income will be available except that deferred tax assets, in case there are unabsorbed debrciation and losses, are recognised if there is virtual certainty that sufficient future taxable income will be available to realise the same. xv. DOUBTFUL DEBTS/ADVANCES Provision is made in the accounts in respect of debts/advances which in the opinion of the management are considered doubtful of recovery. xvi. IMPAIRMENT LOSS Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amounts. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the brsent value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal. 2 DIRECTORS REMMUNERATION: Salary of Rs. 42,00,000/- & Bonus – Rs. 3,30,000/- 3 Balance due to / from third parties are subject to confirmation, reconciliation, and / or adjustments, if any. 4 In the opinion of the board, Loans and Advances and Current Assets are approximately of the value stated, if realized in the ordinary course of buisness. 5 The company has only one segment of activity i.e. Chemicals 6 Disclosure Under Micro, Small & Medium Enterprises Development Act, 2006 The company has not received the required information from suppliers regarding their status under Micro, Small & Medium Enterprises Development Act, 2006. Hence, disclosures, if any, relating to the amounts unpaid as at the year end together with the interest paid/payable as required under the said Act have not been made. 7 Net Exchange Gain included in the profit and loss account is Rs. 7,80,874/- (PY 16,58,790/-). 8 Previous Year Comparatives Previous year's figures have been regrouped or reclassified wherever necessary to correspond with the current year's classification or disclosure. 9 Figures have been rounded off to the nearest rupee. |