Note No.1 Significant Accounting Policies 1) Basis of Preparation of Financial Statement 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 specified under Section 133 of the Companies Act. 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year except for change in the accounting policy for debrciation as more fully described in Note 27. 2) Fixed Assets a) Fixed Assets are stated at cost net of duty credit availed less accumulated debrciation and impairments, if any. The cost includes cost of acquisition/construction, installation and broperative expenditure including trial run expenses (net of revenue) and borrowing costs incurred during br-operation period. Expenses incurred on capital assets are carried forward as capital work in progress at cost till the same are ready for use. b) Pre-operative expenses, including interest on borrowings for the capital goods, where applicable incurred till the capital goods are ready for commercial production, are treated as part of the cost of capital goods and capitalized. c) Machinery spares which are specific to particular item of fixed assets and whose use is irregular are capitalized as part of the cost of machinery 3) Impairment of Assets The Company recognizes all the losses as per Accounting Standard -28 due to the impairment of assets in the year of review of the physical conditions of the Assets and is measured by the amount by which, the carrying amount of the Assets exceeds the Fair Value of the Asset. 4) Debrciation Debrciable amount for assets is the cost of an asset, or otheramount substituted for cost, less its estimated residual value. Debrciation on tangible fixed assets have been provided on the written down-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013. Plant Machinery -15Years Factory Building -30Years Office Equipment - 5 Years Vehicle-8 Years Furniture and Fittings -10 Years Computer -3 Years 5) Inventories Valuation Raw material is valued at cost (First in First Out basis) or nets realizable value whichever is lower. Finished Goods are valued at cost or net realizable value whichever is lower. Stock of Scrap is valued at net realizable value. Stock of Trading Goods is valued at Cost (Weighted Average/ First in First Out basis). 6) Foreign Exchange Transactions Foreign currency transactions are recorded at the rate of exchange brvailing on the date of transaction. All exchange differences are dealt within profit and loss account. Current assets and current liabilities in foreign currency outstanding at the year end are translated at the rate of exchange brvailing at the close of the year and resultant gains/losses are recognized in the profit and loss account of the year except in cases where they are covered by forward foreign exchange contracts in which cases these are translated at the contracted rates of exchange and the resultant gains/losses recognized in profit and loss account overthe life of the contract. 7) Duties & Credits a) Excise Duty is accounted for at the time of clearance of goods except closing stock of finished goods lying at the works. b) Cenvat Credit, to the extent available during the year, is adjusted towards cost of materials. c) Duty credit on export sales has been taken on accrued basis whether license has been issued after closing of the financial 8) Sales are inclusive of excise duty and after deducting the trade discount and also sales tax applicable. 9) Retirement Benefits a) The total accrued liability in respect of employees covered by the Payment of Gratuity Act, 1972, as actuarially determined in accordance with the relevant provisions of AS-15 issued by ICAI, and not provided for amounts to Rs.44,77,787/- (Previous YearRs.39,14,281/-). b) Leave Encashment to Rs.3,94,194/- (Previous Year Rs.3,39,711/-) has been not provided for. 10) Borrowing Cost Borrowing cost is charged to the Profit & Loss Account, except cost of borrowing for the acquisition of qualifying assets, which is capitalized till the date of commercial use of the assets. In compliance of AS-16, the Borrowing Cost amounting to Rs.91,06,056/-(Previous Year Rs.37,02,691/-) has been capitalized during the year to the corresponding Capital Assets. 11) Taxes on Income Provision for current tax is made considering various allowances, disallowances and benefits available to the Company under the provisions of Income Tax Law. In accordance with Accounting Standard AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred taxes resulting from timing differences between book and tax profits are accounted for at tax rate substantively enacted by the Balance Sheet date to the extent the timing differences are expected to be crystallized. 12) Revenue Recognition Sale of goods is recognized when the risk and reward of ownership are passed on to the customers. Revenue from services is recognized when the services are complete. 13) Investments Long term investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Diminution, if any, in the value of Long Term Investment in respect of equity shares in Partap Industries Limited has not been provided for since the Management is of the opinion that reduction in the value of investment is of the temporary nature considering to inherent value and nature of investee's business and hence no provision is required. Current investments are carried at lower of cost and fair value. Income/ Loss from investments are recognized in the year in which it is generated. 14) Provision and Contingencies The company creates a provision when there is a brsent obligation as a result of past event that requires an outflow of resources and a reliable estimate can be made of the amount of obligation. Adisclosure for a contingent liability is made when there is a brsent obligation that may require an outflow of resources or where a reliable estimate of such obligation cannot be made. 15) Cash Flow Statement Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a noncash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Group are segregated 16) Earnings per Share Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) 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 forthe effects of all dilutive potential equity shares. NoteNo.2 Contingent Liabilities Contingent liability not provided for in respect of: a) Bank Guarantees of Rs. 1751.10 Lacs (Previous year Rs. 1812.01 Lacs). b) Bills Discounted of Rs.111.63 Lacs (Previous Year Rs.Nil) c) Accrued Liability for Leave Encashment of Rs.3.94 Lacs (Previous Year Rs.3.39 Lacs) d) Accrued Liability for Gratuity Outstanding of Rs.44.78 Lacs (Previous Year Rs.39.14 Lacs) e) Outstanding letters of credit amounting to Rs. 125.00 Lacs. (Previous year Rs. 125.00 Lacs) f) Entry Tax Payable Rs. 111.42 Lacs (Previous Year Rs. 111.42 Lacs) g) Corporate Guarantees of Rs.3000.00 Lacs (brvious Year Rs.3000) given to Union Bank of India on account of Bank Guarantees furnished by Union Bank of India to the Jammu & Kashmir Govt towards contracts awarded to M/s Pir Panchal Construction Pvt.Ltd., Joint Venture, an association of person, in which ourcompany is one of the participant. NoteNo.3 a) During the Year 2011-12, the Petition filed by the company, challenging the Entry Tax (on Purchases) imposed by U.P VAT Authorities, was rejected by the Hon'ble High Court of Allahabad, holding the imposition of Entry Tax as lawful. The verdict of the hon'ble Court accrued Entry Tax Liability amounting to Rs.2,21,36,566/- upon the Company towards the UP Commercial Taxes Department. But the Company filed a petition in the hon'ble Subrme Court challenging the verdict of Allahabad High Court. Further in accordance with the directions of the hon'ble Subrme Court, the Company has paid a sum of Rs. 1,11,41,669/- to the Department and gave the Bank Guarantee for the balance amount of Rs.1,09,94,897/-. The Case is still pending in the Court of Law. As the Company was of the opinion that eventually no liability shall accrue to the company on this issue, it did not provide for this Entry Tax Liability on Purchases intheYear2011-12. b) The Company has filed civil suit for Rs. 45,35,667/-, against one of its debtor for recovery of dues in respect of goods supplied tothem against LCs. The matter is pending in Delhi High Court NoteNo.4 None of the employees was in receipt of remuneration in excess of Rs.60,00,000 p.a. or Rs.5,00,000 p.m. if employed for part of the yearas brscribed under section 217 (2) (A)of the Companies Act, 1956. Note No.5 Segment Reporting (AS-17) The Company is primarily engaged in the business of manufacture and sale of steel Tube/Pipes and its revenue from trading segment is not significant. As such the accounting standard on segment reporting is not applicable. Note No.6 The outstanding balances of Sundry Debtors/Creditors in the books of the company are subject to confirmation. NoteNo.7 Long Term Loans & Advances vide Note No.12 include Advances against Capital Account of Rs. 17,92,025/- given as Advance against Mumbai Land Development. The aforesaid Land is in the name of the company.Note No.8 On the basis of information available with the company, it does not owe any outstanding dues towards Small Scale Industrial Undertaking amended Schedule VI of the companies Act, 1956 vide Notification NO. GSR 129 (E) dated 22.02.99, in case the sum owned is Rs. 1.00 Lac or more which is outstanding for more than 30 days as at 31 st March, 2015. Note No.9 On the basis of information available with the company, the Company does not have any amounts due to suppliers under the Micro, Small and Medium Enterprises covered underthe Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at 31st March 2015. NoteNo.10 Amounts except number of shares and earnings per share are rounded off to the nearest rupees. Note No.11 The figures of brvious year have been regrouped / rearranged wherever considered necessary. Note No.12 Significant accounting policies and practices adopted by the company are disclosed in the Note No.1 annexed to these financial statements. As per our separate audit Report of even date attached For VAPS& Company Chartered Accountants Firm Regn. No. 003612N Sd/-P.K.Jain Partner M No. 82515 For and on behalf of the Board Sd/- Naresh Kumar Bansal Managing Director Sd/-Rajkumar Malik (Chief Financial Officer) Sd/-Richi Bansal Director Sd/-Kapil Datta (Company Secretary)Place: New Delhi Date : May 30,2015 |