COMPANY OVERVIEW Rajesh Exports Limited ("The Company") is an Indian public Company, incorporated under the provisions of Companies Act, 1956. The Company is a leading gold refiner and manufacturer of all kinds of Gold Jewellery, medallions and other Gold Products. The Company exports its products to various countries around the world and it also retails its products in India through its own retail showrooms under the brand name of SHUBH Jewellers. The Company is having head quarters in Bangalore and manufacturing units at Whitefield, Associate firm M/s. A one Exports, Bangalore and subsidiary M/s.REL Singapore Pte Ltd at Singapore. SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Company have been brpared in accordance with generally accepted accounting principles in India (GAAP) to comply with the accounting standards Specified under the Section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules,2014,and relevant provisions of Companies Act, 2013 ("the 2013Act")/Companies Act,1956 as applicable. The financial statements have been brpared on accrual basis (except in interest income on interest bearing Advances) under the historical cost convention. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year. i. Use of Estimates The brparation of financial statements in conformity with GAAP (generally accepted accounting principles) requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Estimates and underlying assumptions are reviewed on an ongoing basis. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. ii. Fixed assets and Capital work-in-progress a. Tangible Assets: Fixed assets are stated at historical cost less accumulated debrciation. The cost comprises purchase price, borrowing costs if capitalization criteria are met and includes financing cost if any, relating to borrowed funds attributable to construction or acquisition of fixed assets, up to the date when the asset is ready for intended use, any trade discounts and rebates are deducted in arriving at the purchase price. b. Work in Progress Cost of fixed assets not ready for use before the balance sheet date is disclosed under capital work-in-progress. Advances paid towards the acquisition of fixed assets outstanding as of each balance sheet date is disclosed under long term loans and advances. iii. Debrciation The Company has provided debrciation on straight line method over the useful lives of the assets estimated by the management as per Schedule II of the Companies Act, 2013. Debrciation on additions or extensions to existing assets is provided so as to co-terminate with the life of the original asset if it becomes internal part of the existing asset or on the useful life of the asset if it is capable of independent use. For Assets whose unit cost does not exceed Rs. 5,000 /- debrciation is provided at the rate of 100% in the year of capitalisation. iv. Inventories Stock in trade is valued at cost or net realisable value, whichever is less. The cost formula used for this purpose is first in first out (FIFO) method and includes direct cost incurred in bringing the items of inventory to their brsent location and condition. Material in transit is valued at cost price or market price, whichever is lower. v. Revenue Recognition Revenue is recognized only when it can be reliably measured and when it is reasonable to expect ultimate collection. Revenue from operations includes Sale of goods and interest received on fixed deposits made for margin purposes of procurement of Raw Materials. Sales are recorded net of trade discounts, rebates and value added tax if any and are recorded at the realized foreign currency rates. Making charges income is recognized on dispatch of goods. Interest on bank deposits are accounted on accrual basis and other interest bearing loans are accounted on cash basis. Dividend income on investment is accounted as and when the right to receive the payment is established. Cost of goods include the purchase of raw material, labour charges, wastage charges, interest and other charges levied by the seller and foreign exchange hedging cost. vi. Borrowing Costs Borrowing costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such asset up to the date, when such asset is ready for its intended use. Other borrowing costs are charged to the profit and loss account. vii. Foreign Currency Transactions a. For its import and export transactions the company is exposed to foreign exchange transactions, the company hedges it's foreign exchange transactions against it's own imports and exports and also by way of forward contracts with banks. b. Completed foreign exchange transactions are recorded at the actual exchange rate paid and pending foreign exchange transactions are recorded at notional rates, the notional rates are converted in to brvailing rates at the end of the year(Valued at Rs. 62.50 per USD) and the difference is recorded as fluctuation in foreign exchange. Premium paid on forward contracts is recognized over the life of the contracts. c. Premium in respect of forward foreign exchange contract is charged to the Profit and Loss Account. Premium in respect of foreign exchange option contracts is charged to the Profit and Loss Account as and when the contracts are entered in to but the gain on such option contracts, is recognised only on maturity/ cancellation of such option contracts. viii. Employees Benefits Provident Fund contributions are charged to the Statement of profit and loss of the period when the contributions to the respective fund is due. The Company has no obligation, other than the contribution payable under the respective scheme. Superannuation Schemes is not applicable to the Company at brsent. Gratuity liability if applicable for the year under the Payment of Gratuity Act is accounted on the Basis of Actuarial valuation. The Company does not provide leave encashment and carry forward of accumulated leave to next year to its employees. ix. Taxation Provision for current tax is made on the basis of Taxable income for the current accounting year determined in accordance with the Income Tax Act, 1961. Deferred tax is recognized on timing differences; being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. The deferred tax is accounted for using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets/ liabilities in respect of unabsorbed debrciation and carry forward of losses are recognised only if there is virtual certainty that such deferred tax Asset/ liability can be realised against future taxable profits. x. Segment reporting policies The Company and other Companies in the group are mainly engaged in the business of gold and gold products. These, in the context of accounting standard 17 on segment reporting, issued by The Institute of Chartered Accountants of India are considered to constitute one single primary segment. xi. Earning per share Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average of number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all diluted potential equity shares. xii. Contingent Liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability in the financial statements, but are disclosed in the notes. xiii. Provisions A provision is recognised when the Company has a brsent obligation as a result of a past event; 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 are not discounted to its brsent value and are determined based on 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. Provision/Write-off of doubtful and unrecoverable book debts and advances have been made, wherever found necessary by the management. xiv. Investments The Investments are made to enhance the company's business interest. Investments are either classified as current or long term based on management's intention. Long term investments are stated at cost after deducting the provisions if any made for permanent diminution in values. Current investments are stated at lower of the cost and fair market value. Cost for Overseas investments comprises the Indian rupee value of the consideration paid for the investment translated at the exchange rate brvalent at the date of investment. xv. Cash Flow Statement Cash Flow statement are reported using the indirect method, where by profit before tax is adjusted for the effects of transactions of 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 flow. The cash flow from operating, investing and financing activities of company are segregated based on the available information xvi. Leases Lease payments under operating Leases are recognised as an expense in the statement of Profit and Loss over a Lease term. Lease rentals recovered on assets given under operating leases are recognised in the profit and loss account. xvii. Cash and cash equivalents Cash comprises of cash on hand and demand deposits with banks. Cash equivalents are short term balances (Including all bank deposits), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. xviii. Impairment of Assets An Asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An Impairment loss is charged to Profit and Loss Statement in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. NOTES TO FINANCIAL STATEMENTS i. Leases Operating lease: The Company has let-out and taken brmises under cancelable operating lease agreements, which the Company intends to renew in the normal course of its business. The lessee cannot sublease these properties. Total lease rentals recognized as income in the Profit and Loss Account for the year with respect to above is Rs. 1049168 /- (Previous year Rs.1032627/-) and total lease rentals recognized as expenditure is Rs.7533174/-(Previous year Rs. 3276619/-). ii. Capital and other commitments Estimated amount of contracts remaining to be executed on capital account and not provided for is NIL (Previous Year is NIL ). iii. Micro and Small Enterprises dues Based on the information / Documents available with the Company, amounts due to micro and small enterprises are NIL. iv. Contingent Liabilities Contingent liabilities not provided for: a. Sales tax and entry tax demands of Rs.4,79,057/- (Previous year Rs.4,79,057/-) are disputed by the Company. b. The Company had an order from the Income Tax authorities dated December 27, 2006 for the period April 1, 2003 to March 31, 2004 demanding a tax payment of Rs. 9,99,60,890 /- The Commissioner of Income Tax (Appeals) has passed an adverse order confirming the order of assessing authority. The Company has appealed against the said order before the Income Tax Appellate Tribunal, and the income Tax Appellate Tribunal has passed an order in favor of the company, allowing the deduction under section 10B of the Income Tax Act, which is the major portion of the demand raised by the department. However, the Tribunal did not allow expenses of Rs. 200 lakhs. Against the order of the Income Tax Appellate Tribunal, the company and the Income Tax Department both have appealed before the Hon’ble High Court of Karnataka and the Company firmly believes that the issue will be settled in its favor. Further, the Company had received an order from the tax authorities dated November 13, 2009, (rectified by order dated December 31, 2009) for the period April 1, 2006 to March 31, 2007 demanding an additional tax payment of Rs. 36,99,89,925/-. The Company has appealed before the Commissioner of Income Tax (Appeals) against the said order and the Company firmly believes that the issue will be settled in its favour. Further, the Company had received an order from the tax authorities dated December 30, 2010, ( rectified by order dated January 19, 2011 and order dated January 27, 2011) for the period April 1, 2007 to March 31, 2008 demanding an additional tax payment of Rs. 88,23,82,070. The Company has appealed before the Commissioner of Income Tax (Appeals) against the said order and the Company firmly believes that the issue will be settled in its favour. c. The Company has received a demand notice from Employees State Insurance Corporation, Karnataka Region for the period from April 2000 to March 2003 demanding Rs. 11903054/- Company has appealed against the order and paid Rs. 29,75,764 /- under protest and Appellate Authority has reduced the tax to Rs 33,93,286/- & currently the matter is in Employees State Insurance Court. The management firmly believes that the issue will be settled in its favour. The Company has also appealed against the order of Notice from Employees State Insurance Corporation, Karnataka Region for the period from April 2006 to September 2007 demanding Rs. 47,22,209 /- ( including interest etc) and paid Rs. 9,43,800 /- under protest, which is pending decision before Appellate Authority. The management firmly believes that the issue will be settled in its favour. d. The company has appealed against the order of Show cause Notice from Commissioner of Central Excise( Service Tax ) Bangalore demanding Service Tax of Rs. 2,44,83,060/- before the CESTAT and paid Rs. 1,22,41,530 /- under protest, The CESTAT has passed orders on the matter and directed the service tax commissioner to review the order in the light of its findings. The management firmly believes that the issue will be settled in its favor. v. Directors remuneration includes remuneration payable to Executive chairman and Managing director of Rs. 2,39,976/- (Previous Year Rs. 2,39,976/-) vi.Brief Particulars of Employees who were entitled to receive or were in receipt of emoluments aggregating to Rs.60,00,000/- or more per annum and/or Rs.500,000/- or more per month, if employed, for a part of the year is Nil (Previous Year Nil) vii. Company has identified that there is no material impairment of assets and as such no provision is required as per AS-28 issued by the ICAI. viii. In the opinion of the management, no provision is required against contingent liabilities. ix. Unclaimed dividend accounts are subject to reconciliation. x.Previous year figures have been regrouped or reclassified wherever necessary to conform to the current year's grouping or classification For and on behalf of the Board As per our Report of even date For V. SIVASANKAR & CO Chartered Accountants, Firm Regn. No. 010839S (CA VIJAYA SIVASANKAR.P) Prop. M.No. 214786 Sd/- RAJESH MEHTA Chairman DIN : 00336457 PRASHANT MEHT Managing Director DIN : 00336417 A B. VIJENDRA RAO CFO Place: Bangalore Date : May 28, 2015 |