Note 1: SIGNIFICANT ACCOUNTING POLICIES (Annexed to and forming part of the financial statements for the year ended 31st March, 2015) I) Basis of brparation of Financial Statement The financial statements are brpared under the Historical cost convention method, using the accrual system of accounting in accordance with the Generally Accepted Accounting Principles in India including the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. II) Revenue Recognition Revenue from sale of goods and services rendered is recognized upon transfer of title and rendering of services to the customers. • Sales include trade sales. • Gross Sales include applicable taxes unless separately charged and are net of discount. • Sales are recognized on dispatch except consignment sales which are recognized on receipt of statement of accounts from the agent. III) Use of Estimates The brparation of financial statements in conformity with Indian GAAP requires judgements estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent 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 are known/materialized. IV) Fixed Assets Fixed Assets are stated at cost of acquisition inclusive of duties ( net of CENVAT/VAT), taxes, borrowing costs directly attributable to acquisition, incidental expenses and erection/ commissioning etc., up to the date, the asset is ready for its intended use. V) Impairment of Assets The carrying amount of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on external/internal factor. An impairment loss is recognised wherever the carrying amount of an asset exceeds it's recoverable amount which rebrsents the greater of the net selling price and value in use of the assets. The estimated cash flows considered for determining the value in use, are discounted to the brsent value at weighted average cost of capital. VI) Foreign currency transaction a) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. b) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. c) Exchange Differences Exchange differences arising on the settlement/conversion of monetary items are recognized as income or expenses in the year in which they arise. The brmium or discount arising at the inception of forward exchange contracts is amortised as expenses or income over the life of the respective contracts. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the year. VII) Debrciation a) Debrciation on all Fixed Assets is provided as per Schedule II of Companies Act, 2013 under Straight Line Method over estimated useful lives for each category of assets as under: • Factory Building : 30 years • Plant and Machinery : 10 to 20 years • Electrical Installation and Equipments : 10 Years • Furniture and Fixture : 10 Years • Office Equipment : 5 Years • Motor Vehicles : 8 Years • Computers : 3 Years b) Debrciation includes amortisation of leasehold land over the period of lease. c) The residual value of assets has been considered as five percent of the original cost of the assets as per Schedule II of the Act. d) Debrciation is provided on pro-rata basis on additions and deletions of Fixed Assets during the year. e) In case of impairment, if any, debrciation is provided on the revised carrying amount of the assets over its remaining useful life. f) Software costs are amortized using the Straight Line Method over estimated useful life of 3 years. VIII) Investments Long term Investments are stated at Cost less provisions recorded to recognise any decline,other than temporary, in the carrying value of each investment. Investments in foreign companies are considered at the exchange rates brvailing on the date of their acquisition. Current investments are carried at lower of cost or fair value of each investment. Short term Investments in liquid fund scheme of mutual funds have been stated at their NAV on year end date or purchase price whichever is less. IX) Inventories Inventories are valued as follows: a) Raw materials, finished goods, Stock in trade, Work in process, Packing materials and stores & spares are valued at lower of cost and net realisable value. Closing stock has been valued on Weighted Average basis. b) Saleable scraps, whose cost is not identifiable, are valued at estimated realisable value. X) Research & Development Research and development expenditure of revenue nature are charged to Profit & Loss Account, while capital expenditure are added to the cost of fixed assets in the year in which these are incurred. XI) Employee Benefits i) Short term employee benefits are charged off at the undiscounted amount in the year in which the related services is rendered. ii) Post employment and other long term employee benefits are charged off in the year in which the employee has rendered services. The amount charged off is recognised at the brsent value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and losses in respect of post employment and other long term benefits are charged to Profit and Loss Account/Project Development Expenditure Account. XII) 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 number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. XIII) Excise Duty and Custom Duty Excise duty on finished goods stock lying at factories is accounted for at the point of manufacture of goods and accordingly, is considered for valuation of finished goods as on the Balance Sheet date. Custom duty on imported material in transit / lying in bonded warehouse is accounted for at the time, the same are released from Customs/ Bonded warehouse. XIV) Financial Derivatives and Commodity Hedging Transactions In respect of derivative contracts, brmium paid, gains/losses on settlement and provision for losses for cash flow hedges are recognised in the Profit and Loss Account, except in case where they relate to borrowing costs that are attributable to the acquisition or construction of fixed assets, in which case, they are adjusted to the carrying cost of such assets. XV) Borrowing Costs Borrowing Costs relating to acquisition / construction of qualifying assets are capitalized until the time all substantial activities necessary to brpare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue. XVI) Taxation Tax expenses 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. Deferred income taxes reflects the impact of current year timing differences between taxable income for the year and reversal of timing differences of earlier years. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been substantially enacted as on the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the company has carry forward unabsorbed debrciation and tax losses, deferred tax assets are recognised only to the extent there is virtual certainty supported by convincing evidence that sufficient taxable income will be available against which such deferred tax asset can be realized. XVII) Segment Reporting a) Identification of segments The company has identified its business segments as the primary segments . The company's businesses are organized and managed separately according to the nature of products/ services, with each segment rebrsenting a strategic business unit that offers different product / services and serves different markets. The analysis of geographical segments is based on the areas in which the customers of the company are located. b) Allocation of Common Costs Common allocable costs are allocated to each segment on case to case basis applying the ratio, appropriate to each relevant case. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segment on a reasonable basis, have been included under the head "Unallocated". The accounting policies adopted for segment reporting are in line with those of the Company. XVIII) Prior Period Expenses/Income Material items of prior period expenses/income are disclosed separately. XIX) Provision, 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. Contingent Assets are neither recognised nor disclosed in the financial statements 1. Pursuant to the Scheme between Manaksia Limited and Manaksia Aluminium Company Limited, Manaksia Steels Limited, Manaksia Coated Metals & Industries Limited and Manaksia Industries Limited (the Companies), the Companies got demerged from the appointed date of 01.10.2013. Investment in Equity shares of demerged Companies were cancelled simultaneously upon allotment of shares by the demerged companies to the shareholders of Manaksia Ltd and this amount was adjusted with General Reserve of Manaksia Ltd. 2. Effective from April 1, 2014, the Company has charged debrciation based on the revised remaining useful lives of the assets as per the requirement of Schedule II to the Companies Act, 2013. Due to above, debrciation charge for the year ended March 31, 2015, is higher and profit after tax is lower by Rs. 20.39 lacs. An amount of Rs 56.49 Lacs (net of deferred tax) has been recognized in the opening balance of retained earnings for the assets where remaining useful life as per Schedule II is Nil. 3. Corresponding comparative figures for the brvious year have been regrouped and readjusted wherever considered necessary to confirm to the current year brsentation. 4. Current period figures are for 12 months ended 31st March 2015 in respect of residual undertaking remaining after demerger and brvious period figures include the results of entire undertaking from start of Financial year (i.e 1st April 2013) to period prior to appointed date of demerger (i.e 30th September 2013). Since the reporting period of residual undertaking are not same, these figures are not comparable. In terms of our Report on even date For SRB & Associates Chartered Accountants Firm Regn. No. 310009E Bisworanjan Sutar (Partner) Membership No.066708 For and on Behalf of the Board of Directors Suresh Kumar Agrawal Managing Director DIN:00520769 Sunil Kumar Agrawal DIN:00091784 Director Sanjay Kumar Singhania Chief Financial Officer Raj Kumar Banthia Company Secretary Place : Kolkata Date : 15th day of May, 2015 |