NOTE 1 Significant Accounting Policies (i) BASIS OF brPARATION OF ACCOUNTS The financial statements are brpared under historical cost convention on accrual basis and are in compliance with the Companies Accounting Standard Rules, 2006 and the relevant provisions of the Companies Act 2013 thereof pending notification of Accounting Standards in terms of section 133 of Companies Act 2013. The accounts brsentation under Indian Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the balance sheet date. (ii) REVENUE RECOGNITION a. Sale of goods Revenue from the sale of goods is recognised in the Statement of profit and loss when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from operations includes consideration received or receivable, excise duty but net of discounts and rebates and sales related taxes. b. Sale of power Revenue from the sale of power is recognised based on the units as per invoice as transmitted to buyer. c. Dividend and Interest income Dividend income is recognized when the Company's right to receive dividend is established. Interest income is recognised on accrual basis based on interest rates implicit in the transactions. (iii) FIXED ASSETS All Fixed Assets are valued at cost less debrciation/amortization. The cost of an asset includes the purchase cost of materials, including import duties and non refundable taxes and any directly attributable costs of bringing an asset to the location and condition of its intended use. Interest on borrowings used to finance the construction of fixed assets are capitalized as part of the cost of the asset until such time that the asset is ready for its intended use. (iv) INTANGIBLE ASSETS Intangible Assets expected to provide future enduring economic benefits are stated at cost less amortization. Cost comprises purchase price and directly attributable expenditure on making the asset ready for its intended use. (v) DEbrCIATION & AMORTIZATION Tangible Assets Fixed Assets are debrciated on straight line basis applying the useful life specified in Schedule II to the Companies Act, 2013. Intangible Assets Intangible assets are amortized over their best estimated useful life ranging upto three years on straight line method. Others Leasehold lands are amortized on straight line basis over the period of lease. (vi) INVESTMENTS Non Current Investments are stated at cost less provision, if any, for diminution which is other than temporary in nature. Current investments are carried at lower of cost or fair value. (vii) INVENTORIES Raw materials and Packing materials are valued at cost comprising purchase price, freight and handling, non refundable taxes and duties and other directly attributable costs incurred on bringing such inventories to their brsent location and condition. Finished products are valued at lower of cost and net realizable value. (viii) FOREIGN CURRENCY TRANSACTIONS Foreign Currency transactions and forward exchange contracts are recorded on initial recognition in the reporting currency i.e. Indian rupees, using the exchange rates brvailing on the date of the transaction. Monetary assets and liabilities in currencies other than the reporting currency and foreign exchange contracts remaining unsettled are remeasured at the rates of exchange brvailing at the balance sheet date. Exchange difference arising on the settlement of monetary items and on the remeasurement of monetary items are included in Statement of profit and loss for the year. In case of forward exchange contracts, the difference between the contract rate and the spot rate on the date of transaction is charged to the Statement of Profit and Loss over the period of the contract. (ix) BORROWING COSTS Borrowing costs that are attributable to the acquisition, construction of qualifying assets are capitalized as part of the cost of such assets till such time the asset is ready for its intended use or sale. All other borrowing costs are recognised as an expense in the Statement of Profit and Loss in the period in which they are incurred. (x) RESEARCH AND DEVELOPMENT COSTS Revenue expenditure on research and development are expensed in the year in which these are incurred. Fixed Asset used for research and development is stated at cost less accumulated amortization and impairment losses are debrciated in accordance with policy of the Company. (xi) EMPLOYEE BENEFITS (i) Short Term benefits Short term benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related services are rendered. (ii) Post Employment Benefits Defined contribution plans are those plans where the Company pays fixed contributions to a separate entity. The contributions are expensed as they are incurred in line with the treatment of wages and salaries. Defined benefit plans are arrangements that provide guaranteed benefits to employees, either by way of contractual obligations or through a collective agreement. The brsent value of these defined benefit obligations are ascertained by independent actuarial valuation as per the requirement of Accounting Standards 15 - Employee Benefits. The liability recognised in the balance sheet is the brsent value of the defined benefit obligations on the balance sheet date less the fair value of the plan assets (for funded plans), together with adjustments for unrecognised past service costs. All actuarial gains and losses are recognised in the Statement of Profit and Loss in full in the year in which they occur. (xii) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognised when there is a 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 the Notes to the financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements. (xiii) IMPAIRMENT OF FIXED ASSETS (a) The carrying amounts of assets are reviewed at each Balance Sheet date for indicators of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. (b) After impairment, debrciation is provided on the revised carrying amount of the assets over its remaining useful life. (c) A brviously recognised impairment loss is increased or reversed depending on changes in circumstances. (xiv) TAXATION (a) Tax expense comprises of Current and Deferred Tax. Current Income Tax is measured at the amount expected to be paid to the Tax Authorities in accordance with the Indian Income Tax Act, 1961. (b) Deferred Tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred Tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet. Other Notes to Financial Statements. 2.1 Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 1.31 Crores (brvious year Rs. 1.01 Crores). 2.2 The company has reviewed the impairment of assets at year end and noted that none of the assets has been impaired as on 31st March, 2015. 2.3 Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 1.31 Crores (brvious year Rs. 1.01 Crores). 2.4 The company has reviewed the impairment of assets at year end and noted that none of the assets has been impaired as on 31st March, 2015. In view of change in debrciation method from written down value to straight line method, debrciation for the year ended 31st March, 2015 is higher by Rs. 2.71 Crores and effect relating to the period prior to the 1st April, 2014 is Rs. 30.20 Crores, which has been shown as the 'Exceptional Item' for the year ended 31st March, 2015. 2.5 During the year, the Company has entered into a Joint Venture agreement with JX Nippon Oil & Energy Corporation, Japan to form a Joint Venture Company to manufacture and sell lubricants under the brand name 'ENEOS'. In pursuance of this joint venture agreement, a new Joint Venture Company named JX Nippon TWO Lubricants India Pvt. Ltd. was incorporated on 8th August, 2014. Further, the Company has transferred 'Business Undertaking' pertaining to Eneos business pursuant to the 'Business Transfer Agreement' to JX Nippon TWO Lubricants India Pvt. Ltd. on 1st October, 2014 for a lump sum consideration of Rs.108 Crores as Slump Sale. As a result of this transaction, a long term capital gain has accured during the year and has been shown as an 'exceptional item' in the Statement of Profit & Loss. 2.6 During the year, the Company has transferred a land and building at Royapuram, Chennai on 9th October, 2014 at a lump sum consideration of Rs. 13.12 Crores. As a result of this transaction, a long term capital gain has accured during the year and shown as an 'exceptional item' in the Statement of Profit & Loss. 2.7 The Company had instituted a Tide Water Oil Company (India) Limited Employee Welfare Scheme (TWOC-EWS 2010-11) as approved by the Board of Directors and the Shareholders vide a special resolution by postal ballot on 2nd March 2011 for allotment of stock options to employees. The Scheme was kept in abeyance during the year. The scheme was being administered by an independent Tide Watre Oil Co. (India) Ltd. Emplyee Welfare Trust (TWOC-EWT). The objective of the trust was acquiring shares from the secondary market and implementing the aforesaid scheme under the TWOC-EWS 2010-11. In terms of clause 22A.1 of SEBI guideline 1999. "in case of ESOS/ESPS administered through a Trust, the accounts of the Company shall be brpared as if the company itself is administrating the ESOS/ESPS" and as per opinion of the Expert Advisory Committee of Institute of Chartered Accountants of India, the balance loan amounting to Rs. 16.50 Crores (Previous year Rs. 17.00 Crores) to TWOC-EWT in the books of the Company has been eliminated against loan paid to TWOC-EWT by means of book adjustment only. Therefore 21,457 (brvious year 21,457) nos. of equity shares held in trust for employees under the ESOP scheme as on 31st March 2015, amounting Rs. 15.59 Crores (brvious year Rs. 15.39 Crores) has been shown as deduction from Share Capital to the extent of face value of equity shares Rs. 0.02 Crores (brvious year Rs. 0.02 Crores) and Securities Premium Reserve to the extent of Rs. 4.39 Crores (brvious year Rs. 4.39 Crores) and remaining balance amount has been shown as deduction from General Reserve to the extent of Rs. 11.18 Crores (brvious year Rs. 10.98 Crores). Since the financial result of TWOC-EWT is included in standalone financial statements of the Company, the notional accumulated deficit of ESOP trust amounting Rs. 0.91 Crores (brvious year Rs. 1.61 Crores) arising from the operation of the TWOC-EWT till 31st March 2015 has been adjusted with 'Surplus' of the Company. 2.8 The diminution in value of Long Term quoted Investments amounting to Rs. 0.41 Crores (brvious year Rs. 0.41 crores) is in the opinion of the management, not of a permanent nature and accordingly no provision has been made. 2.9 Disclosures pertaining to Segment Reporting as per AS-17 Based on the synergies, risks and returns associated with business operations and in terms of Accounting Standard –17, the Company is brdominantly engaged in the business of a single reportable segment of Lubricants during the year. Therefore disclosure requirements of AS 17 on Segment Reporting are not applicable to the company. 2.10 Contribution to political party amounting to Rs. 0.01 Crores (Previous year NIL). 2.11 Previous year figures have been reclassified to conform to this year's classification and have been regrouped and rearranged wherever necessary to make it comparable with the current year figures. On behalf of the Board Kallol Datta Chairman R. N.Ghosal Managing Director S. Basu CFO S. Ganguli Secretary Kolkata, 30th May 2015 |