A. SIGNIFICANT ACCOUNTING POLICIES : (a) Basis of brparation : These financial statements have been brpared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standards brscribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and other accounting principles generally accepted in India, to the extent applicable. (b) Use of Estimates : The brparation of the financial statements in conformity with GAPP requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements. (c) Revenue Recognition Sales are stated inclusive of rebate and trade discount and excluding Central Sales Tax, State Value Added Tax. With regard to sale of products, income is reported when practically all risks and rights connected with the ownership have been transferred to the buyers. This usually occurs upon dispatch, after the price has been determined. Export Benefits are accounted on accrual basis. (d) Fixed Asset : (i) Tangible Fixed Assets acquired by the Company are reported at acquisition value, with deductions for accumulated debrciation [other than "freehold land" where no debrciation is charged]. The acquisition value includes the purchase price (excluding refundable taxes), and expenses directly attributable to assets to bring it to the factory and in the working condition for its intended use. Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings if any, the corresponding borrowing cost are capitalized up to the date when the asset is ready for its intended use. (ii) Intangible Fixed assets are stated at cost of acquisition or development. (iii) All indirect expenses incurred during project implementation and on trial run are treated as incidental expenditure during construction and capitalized. (iv) Capital Works in Progress are stated at Cost. (e) Impairment of Assets : The Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is higher of the asset's net selling price and value in use, which means the brsent value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset other than goodwill is reversed if, and only if, the reversal can be related objectively to an event occurring after the impairment loss recognized. The carrying amount of an asset other than goodwill is increased to its recoverable amount that would have been determined (net of any accumulated amortization or debrciation) had no impairment losses been recognized for the asset in prior years. (f) Debrciation and Amortisation : a) Debrciation on fixed assets is provided to the extent of debrciable amount on Straight Line Method. Debrciation is provided based on useful life of the assets as brscribed in Schedule II to the Companies Act,2013. b) Intangible assets are amortized over a period of 5 years. (i) Debrciation on additions/disposals during the period is provided on prorata with reference to the month of acquisition/installation as required by Schedule II of the Companies Act,2013. (ii) No Debrciation has been provided in respect of Capital Work in Progress (g) Investments : Investments are classified as Long Term & Current Investments. Long Term Investments are: • valued at cost less provision for diminution other than temporary, in value, if any. • Current Investments, if any, are valued at lower of cost or fair value . (h) Cash Flow Statement Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash 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 Company are segregated. Cash and Cash equivalents brsented in the Cash Flow Statement consists of cash on hand and demand deposits with banks. (i) Foreign Currency Transactions Transactions in the foreign currency which are covered by forward contracts are accounted for at the contracted rate; the difference between the forward rate and the exchange rate at the date of transaction is recognized in the statement of profit & loss over the life of the contract. Foreign currency denominated monetary assets and liabilities are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date. Exchange differences arising on settlement or restatement of long term foreign currency monetary items, in so far as they relate to acquisition of debrciable assets are adjusted to carrying cost of such assets and debrciated over balance life of the assets.The gains or losses resulting from such translations are included in the Statement of Profit and Loss. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at the exchange rate brvalent at the date when the fair value was determined. Non-monetary assets and non-monetary liabilities denominated in foreign currency and measured at historical cost are translated at the exchange rate brvalent at the date of transaction. Revenue, expense and cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in effect on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. (j) Valuation of Inventories i) Raw materials are valued at lower of cost or net realizable value. ii) Work in progress has been valued at cost of materials and labour charges together with relevant factory overheads. iii) Finished Goods are valued at lower of cost or net realizable value . iv) Stores & Spares and Power & Fuel stocks are valued at cost, (k) Employee Benefit: i. Short Term Short Term employee benefits are recognized as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the company. ii. Long Term The Company has both defined contribution and defined benefit plans. These plans are financed by the Company in the case of defined contribution plans. iii. Defined Contribution Plans These are plans in which the Company pays br-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to Employees Provident Fund. The Company's payments to the defined contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers. iv. Defined Benefit Plans Expenses for defined benefit gratuity payment plans are calculated as at the balance sheet date by independent actuaries in the manner that distributes expenses over the employees working life. These commitments are valued at the brsent value of the expected future payments, with consideration for calculated future salary increases, using a discounted rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on Government Bonds with a remaining term i.e. almost equivalent to the average balance working period of employees. v. Other Employee Benefits Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. (l) Earning per Share : Basic earning per share is calculated by dividing the net profit after tax for the year attributable to Equity Shareholders of the Company by the weighted average number of Equity Shares outstanding during the year. Diluted earning per Share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year. (m) Taxation Income -tax expense comprises of current tax, and deferred tax charge or credit. Provision for current tax is made on the basis of the assessable income at the tax rate applicable to the relevant assessment year. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets arising mainly on account of brought forward business losses, capital losses and unabsorbed debrciation under tax laws, are recognized, only if there is a virtual certainly of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realization. At each balance sheet date, the carrying amount of deferred tax assets is reviewed to reassure realization. (n) Provisions/ Contingencies A provision is recognized when the Company has a brsent legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding long term benefits) are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognized but are disclosed in the notes to the Financial Statements. A contingent asset is neither recognized nor disclosed. (o) Borrowing Cost Borrowing costs are recognized in the period to which they relate, regardless of how the funds have been utilized, except where it relates to the financing of construction or development of assets requiring a substantial period of time to brpare for their intended future use. Interest on such borrowings if any is capitalized up to the date when the asset is ready for its intended use. The amount of interest capitalized for the period is determined by applying the interest rate applicable to appropriate borrowings 1. As per the practice consistently followed, Cenvat Duty on finished goods lying in the plants at the end of the period is neither included in expenditure nor valued in such stock, but is accounted for upon clearance of goods. Significant accounting policies - A Notes on Financial Statements 1 to 48 For Parikh & Majmudar Chartered Accountants Firm Reg. No. 107525W [C.A.(Dr) Hiten M. Parikh] PARTNER M. No. 040230 For, and on behalf of the Board Rushil Decor Limited [Ghanshyambhai A.Thakkar] Chairman DIN : 00208843 [Krupeshbhai G. Thakkar] Managing Director DIN : 01059666 [V. S .Vora] Chief Financial Officer [H. K. MODI] Company Secretary Place : Ahmedabad Date : 23rd May, 2015 |