NOTES ACCOMPANYING FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 Significant Accounting Policies 1. Basis of brparation and brsentation of financial statements The Company maintains its accounts on accrual basis following the historical cost convention in accordance with Generally Accepted Accounting Principles {"GAAP"} in compliance with the provisions of the Companies Act, 2013 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2014, brscribed by the Central Government (as amended). However, certain claims are accounted for as and when admitted by the appropriate authorities. 2. Use of Estimates The brparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the year, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as at the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, provision for doubtful debts/ advances, future obligations in respect of retirement benefit plans etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known. 3. Revenue recognition i. Revenue from sale of goods is recognized when all significant risks and rewards of ownership is transferred to the buyer under the terms of the contract and we retain no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exist regarding the amount of consideration that will be derived from sale of the goods. Sales exclude excise duty and sales tax. ii. Industrial Promotion Assistance (IPA) is recognized when the Company's right to receive the same is established with reasonable certainty. iii. Other income is accounted on accrual basis as and when the right to receive arises. iv. Dividend income is accounted in the period in which the right to receive the same is established. v. Interest income on deposits is recognized at the agreed rate on time proportion basis. vi. Income from Wind mills: a. Under wheeling and banking arrangement: Units generated from windmills are adjusted against the consumption of power at our factories. The monetary value of the power generated at wind farms that are consumed at factories are not recognised as revenue because it is inter-divisional transfer. The value of unadjusted units as on the Balance Sheet date has been included under Other Current Assets. b. Under Power purchase agreement: Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in Income from Wind power generation. 4. Tangible Fixed assets Fixed assets are stated at original cost less accumulated debrciation, accumulated amortisation and cumulative impairment. Pre-operative expenses including administrative and other gênerai overhead expenses which are specifically attributable to the project, incurred up to the date of commencement of commercial operation are capitalized as a part of the cost of the fixed asset. Gains or losses arising from disposai of fixed assets, measured as the difference between the net disposai proceeds and the carrying amount of such assets, are recognised in the statement of profit and loss. 5. Debrciation i. Own Assets Debrciation has been provided based on Straight-line basis as per the useful life brscribed in Schedule II of the Companies Act, 2013 Debrciation on additions/ deductions is calculated pro-rata from / to the month of additions/ deductions. ii. Leasehold Land Land acquired under long-term lease is classified under "Tangible assets" and is amortised over the primary lease period 6. Intangible Assets and Amortisation Intangible assets are recognized when it is probable that the future economie benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably. Intangible assets are amortized over their estimated useful life on Straight-line method as follows: - Computer Software - Over a period of 5 years Amortisation on impaired assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life. Internally generated software, if any, is not capitalized and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred. 7. Impairment of assets As at each Balance Sheet date, the carrying amount of asset is tested for impairment so as to determine: i. the provision for impairment loss, if any; and ii. the reversal of impairment loss recognized in brvious periods, if any, Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined: a) in the case of an individual asset, at the higher of the net selling price and the value in use; and b) in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit's net selling price and the value in use. (Value in use is determined as the brsent value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life.) 8. Investments i. All Investments being non-current and non-trade are valued at cost. ii. The carrying amount of long term investments is determined on an individual investment basis. iii. As at the balance sheet date, provision for diminution is made to recognize the decline other than temporary, in the value of investments. iv. The Company discontinues the use of the equity method from the date when its investment ceases to be an Associate and accounted in accordance with Accounting Standard (AS) 13, Accounting for investments. Accordingly, in CFS the carrying amount of the Investment on that date of cessation of Associate is considered as cost. 9. Inventories i. Raw-materials, stores, spares and packing materials etc. are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their brsent location and condition or net realizable value whichever is lower. ii. Work-in-progress is valued at weighted average cost, including the cost of conversion with systematic allocation of production and administration overheads. iii. Finished goods are valued at cost or net realizable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their brsent location and condition including excise duty. 10. Foreign currency transactions and forward contracts i. The reporting currency of the Company is Indian Rupee. ii. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate. iii. The exchange differences on seulement/ restatement are included in br-operative expenses up to the date of commercial operation and recognised as income or expense thereafter in the period in which they arise. iv. Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates''. Exchange differences arising on such contracts are recognized in the period in which they arise. Gains and losses arising on account of roll over/cancellation of forward contracts are recognized as income/expenses of the period in which such roll over/cancellation takes place. The brmium paid/ received on a foreign currency forward contract is accounted as expenses/income over the period of the contract. 11. Employee Benefïts a. Short-term employee benefits : Short-term employee benefits viz., Salaries, Wages, are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which the related service is rendered. b. Post Employment Benefits : i. Defined Contribution plans: Contributions to Provident fund and Superannuation fund are recognized as an expense in the profit and loss account for the year in which the employees have rendered services. The Company contributes to Provident fund administered by the Government on a monthly basis at 12% of employee's basic salary. The Company also contributes for superannuation a sum equivalent to 15% of the employee's eligible annual basic salary subject to a maximum of X 1 Lac per annum and is remitted to "Ramco Industries Limited Superannuation Scheme" administered by trustees and managed by Life Insurance Corporation of India The balance amount, if any, is paid as salary at the option of the company. There are no other obligation other than the above defined contribution plan. ii. Defined Benefit Plan : Gratuity: The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement and death while in employment or on termination of employment of an amount equivalent to 15 Day's basic salary payable for each completed year of service. Vesting occurs upon completion of 5 years of continuous service. The Company makes annual contributions to "Ramco Industries Limited Employees Gratuity Fund" administered by Trustees and managed by Life Insurance Corporation of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the "projected unit credit method". Leave Encashment : The Company has a policy of providing encashment of unavailed leave for its employees. The obligation for the leave encashment is recognised based on an independent external actuarial valuation at the Balance Sheet date. The expense is recognized at the brsent value of the amount payable determined based on actuarial valuation using "projected unit credit method". c. Long-term employee benefits : The obligation for long term employee benefits such as long term compensated absences is recognized in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above. d. Employee Separation Costs : Compensation to employees who have opted for retirement under the voluntary retirement scheme of the Company is charged to Profit and Loss Statement in the year of exercise of option by the employee. 12. Lease Lease rentals are expensed off with reference to the lease terms. 13. Borrowing costs Specifie borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalized as part of the cost of those assets as per AS 16. All other borrowing costs are charged to revenue. 14. Research and Development Expenditure Expenditure on Research & Development of revenue nature incurred by the Company is charged to statement of Profit and Loss account under the respective revenue heads, while those of capital nature are treated as fixed assets, under respective asset heads. 15. Taxeson lncome Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments/ appeals. Minimum Alternate Tax (MAT) credit is recognized as an asset to the extent there is convincing evidence that the company will pay normal income tax during the specified period. When the MAT credit becomes eligible to be recognized as an Asset viz., "MAT credit entitlement", the same is created by way of credit to the Statement of Profit and loss and shown as "MAT credit Recognition". Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets relating to unabsorbed debrciation/business losses are recognized and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Other deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. 16. Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past event and it is possible that there will be an outflow of resources. Un-provided contingent liabilities are disclosed in the accounts by way of notes. Contingent assets are not recognized. 17. Segment Accounting i. The Company identifies business segment as the primary segment as per AS-17. Under the primary segment, there are three reportable segments viz., Building products, Textile and Power generation from Windmills. These were identified considering the nature of the products, the differing risks and returns. The valuation of inter segment transfers are based on brvailing market prices. ii. Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment. iii. The Company brpares its segment information in conformity with accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole. 18. Subsidies and Government Grants Revenue related grants are recognised on accrual basis wherever there is reasonable certainty and are disclosed under "Revenue from operations". Receivables of such grants are shown under "Other current asset". Capital related grants is accounted as "Capital Reserve" under Reserves and Surplus upon fulfillment of conditions attached thereto and is not adjusted against Fixed Assets. Interest Subsidy under Technology Upgradation Fund Scheme (TUF) is credited to the Interest on borrowings under the head "Finance costs". 19. Earnings Per Share Earnings per share (EPS) is calculated by taking into account, the net profit after tax, divided by the weighted average number of Equity Shares outstanding as on the Balance Sheet date. 20. Operating cycle for current/non-current classification Operating cycle for the business activities of the Company is taken as twelve months for classification of its assets and liabilities into current/non-current. 21. Previous year's figures have been regrouped/restated wherever necessary so as to make them comparable with that of the current year. 22. Figures have been rounded off in lakhs with two decimal. For M/s.M.S. JAGANNATHAN & N. KRISHNASWAMI Chartered Accountants Firm's Registration No.: 001208S K.SRINIVASAN Partner Membership No.: 021510 For M/s.CNGSN & ASSOCIATES LLP Chartered Accountants Firm's Registration No.: 004915S LLP Registration No. S200036 C.N.GANGADARAN Partner Membership No.: 011205 For and on behalf of the Board P.R. RAMASUBRAHMANEYA RAJHA Chairman brM.G.SHANKER Chief Executive Officer K.SANKARANARAYANAN Chief Financial Officer S. BALAMURUGASUNDARAM Company Secretary & Sr.G.M.(Legal) Place: Chennai Date : 20th May, 2016 |