Notes forming part of Financial Statements for the year ended 31st March, 2016 NOTE 1 CORPORATE INFORMATION ~ Navin Fluorine International Limited is a public limited company, incorporated under the provisions of the Companies Act, 1956. Its shares are listed on the Bombay, National and Ahmedabad stock exchanges. The Company belongs to the reputed Arvind Mafatlal Group in India. Established in 1967, it has the largest integrated fluorochemicals complex in India. The Company primarily focuses on fluorine chemistry - producing refrigeration gases, inorganic fluorides, specialty organofluorines and offers Contract Research and Manufacturing Services. Its manufacturing facilities are located at Surat and Dahej in Gujarat and Dewas in Madhya Pradesh. NOTE 2 SIGNIFICANT ACCOUNTING POLICIES ~ (a) Basis of brparation of Financial Statements The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards brscribed under Section 133 of the Companies Act, 2013. The financial statements have been brpared on accrual basis under the historical cost convention. (b) Use of estimates The brparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results materialise or are known. (c) Tangible fixed assets Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated debrciation, amortisation and impairment loss, if any. (d) Debrciation on tangible fixed assets Debrciation on tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013. (e) Intangible assets Intangible assets are stated at cost of acquisition less accumulated amortisation. Computer Software which are capitalised, are amortised over a period of 3 years on straight-line basis. (f) Impairment of tangible and intangible assets Impairment loss is provided to the extent that the carrying amount(s) of assets exceed their recoverable amount(s). 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. (g) Investments Long-term investments are carried at cost. Provision is made to recognize a diminution, other than temporary, in the carrying amounts of long-term investments. Current investments are carried individually, at the lower of cost and fair value. Investment properties are carried individually at cost less accumulated debrciation and impairment, if any. Investment properties are capitalised and debrciated (where applicable) in accordance with the policy stated for Fixed assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Assets. (h) Inventories Items of inventory are valued at cost or net realizable value, whichever is lower. Cost is determined on the following basis: Raw materials, traded goods, stores and spares - Weighted average Process stocks and finished goods - At material cost plus appropriate value of overheads (i) Retirement and other employee benefits (i) The Company contributes towards provident fund, family pension fund and superannuation fund which are defined contribution schemes. Liability in respect thereof is determined on the basis of contribution required to be made under the statutes / rules. (ii) Gratuity liability, a defined benefit scheme, and provision for compensated absences is accrued and provided for on the basis of actuarial valuations made at the year end. (j) Foreign currency transactions Transactions in foreign currency are recorded at the rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency and forward exchange contracts are reported using closing rates of exchange. Exchange differences arising thereon and on realization / payment of foreign exchange are accounted, in the relevant year, as income or expense. In case of forward exchange contracts, or other financial instruments that are in substance forward exchange contracts, the brmium or discount arising at the inception of the contracts is amortized as expense or income over the life of the contracts. Gains / losses on settlement of transactions arising on cancellation / renewal of forward exchange contracts are recognized as income or expense. (k) Borrowing costs Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized 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. All other borrowing costs are charged to revenue. (l) Operating lease Lease arrangements where the risks and rewards incidental to the ownership of an asset substantially vest with the lessor are recognized as Operating lease. Operating lease receipts and payments are recognized as income or expense, as the case may be, in the Statement of Profit and loss on a straight-line basis over the lease term. (m) Revenue recognition Revenue (income) is recognized when no significant uncertainty as to its determination or realization exists. (n) Taxes on income Tax expense comprises of both current and deferred tax at the applicable enacted / substantively enacted rates. Current tax rebrsents the amount of income-tax payable / recoverable in respect of the taxable income / loss for the reporting period. Deferred tax rebrsents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. (o) Provisions and contingencies A provision is recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a possible or brsent obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed. (p) Employee stock option Measurement and disclosure of the employee share-based payment plans is done in accordance with the Guidance Note on Accounting for Employee Share-based Payments, issued by The Institute of Chartered Accountants of India. Compensation expense is amortized over the vesting period of the option on a straight line basis. The Company measures compensation cost relating to employee stock options using the intrinsic value method. (q) Research and development expenses Revenue expenditure pertaining to research is charged to the 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. NOTE 3 The Company received Rs. 260.07 lacs (as at 31st March, 2015, Rs. 337.15 lacs) during the year from its wholly owned subsidiary Sulakshana Securities Limited (SSL), towards partial repayment of interest free advances provided in earlier years. The market value of the assets of SSL far exceeds the outstanding advance to SSL of Rs. 2,010.00 lacs (as at 31st March, 2015, Rs. 2,200.00 lacs) at the year end. NOTE 4 Mafatlal Industries Limited was executing a project in Iraq when hostilities broke out between Iraq and Kuwait in 1990-91, resulting in suspension of project work. In view of the post war sanctions imposed by the United Nations and the Government of India, suspended operations could not be resumed. The customer’s bankers have asked for extension of bank guarantees for advance payment and performance and the State Bank of India (SBI), in turn, had claimed that the funds deposited with them in respect of the aforesaid project are subject to lien which was subsequently released on alternate arrangements. In view of the continuing uncertain circumstances, the receipts and payments under the contracts, transferred to the Company pursuant to the sanctioned scheme of Mafatlal Industries Limited, continue to be carried forward and necessary adjustments would be made on the status of the project becoming clearer. NOTE 5 MICRO, SMALL AND MEDIUM SCALE BUSINESS ENTITIES A sum of Rs. 481.37 lacs is payable to Micro and Small Enterprises as at 31st March, 2016 (as at 31st March, 2015, Rs. 281.04 lacs). There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and also as at 31st March, 2016. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company NOTE 6 Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. H. A. Mafa Chairman S. S. Khanolkar Managing Director Sitendu Nagchaudhuri Chief Financial Officer N. B. Mankad Company Secret T.M.M. Nambiar V. P. Mafatlal S. S. Lalbhai A. K. Srivastava P. N. Kapadia S. G. Mankad S. M. Kulkarni H. H. Engineer R. V. Haribhakti Directors Mumbai, 30th April, 2016 |