STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES for the year ended March 31st, 2015 Note 1 : Significant Accounting Policies : A. Basis of brparation of Financial Statements The financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been brpared to comply in all material aspects with the Accounting Standards notified pursuant to Companies (Accounting Standards) Rules 2006 which continues to be applicable under section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 and the other relevant provisions of the Companies Act, 2013. The accounting policies have been consistently applied by the Company and are consistent with those used in the brvious year. The reporting currency is INR and amounts are rounded off to nearest lacs. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. B. Use of Estimates The brparation of the 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. Although these estimates are based upon best knowledge of current events and actions, actual results could differ from these estimates. These differences are recognized in the period in which the results are known / materialized. C. Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. a) Revenue from sale of goods is recognized when all the significant risks and rewards of ownership are transferred to the buyer and the Company retains no effective control of the goods transferred to a degree usually associated with ownership; and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Sales figure are inclusive of excise duty and freight in case of landed rates, but are of net of sales returns, and rate difference adjustments. b) Export benefits available under the brvalent schemes are accrued in the year in which the goods are exported and are accounted to the extent considered recoverable. c) Dividend income is recognized when the right to receive dividend is established. d) Interest income is recognized on accrual basis. D. Fixed Assets and Debrciation a) Fixed assets including leasehold improvements and technical knowhow costs are stated at cost (net of CENVAT, wherever applicable). Cost includes direct expenses related to acquisition and installation and interest incurred during construction period. b) Debrciation is provided on Straight Line Method (SLM) at the rates and in the manner brscribed in Schedule II to the Companies Act, 2013 or over the estimated useful lives of the assets, whichever is higher. Assets costing X 5,000 or less are fully debrciated in the year of purchase. c) In respect of addition and sales of assets during the year, debrciation is provided on pro-rata basis. d) In case of assets acquired on lease, cost / brmium paid are being amortized over a period of 20 years or the life the lease whichever is less. e) Expenditure on projects pending capitalization is shown under the head "Capital Work In Progress" which will be capitalized to respective heads of Fixed Assets on commencement of commercial production. f) Machinery spares either procured along with plant and machineries or subsequently and whose useful life is expected to be irregular are capitalized and debrciated over residual use life of related plant and machinery. E. Intangible Assets a) Acquired Intangible Assets in the form of "Process Know How" is recognized at the cost of acquisition and amortized on straight line basis over a period of five years, depending on their estimated useful life. b) Capitalized software includes cost on Enterprise Resource Planning (ERP) project and other Software cost including license fees, which provides significant future benefits. ERP Project fees are amortized over a period of seven years. Costs of all other software are amortized over a period of five years. c) The amortization period and method are reviewed at each year end. F. Impairment of Fixed Assets a) Assessment is done at each Balance Sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is higher of an asset's or cash generating unit's net selling price and its value in use. b) Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. G. Inventories Raw Materials, Stores & Spares and finished goods are valued at cost or net realizable value whichever is lower. For this purpose cost is arrived at on weighted average basis. In respect of finished goods appropriate overheads are considered based on the normal operating capacity. Cost of finished goods also includes excise duty if applicable. H. Foreign Exchange Transactions a) Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchanges rate between the reporting currency and the foreign currency at the date of transaction. Foreign currency monetary items outstanding as on balance sheet date are revalued at exchange rate brvailing on balance sheet date (closing rate) and the gain / loss is recognized in Statement of Profit and Loss. b) The brmium or discount arising at the inception of forward exchange contracts is amortized as expenses or income over the life of the Contract. Exchange differences on such contracts are recognized 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 recognized as income or as expense for the year. I. Investments a) Current Investments are carried at the lower of cost and quoted / fair value, computed category wise. b) Long-term investments are stated at cost added by directly attributable cost. Provision for diminution in the value of long-term investments is made only if such a decline is of other than temporary in nature in the opinion of the management. J. Employee Benefits a) Short Term Employee Benefits Short term employee benefits are recognized as expenses at the undiscounted amount in the Statement of Profit and Loss of the year in which the related services is rendered. Short term employee benefits also include accrued leave benefits, which are expected to be availed or encashed within 12 months from the end of the year. b) Post-employment benefit plans b.i) Defined Contribution Plan Contribution towards provident fund for eligible employees are accrued in accordance with applicable statutes and deposited with the regulatory authorities. The Company does not carry any other obligation apart from the monthly contribution. b.ii) Defined Benefit Plan The Company provides for gratuity, a defined benefit plan covering eligible employees in accordance with the Payment of Gratuity Act, 1972, through an approved Gratuity Fund. The Gratuity Fund is administered through a Trust. Contributions in respect of gratuity are made to the approved Gratuity Fund of the Company. The Company's liability is actuarially determined (using the Projected Unit Credit method) at the end of each year and is recognized in the Balance sheet as reduced by the fair value of Gratuity Fund. Actuarial losses/ gains are recognized in the Statement of Profit and Loss in the year in which they arise. K. Borrowing Cost General and specific borrowing costs directly attributable to the acquisition, construction and production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are recognized in Statement of Profit and Loss in the period in which they are incurred. L.. Earnings Per Share Basic earnings per share are 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. M. Taxes on Income a) Tax expense comprise of current and deferred taxes. b) Current income tax is measured at the amount expected to be paid to tax authorities in accordance with the Indian Income Tax Act, 1961. c) Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets are recognized for deductible timing differences 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 realized. Deferred tax asset is recognized on carried forward losses (if any) under tax laws, only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized. At each reporting date, the unrecognized deferred tax assets is reassessed and recognized to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets against the current tax liabilities. d) Minimum Alternate Tax (MAT) Credit is recognized 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. In the year in which the MAT Credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset 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 there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period. N. Provisions, Contingent Liabilities and Contingent Assets Provisions are recognized when there is a brsent obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the brsent obligation at the Balance sheet date and are not discounted to its brsent value. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company or a brsent obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements. O. Cash and Cash Equivalents In the Cash Flow Statement, cash and cash equivalents rebrsent cash on hand and demand deposits with bank. P. General Accounting policies not specifically referred to are consistent with generally accepted accounting practice. 1. Forward Contracts A) The Company uses forward contracts to hedge its risks associated with fluctuations in foreign currency and interest rates. The use of forward contracts is covered by Company's overall strategy. The Company does not use forward covers for speculative purposes. B) Part of the foreign currency loans are covered by combrhensive hedge which effectively fixes liability of such loans and further there is no additional risk involved post hedging of such loans. C) The outstanding forward contracts as at March 31, 2015 is 7 143.42 lacs (Previous Year 7 245.00 lacs) in respect of hedging currency related risk. 2. As per Section 74(1) of the Companies Act, 2013, the Company is required to make repayment of deposit accepted prior to 31.03.2014 within a period of one year from 01.04.2014 or the date on which deposit becomes due for payment, whichever is earlier. The Company has repaid the deposits which have matured during the year 2014-15. However, in respect of deposits maturing after 31.03.2015, the Company has made an application dated March 29, 2015 under Section 74 (2) of the Companies Act, 2013, before the Company Law Board, Western Region Bench, Mumbai to allow the Company to re-pay the deposits upto and inclusive of the time as agreed with the fixed deposit holders. Pending the outcome of the application made the deposits are not re-paid by the Company before 31.03.2015. Consequently, the classification of deposit in to Current and Non-Current Category is made considering the period within which deposit will be repaid. 3. The figures of the brvious year have been regrouped / reclassified, where necessary, to confirm with the current year's classification. As per our audit report of even date attached For Manubhai & Shah Chartered Accountants Firm Registration No.: 106041W For and on behalf of Board of Directors G. R. Parmar Partner Membership No.:121462 C. S. Parikh Executive Chairman DIN- 00041584 Bharat Kanani Chief Financial Officer Anuja Muley Secretary Date ; May 27, 2015 place : Waghodia, Vadodara |