Notes to the financial statements for the year ended 31 March 2015 1 Background PG Electroplast Limited is an Electronic Manufacturing Services (EMS) provider for original Equipment ManfacSurers (OEMs)cf consumer electronic products in India. The Company manufacture and / or assemble a combrhensive range of consumer electronic components and finished products such as Kitchen Appliances, air conditioners (ACs) sub- assemblies, water purifiers and compact Fluorescent Lamps (CFL), Solar Lantern,Washing Machine for third parties. As backward integration, the company also do plastic injection moulding and manufacture Printed Circuit Boards (PCB) assemblies for CTVs.LCD & LED , and CFL 2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES i) Basis of Preparation The financial statements are brpared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards as brscribed by the Companies (Accounting Standards) Rules, 2006, which continue to apply under Section 133 of the Companies Act, 2013, ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Companies Act, 1956, to the extent applicable and guidelines issued by the Securities and Exchange Board of India (SEBI). ii) Use of Estimates The brparation of financial statements in conformity with GAAP requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenue and expenses, assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. All assets and liabilities have been classified as Current or Non-Current as per the criteria set out in the Schedule III to Companies Act, 2013. iii) Revenue Recognition (a) Sale of goods: Sales are recognised when the substantial risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract and are recognised net of trade discounts, rebates and sales tax/ value added tax. The excise duty recovered is brsented as a reduction from gross turnover. Sales returns are recognised on receipt of finished goods in the factory. (b) Sale of Services: In contracts involving the rendering of services, revenue is measured using the proportionate completion method and are recognised net of service tax. (c) interest income is recognized on accrual basis. iv) Fixed Assets and Debrciation Tangible Assets (a) Tangible Assets are stated at acquisition cost, net of accumulated debrciation and accumulated impairment losses, if any. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the assets are ready for use. Where the acquisition of fixed assets a re financed through long term foreign currency loans (having a term of 12 months or more at the time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets.In respect of new projects, all cost including borrowing cost incurred upto the date of commencement of commercial production or when related asset is put to use are capitalised. (b) Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance. (c) Lossesarising from the retirement of, and gains or losses arising from disposal of fixed assets are recognised in the Statement of Profit and Loss, v) Debrciation (a) The debrciation on assets acquired/sold/discarded/demoiished during the year is provided from/upto the month the asset is commissioned/sold or discarded. (b) Debrciation on Tangible Fixed Assests has been provided on Straight Line Method( SLM)based on useful life of the assests brscribed in Schedule II of the Companies Act , 2013 except in respect of major Plant & machinery, where useful life has been taken as 25 years ,as technically assessed. (c) Lease hold land is amortized over the period of Lease. vii) Inventories Raw material, components, stores and spares are valued at lower of cost and net realisable value. However, materials and other items held for use in production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials , components and stores and spares is determined using the first-in, first-out (FIFO) method. Work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials, labour and related production overheads. Net realisable vaiue is the estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale. viii) Investments Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision is made for diminution in value, if such diminution is, in the opinion of the management, other than temporary in nature. ix) Borrowing Costs Borrowing costs that are directly attributable to the acquisition, construction or Production of qualifying assets are capitalized as part of the cost of such assets. A Qualifying assets is one that necessarily taken substantial period time to get ready for its intended use. x) Employee Benefits (a) Short Term Employee Benefits All employee benefits payable within twelve months after the end of the period in which the employee render the related services are classified as short term employee benefits and are recognised as expense in the period in which the employee renders the related service. The company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange of services rendered as a liability. (b) Long Term Employee Benefits Defined Contribution Plan Defined contribution plans are retirement benefit plans under which the Company Pays fixed contribution to separate entities (funds) or financial institutions or state managed benefit schemes. The Company's contribution to defined contribution plans is recognized in the Profit & Loss account in the financial year to which they relate. The Company operates the following defined contribution plan. • Provident Fund Plan & Employee Pension Scheme. The Company makes specified monthly contributions towards Employee Provident Fund/Employee Pension Scheme to fund administered and managed by the Government of India. • Employee State Insurance The Company makes specified monthly contributions towards Employees State Insurance Scheme. (c) Defined benefit plan Defined benefit plans are retirement benefit plans under which the Company pays certain defined benefits to the employees at the time of their retirement/resignation/death based on rules framed for such schemes. Company operates following defined benefit plans: • Gratuity The Company provides for gratuity obligations through a defined benefit retirement plans (the Gratuity Plan-*-).The Gratuity Plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employee salary and years of employment with the Company. The company provides for its liability under the Gratuity Plan based on actuarial valuation. • Earned Leaves The Company provides for the liability at year end on account of unavailed accumulated leaves on the basis of actuarial valuation xi) Foreign Currency Transactions Initial Recognition On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Subsequent Recognition All monetary assets and liabilities in foreign currency are restated using the exchange rate brvailing at reporting date. Exchange Differences The Company has opted to avail the choice provided under paragraph 46Aof AS-11"The Effect of Changesin Foreign Exchange Rates" inserted vide Notification dated December 29, 2011. Consequently, Exchange differences arising on long-term foreign currency monetary items related to acquisition of debrciable capital asset added to or deducted from the cost of the asset and debrciated over the remaining useful life of the asset. For this purpose, the company treats a foreign monetary item as "long-term foreign currency monetary item", if it has a term of 12 months or more at the date of its origination. All other exchange differences are recognised as income or expenses in the period in which they arise. xii) Government Grants The Company is entitled to various incentives from government authorities in respect of manufacturing units located in developing regions. The Company accounts for its entitlement on accrual basis. Government Grants receivable in nature of promoter's contribution i.e. by way of its contribution towards total capital outlay under a goverment scheme, such grants are credited to Capital Reserve and treated as a part of Shareholder's funds. xiii) Current and deferred tax (a) Tax expense for the period,, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current Tax on income is determined on the basis of taxable income computed in accordance with the applicable provisions of the Income Tax Act, 1961. (b) Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assetsare recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised except in case of unabsorbed debrciation or carry forward of losses under Income Tax Act, 1961, deferred tax asset is recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realised. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the company reassesses unrecognised deferred tax assets, if any. xiv) Lease Accounting Operating lease payments are recognized as an expense in the Profit and Loss account on accrual basis. xv) Impairment of Assets Impairment of individual assets / cash generating unit (a group of assets that generates identified independent cashflows) is identified using external and internal sources of information and impairment loss if any, is determined and recognised in accordance with the Accounting Standard (AS) 28 "Impairment of Assets". xvi) Segment Reporting The company operates in a single segment of Electronics goods and components and therefore the disclosure requirements as per Accounting Standard 17 "Segment Reporting' is not applicable to the company. xvii) Provisions, Contingent liabilities and Contingent Assets Provisions: Provisions are recognised when there is a brsent obligation as a result of a past event and 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. Contingent Liabilities: 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, is termed as a contingent liability. Contingent Assets : Contingent assets are neither recognised nor disclosed. xviii) Cash and Cash Equivalents Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, fixed deposits and other short term highly liquid investments where the original maturity is three months or less that readily convertible into known amount of cash and which are subject to an insignificant risk of change in value. xix) Earnings Per Share The Basic and Diluted Earnings Per Share ("EPS') is computed by dividing the net profit / (loss) after tax for the year by weighted average number of equity shares outstanding during the year. As per our report of even date For Chitresh Gupta & Associates Firm registration number: 01707SN For and on behalf of the board of directors Chartered Accountants CA. Chitresh Gupta Partner Membership no.: 098247 (Promod Gupta) Managing Director DIN-00181800 (Rahul) Company Secretary (Vishai Gupta) Executive Director DIN-00184809 (K.A.Khandelwal) Chief Financial Officer Place: Greater Noida, U.P. Date: 30th May 2015 |