1 SIGNIFICANT ACCOUNTING POLICIES a Basis of Preparation The financial statements of the Company have been brpared in accordance with the historical cost convention on an accrual basis of accounting in accordance with generally acceptable accounting principles in India. These financial statements have been brpared to comply in all material respects with the Accounting Standards specified under section 133 of the Companies Act, 2013 ("the Act") read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and other relevant provisions of the Act.(" Indian GAAP") b Use of estimates The brparation of financial statements in accordance with Indian GAAP requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date of financial statements. The estimates and assumptions used in the a Companying financial statements are based upon management's evaluation of the relevant facts and circumstances as of the date of financial statements, which in management's opinion are prudent and reasonable. Actual results may differ from these estimates. Any revision to accounting is recognized prospectively in current and future periods. c Presentation and disclosure of financial statements The financial statements are brpared and brsented in the form set out in Schedule III of the Act, so far as they are applicable thereto. All assets and liabilities have been classified as current or noncurrent as per the Company's normal operating cycle and other criteria set out in the Schedule III of the Act. Based on the nature of products and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of assets and liabilities. The accounting policies adopted in the brparation of the financial statements are consistent with those of the brvious year. d Summary of significant accounting policies i Fixed assets Tangible fixed assets Fixed assets are recorded at cost of acquisition or construction and they are stated at historical cost (net of CENVAT and VAT) All direct expenses attributable to acquisition of fixed assets are capitalised. Cost includes all incidental expenses related to acquisition and installation. Borrowing costs relating to acquisition of fixed assets, which take a substantial period of time to get ready for their intended use are also included to the extent they relate to the period till such assets are ready to be put to use. When an asset is scrapped or otherwise disposed of, the cost and related debrciation are removed from the books of account and resultant profit or loss, if any is reflected in the Statement of Profit and Loss. Intangible assets Intangible assets are initially measured at cost and amortized so as to reflect the pattern in which the asset's economic benefits are consumed. Capitalized hardware/software costs of Enterprise Resource Planning (ERP) system includes design software cost, which provides significant future economic benefits over an extended period. The cost comprises licence fee, cost of system integration and initial customization. The costs are capitalised in the year in which the relevant system is ready for the intended use. The up gradation/enhancements are also capitalized and assimilated with the initial capitalisation cost. Research and development cost. Research cost are expensed as incurred. Development expenditure incurred on an individual project isrecognised as an intangible assets when all of the following criteria are met: i It is technically feasible to complete the intangible asset so that it will be available for use or sale. ii There is an intention to complete the asset. iii There is a ability to use or sale the asset. iv The asset will generate future economic benefits. v Adequate resources are available to complete the development and to use or sale the asset. vi The expenditure attributable to the intangible asset during development can me measured reliably. Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use and it is amortised on straight line basis over the estimated useful life. During the period of development the asset is tested for impairment annually. ii Impairment of assets The carrying amount of cash generating units/assets is reviewed at Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated at the higher of net selling price and value in use. Impairment loss is recognised wherever carrying amount exceeds the recoverable amount. iii Debrciation Debrciation is provided as per straight-line method over the estimated useful lives of the assets brscribed under schedule II to the Companies Act 2013. Leasehold land is debrciated over its period of lease. Capitalised ERP hardware/software, technical knowhow and development expenditure of projects/products incurred is amortised over the estimated period of benefits, not exceeding five years. iv Investments Long-term investments are stated at cost. Provision, if any, is made for diminution other than temporary in the value of investments. Current investments are stated at cost or fair value whichever is lower. v Inventories Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their brsent location and condition. Raw materials and packing materials are valued at cost or net realizable value whichever is lower. Cost is determined on the basis of weighted average method. Finished goods produced and purchased for sale and work-in-progress are carried at cost or net realisable value whichever is lower. Excise duty is included in the value of finished goods inventory. Stores and spares are carried at cost. vi Foreign currency transactions Transactions in foreign currencies are recorded at the exchange rates brvailing on the date of transaction. Foreign currency monetary assets and liabilities are translated at year-end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise. In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense over the period of the contract. Gains or losses on cancellation / settlement of forward exchange contracts are recognised as income or expense. vii Research and Development Revenue expenditure on Research and Development (R&D) is included under the natural heads of expenditure. Capital expenditure on R&D is capitalised as fixed assets. Development cost including legal expenses and/ or in relation to patent/trade marks relating to the new and improved product and/or process development is recognised as an intangible asset to the extent that it is expected that such asset will generate future economical benefits. viii Employee stock options Measurement and disclosure of the employee share-based payment plans is done in accordance with SEBI (Share Based Employee Benefits) Regulations, 2014 and the Guidance Note on Accounting for Employee Share-based Payments, issued by ICAI. The Company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortised over the vesting period of the option on a straight line basis. ix Employee benefits Short term employee benefits All short-term employee benefits such as salaries, wages, bonus, special awards and medical benefits which fall due within 12 months of the period in which the employee renders the related services which entitles him to avail such benefits are recognised on an undiscounted basis and charged to the statement of profit and loss. Defined contribution plan The Company has a statutory scheme of Provident Fund a defined contribution scheme and contribution of the Company is charged to the Statement of Profit and Loss as incurred. The Company has a scheme of superannuation with the LIC of India and contribution of the Company is charged to the statement of profit and loss as incurred. Defined Benefit Plan The Company's liability towards gratuity to its employees is provided on the basis of an actuarial valuation using the projected unit credit method. Actuarial gains and losses are recognised in full in the statement of profit and loss in the year in which they occur. Compensated Absences The accumulated balance of leave encashment (unfunded) is provided on acturial basis using projected unit credit method. x Revenue Revenue from the sale of products is recognised when the title and the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding collectability of the amount due, associated costs or the possible return of goods. Revenue in respect of overdue interest, insurance claim, export benefits, etc is recognised to the extent the Company is reasonably certain of its ultimate realisation. xi Expenses Expenses are accounted for on accrual basis. xii Provisions, Contingent Liabilities and Contingent Assets. Provisions are recognised when a brsent legal or constructive obligation exists and the payment is probable and can be reliably estimated. A Contingent liability is a possible obligation that arises from past events or a brsent obligation that is not recognised because it is not possible that an outflow of resources will be required to settle the obligation. Contingent liabilities are disclosed by way of notes to the financial statements, after evaluation by the management of the facts and legal aspects of each matter involved. Contingent Assets are neither recognised nor disclosed in financial statements. xiii Income-tax Tax expense comprises current and deferred tax. Current tax is measured at the amount computed under the Income Tax Act, 1961. MAT credit is recognised as an asset only when, and to the extent, there is convincing evidence that the Company will pay normal income tax during the specified period and the said is created by way of credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent that there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of being reversed in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted, at the reporting date. xiv Earnings per share Basic earnings per equity share is computed by dividing net profit by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding adjusted for the effects of all dilutive potential equity shares. xv Borrowing costs Borrowing cost include exchange differences arising from foreign exchange borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, that are attributable to the acquisition, construction or production of a qualifying asset, are capitalised as part of the cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred. xvi Cash and cash equivalents Cash and cash equivalents for the purposes of cash flow statement comprise of cash at bank and in hand and short term investments with an original maturity of three months or less. xvii Leases Finance Leases, where substantially all the risks and benefits incidental to ownership of the leased item, are transferred to the Company, are accounted for as finance leases. Assets acquired under finance leases are capitalised at lower of fair value and brsent value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged to income. Lease management fees, legal charges and other initial direct costs are capitalised. If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease item, capitalized leased assets are debrciated over the shorter of the estimated useful life of the asset or the lease term. Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term. a Foreign currency term loans Foreign currency term loans at 31 March 2016 comprise two term loans, which are repayable in 21 substantially equal quarterly installments commencing after a moratorium of 24 months from the date of 1st disbursement i.e. 3 March 2011 and 28 March 2014 respectively. The loans are secured by i) First pari passu mortgage and charge on mortgage and charge on the entire immoveable properties and moveable fixed assets of the Company, both brsent and future. ii) Pledge of 100% of the equity shares of CFCL Mauritius Pvt. Ltd ("CFCL Mauritius"). iii) Pledge of 100% equity stake of the CFS EUROPE S.p.A .Italy held by the CFCL Mauritius. Collateral Security: 2nd pari passu charge on the entire current assets of the Company. These loans carry an interest rate 4.50% and 4.50% above LIBOR, respectively. The current interest rate on these ranges from 4.89% to 4.95%. b Rupee term loans Rupee term loan from banks comprise term loans from EXIM Bank , State Bank of Patiala and Vehicle loans from HDFC Bank and ICICI Bank. Term loan from EXIM Bank is repayable in 28 & 21 equal quarterly installments commencing after a moratorium period of one year and two year for the date of first disbursement from 13 May, 2010 and 28 March 2014. The loan is secured by a first pari passu charge on all the fixed assets of the Company, both brsent and future. Collateral Securities: 2nd pari passu Charge on the entire Current assets of the Company. In addition to the above the loan disbursed on 28 March 2014 is also secured by way of 1)Pledge of 100% Shares of CFCL Mauritius Private Limited held by CFCL.(2) Pledge of 100% shares of CFS Europe S.P.A .Italy held by CFCL Mauritius Pvt. Ltd. The current interest rate on these ranges from 12.05 % to 13.35%. Term loan from State Bank of Patiala is repayable in 26 equal quarterly installments commencing from 31 December 2013. The loan is secured by first pari passu charge on all the fixed assets of the Company, both brsent and future. Collateral Security: 2nd pari passu Charge on the entire Current assets of the Company. The current interest rate is 12.50%. Term loan from HDFC Bank is repayable in maximum tenure five to seven years. The loan is secured by hypothecation of vehicles. The current interest rate ranges from 11.50% to 12.50%. Term loan from ICICI Bank is repayable in maximum tenure five years. The loan is secured by hypothecation of vehicles. The current interest rate ranges from 11.50% to 12.50%. 2 Commission to Directors The members at their 20th Annual General Meeting have approved the payment of remuneration by way of commission to its Non-Executive Directors, of an amount not exceeding 1% of the Net Profits, for a period of 5 years from the FY 2012-13. During the FY 2015-16, the Company has made a provision of Rs. 36.00 Lacs towards commission payable to Non-executive Directors. 3 Exceptional Item On 16th June 2013, a fire had occurred at the Company's factory at tarapur as a result of which there was a loss of inventory and fixed assets. Company had brferred an insurance claim which was settled during the year. The resultant loss on final settlement of the insurance claim amounting to Rs. 454.73 Lacs has been disclosed as an exceptional item. Prior year figures have been reclassified, where necessary to confirm to current year's classification. As per our report of even date. For B.K. Khare & Co. Chartered Accountants Firm Registration No : 105102W Himanshu Chapsey Partner Membership No : 105731 For and on behalf of the Board of Directors of Camlin Fine Sciences Limited A.S.Dandekar Managing Director D.R.Puranik Executive Director & Chief Financial Officer R.D.Sawale Company Secretary Place : Mumbai Dated : 23 May 2016 |