Significant Accounting Policies BACKGROUND Texmo Pipes and Products Limited was formed as a Partnership Firm by the name M/s Shree Mohit Industries on 13th May 1999 and was subsequently converted and incorporated as a Public Limited Company in July 2008 with the Registrar of Companies, Madhya Pradesh and Chhattisgarh. The Partnership Firm was converted into Company under Part IX of the Companies Act, 1956 under the name of Texmo Pipe sand Products Limited having Certificate of incorporation dated 3rd July 2008. L Basis of Preparation of Financial Statements The financial statements have been brpared in accordance with the Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis and in consonance with the mandatory accounting standards as brscribed under section 133 of Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the provision of the Act {to the extent notified) and guidelines issued by Securities and Exchange Board of India (SEBI). The financial statements for the financial year ended 31" March, 2015 have been brpared as per the requirements of the Schedule III to the Companies Act, 2013. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in accounting policy. 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. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non -current classification of assets and liabilities. II. Use of Estimates In brparation of financial statements estimates and assumptions are required to be made in conformity with GAAP, which affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Any revisions to the accounting estimates are recognized prospectively in the current and future periods. III. Fixed Assets a. Tangible Tangible fixed assets are carried at cost of acquisition or construction, less accumulated debrciation. The cost of fixed assets includes taxes (other than these subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related to the acquisition or construction of the respective assets. Profit or loss on disposal of tangible asset is recognised in the statement of profit and Loss. b. Intangible Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, Intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss, if any. Profit or loss on disposal of intangible assets Is recognised in the statement of profit and loss. IV. Debrciation and Amortization: Debrciation is charged on Straight Line Method over the useful lives of assets as brscribed in schedule II to the Companies Act, 2013. Debrciation on assets purchased/sold during the year is proportionately charged. In respect of the following assets, useful life estimated is different than these brscribed in Schedule II; Asset Useful Life Dies and Moulds: 3 years Intangible Assets are amortized over their respective individual estimated useful lives on Straight Line basis, commencing from the date the asset is available for its use. The Computer Software SAP is amortized over a period of 5 years. V. Impairment of Assets The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired- If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that if a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset Is reflected at the recoverable amount. VI. Foreign Currency Transactions: a. Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction or that approximates the actual rate at the date of the transact ion. b. Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the brmium paid on forward contracts is recognised over the life of the contract. c. Non-monetary foreign currency items are carried at cost. d. Exchange differences arising on a monetary item that is receivable from a non-integral foreign operation, the settlement of which is neither planned nor likely to occur in the foreseeable future are accumulated in Foreign Currency Translation Reserve {FCTR). The exchange differences so accumulated in FCTR are reclassified to the Statement of Profit and Loss as and when settlement occurs. e. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss Statement. VII. Investments a. Investments which are intended for sale within twelve months are classified as current investment. b. Others are classified as long term investment. c. Cost of investment comprises of the purchase price and any directly attributable expenses incurred. d. Current investments are carried at the lower of cost a n d fair value computed individually. Long term Investment are stated at cost. Provision for diminution in the value of long term investment is made, only if, in the opinion of the management, such a decline is registered as being other than temporary VIII. Inventories a. Raw material, work in progress: finished goods, packing materials: stores, spares, components consumables and stock-in trade are carried at the lower of cost and net realizable value. Damaged unserviceable and inert stocks are suitably written down/provided for. Reusable waste is valued at net realizable value. b. In determining cost of raw material, packing materials, stock-in trade, stores, spares, component and consumable, weighted average cost method is used. Cost of inventory comprises all cost of purchase, duties, taxes (other than these subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their brsent location and condition. c. Cost of finished goods and work in progress includes costs of conversion and other costs incurred in bringing the inventories to their brsent location and condition. Cost is computed on weighted Average basis. Excise Duty in respect of finished goods lying at the factory brmises have been provided for and included in valuation of inventory where the excise duty is payable. d. Goods o r materials in transit are valued at cost to date. IX. Cash Flow Statement Cash flows are reported using the indirect method, whereby profit/ (loss) before extraordinary items and tax is adjusted for the effect of transaction of non-cash nature and any deferrals or accrual of past or future cash receipts or payment. The cash flow from operating, investing and financing activities of the Company are segregated based on the available information. X. Cash and Cash Equivalent Cash and cash equivalent include cash and cheques in hand, bank. balance: demand deposits with banks and other short-term highly liquid investment where the original maturity is three month or less. XI. Revenue Recognition a. Revenue from sale of goods is recognized on transfer of a II significant risks and rewards of owners hip to the buyer. The amount recognized as sale is exclusive of sales tax/VAT and is net of returns. Sales are stated gross of excise dub/ as well as net of excise duty; excise duly being the amount included in the amount of gross turnover. The excise duty related to the difference between the closing stock and opening stock is recognized separately as part of changes in inventories of finished goods, work in progress and stock in trade. b. Interest income is recognized on the time proportion basis. XII.Employee Benefits a. Shod term Employee Benefits: Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit & Loss of the year in which the related service is rendered. b. Post Employment Benefits : i. Defined Contribution Plan: The Company's contribution paid/payable during the year to Provident Fund, Employee State Insurance are considered as Defined Contribution Plans. The contribution paid/ payable under these plans are recognised during the period in which the employee render services. ii. Defined Benefit Plan: Employee Benefits in the nature of Gratuity are recognised as an expense in the statement of Profit and Loss for the period in which the employee has rendered services. The company contributes towards Gratuity Fund administered by LIC of India for eligible employees. Under this scheme the settlement obligations remain with the company., although insurer administer the scheme and determine the contribution brmium required to be paid by the company. The plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employee's salary and the years of employment with the company. Liability with regard to Gratuity Fund is accrued based on actuarial valuation conducted by an independent Actually as at 31 A March each year. XIII. Borrowing Cost Borrowing Cost attributable to acquisitions and construction of qualifying assets are capitalized as a part of cost of such assets up to (he date when such assets are ready for its intended use. 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 in the Statement of Profit & Loss in the period in which they are incurred. XIV Taxation Tax expense comprises of Current Tax and Deferred Tax. Current Tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets, on timing difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more periods. XV. Earnings per share The Basic and Diluted Earnings Per Share ("EPS") is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year. XVI. Government Grant The company recognizes Government grants only when there is reasonable accuracy and conditions attached to them shall be complied with, and the grants will be received. The Revenue grants are recognised in the Profit and loss account in the period in which these are accrued. XVII. Provisions, Contingent Liabilities and Contingent Assets The Company creates a provision when there exists a brsent obligation as a result of a past event that probably requires an outflow of resource and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not require an outflow of resource. When there is possible obligation or a brsent obligation in respect of which likelihood of outflow of resources is remote, no brvision or disclosure is made. Contingent assets are neither recognized nor disclosed in the financial statements. 2. Insurance Claim Receivable During the year 2010-11 on 21.03.2011 a fire occurred in main Raw Material godown at the factory brmises of the Company and the Company has lodged the claim of Rs. 2547.69 Lacs with the Insurance Company and the same was accounted as 'Insurance Claim Receivables The Claim is finally settled by Insurance Company for Rs. 1640.36 Lacs on 12.04.2012. The Management has filed lav/suit against the Insurance Company as the claim for the balance amount. The Management is confident of realizing the amount due from the Insurance Company and accordingly no adjustments are made to the financial results of the Company in this regard. 3. In accordance with AS-28 issued by ICAI, the carrying amounts of assets have been reviewed at year end for indication of impairment loss, if any. As there is no indication of impairment of assets, no loss has been recognized during the year. 31 .The Company Is engaged mainly in production of Plastic products which constitutes a single reportable segment in accordance with Accounting Standard-17-"Segment Reporting" specified under section 133 of the Companies Act, 2013.read with the rule 7 of the Companies (Accounts) rules, 2014. The geographical segmentation is not relevant as the company mainly operates within India. 4. The Company has recognized exchange differences arising on foreign currency items in line with Accounting Standard-11 Pursuant to above Net Exchange Loss on purchase of Raw Material and Machinery Spare Pails relating to the financial year 2014-15 amounting to Rs.4.43 Lacs (PY Rs. 26.73 Lacs) has been recognized as Expense. 5 . Balances of creditors and debtor/advances are subject to confirmation/reconciliation and consequential adjustments, if any. 6. The Company has established Unit no. 2 and is eligible for incentive under Madhya Pradesh Industrial Investment Promotion Assistance Scheme-2004, wherein 75% of VAT and CST paid shall be refunded till F.Y 2018-19. During the year ended 31st March 2015, incentive as mentioned are booked in Other Operating Income of Rs. 171.15 Lacs {P.Y 83.53 Lacs). 7. In the opinion of the Board of Directors the current assets, loans and advances have a value of realization in ordinary course of business at least equal to the amount at which they are stated and the provision for all known liabilities are adequate and not in excess of the amount reasonably necessary. As per our report of even date For Pankaj Somaiya & Associates LLP Firm Registration No. 010081C/C4000001 Chartered Accountants CA Pankaj Somaiya Partner Membership No.079918 Place: Burhanpur (MP) Date: 26th May 2015 For Texmo Pipes and Products Limited Sanjay Agrawal Managing Director (DIN: 00316249] Satyendra Rathi CFO Vljay Prasad PappuWhole Time Director {DIN; 02066748] Ravi Patidar Company Secretary Place: Burhanpur {MP) Date: 26th May 2015 |