Summary of significant accounting policies and other explanatory information for the year ended March 31,015 1.1 Basis of brparation of financial statements The financial statements have been brpared to comply w i t the accounting principles generally accepted in India ("Indian GAAP"), including the Accounting Standards specified under Section 133 of the Companies Act 2013 (the 'Act'), read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended).The financial statements have been brpared on a going concern basis under tine historical cost convention on the accrual basis of accounting. The accounting policies have been consistently applied by the Company. 1.2 Use of estimates In brparing the Company's financial statements in conformity w i t the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Examples of such estimates includes estimated provision for doubtful debts/advances, employee retirement benefit plans, provision for income taxes, useful life of fixed assets, diminution in value of investments, other probable obligations and inventory write down. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods. 1.3 Fixed assets (a) Tangible assets Fixed assets are stated at cost less accumulated debrciation and impairment losses if any. Cost comprises the purchase price and any attributable costs of bringing the asset to its working condition for its intended use. When an asset is scrapped or otherwise disposed off, the cost and related debrciation are removed from the books of account and resultant profit or loss, if any, is reflected in the Statement of Profit and Loss. Project under commissioning and other assets under erection/installation are shown under capital work in progress and are carried at cost, comprising of direct cost and related incidental expenses. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its brviously assessed standard of performance. Foreign currency loans availed for acquisition of fixed assets are converted at the rate brvailing on the due date for installments repayable during the year and at the rate brvailing on the date of balance sheet for the outstanding loan. The fluctuation is adjusted in the original cost of fixed (b) Intangible assets Intangibles are stated at cost less accumulated amortization and impairment losses (if any). Cost related technical assistance for new projects are capitalized. The software and technical assistance are amortised over a period of 10 year. 1.4 Debrciation (a) Tangible and Intangible assets (I) Debrciation on fixed assets is provided pursuant to the enactment of the Companies Act 22013 (the 'Act'), the Company has, effective from 1st/April 2014, revised the estimated useful lives of its fixed assets, which are either less than or in accordance w i t the provisions of Schedule II to the Act as follows: Block of asset -Life (in years) Free hold land N.A. Leasehold- land Lease period Factory building -30 years Plant and Machinery -10 years (Plant—) 15 years (Other Plants) Computer -3 years Lab Equipment- 10 years Mouldsand Dies- 8 years Vehicles- 8 years Motorcycles and scooters- 10 years Furniture and fixtures -10 years Office equipments- 5 years Windmill -22 years Intangible assets Software -6 years Licenses- 5 years (I) Leasehold land is debrciated over the period of lease. (I) Cost of License is amortized over a period of five years, which is the tenure of license agreement. 1.5 Investments Investments that are readily realizable and intended to be held for not more than one year are classified as current investments; all other investments are classified as long term investments. Long term investments are carried at cost less provision (if any) for decline in value which is other than temporary in nature. Current investments are carried at lower of cost and fair value. 1.6 Inventories Inventories are valued at the lower of cost and net realisable value. Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition: •Cost of raw materials, stores and spares includes direct expenses and is determined on the basis of first in first out method. • Work in progress is carried at lower of cost or net realisable value. • Finished products are valued at lower of cost or net realisable value and net of excise duty. 1.7 Employee benefits (a) Provident fund The Company makes contribution to statutory provident fund in accordance with Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The plan is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee. The Company makes monthly contributions and has no further obligation under the plan beyond its contributions. (b) Gratuity Gratuity is a post-employment benefit and is in the nature of defined benefit plan. The liability recognized in the balance sheet in respect of gratuity is the brsent value of the defined benefit obligation at the balance sheet date together with adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method. Actuarial gains and losses arising from adjustments and changes in actuarial assumptions are charged or credited to the Statement of Profit and Loss in the year in which such gains or losses arise. The Company also has a defined contribution superannuation plan in respect of eligible employees under a scheme of Life Insurance Corporation of India; contributions in respect of such scheme are recognized in the Statement of Profit and Loss. (c) Compensated absences Provision for compensated absences when determined to be a long term benefit is made on the basis of actuarial valuation as at the end of the year. /Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the Statement of Profit and Loss in the year in which such gains or losses arise. Provision related to short term compensated absences of workers is provided on actual basis. (d) Short Term employee benefits The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. 1.8 Research and development costs Revenue expenditure is charged to the Statement of Profit and Loss under respective heads of account in the year in which it is incurred. Capital expenditure is included in fixed assets and debrciated as per the debrciation policy of the Company. 1.9 Impairment 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 a brviously assessed impairment loss no longer exists then the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of debrciated historical cost. 1.10 Foreign currency transactions (a) Initial recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (b) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. (c) Exchange differences Exchange differences arising on the settlement of monetary items or on restatement of the Company's monetary items at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognized as income or as expenses in the year in which they arise. The Company generally uses foreign exchange forward contracts to hedge its exposure for movement in foreign exchange rates. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts or options for trading or speculation purpose. Foreign exchange forward contracts where there is an underling are accounted in accordance with AS 11 -"The Effects of changes in Foreign Exchange Rates" i.e., (a) the brmium or discount on all such contracts arising at the inception of each contract is amortised as income or expenditure over the life of contract (b) the exchange difference is calculated as the difference between the foreign currency amount <^f ^he contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change. (c) any profit or loss arising on the cancellation or renewal of such contracts is recognised as income or as expense for the year. (d) The Company has elected to account for exchange difference arising on reporting of long-term foreign currency items in accordance with Companies (Accounting Standards) Amendment Rules, 2009 pertaining to (AS-11) notified by Government of India on 31st March, 2009 (as amended on 29th December, 2011). Accordingly, the effect of exchange differences on long term foreign currency loans of the Company is accounted by addition or deduction to the cost of fixed assets so far it relates to debrciable capital assets. 1.11 Taxation The tax expense comprises of current taxes and deferred taxes. Current tax is the amount of income tax determined to be payable in respect of taxable income for a period as per the provisions of Income Tax Act, 1961. Deferred tax is the effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are reviewed at each Balance Sheet date and recognized/derecognized only to the extent that there is reasonable/virtual certainty, depending on the nature of the timing differences, that sufficient future taxable income will be available against which such deferred tax assets can be realized. Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The company recognizes MAT credit available as an asset only to the extent there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT Credit is allowed to be carried forward. In the year in which the Company recognizes MAT Credit as an asset, 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 "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal tax during the specified period. 1.12 Revenue recognition (a) Revenue from sale of goods is recognised upon transfer of all significant risks and rewards incident to ownership to the buyer which generally coincides with the dispatch of goods to the customers. i) Domestic sales are recorded net of sale returns, sales tax and excise duty. Export sales are stated net of returns and include export incentives. ii) No significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. (b) Revenue generated from Windmill located in district Kutch, Gujarat is adjusted against the consumption of power at the manufacturing unit of the Company located in Mehsana, Gujarat. The monetary value of the unit so adjusted, calculated a the brvailing Gujarat Energy Transmission Corporation Limited (GETCO) rate net of wheeling charge is included in the Power and Fuel Account. The value of the unadjusted units as at the balance sheet date has been included under Sundry Debtors. The Company has been permitted by the Gujarat Energy Development Agency (GEDA) to set up a Wind Farm of 0.75 MW in district Kutch, Gujarat in accordance w i t the provisions of the Wind Power Generation Policy, 2002. A tripartite Wheeling and Banking agreement has been entered into by the Company with GEDA and Gujarat Energy Transmission Corporation Limited (GETCO). (c) Income from interest on deposits, loans and interest bearing securities is recognised on the time proportionate method taking into account the amount invested and the underling rate of interest. 1.13 Export benefits/incentives Revenue in respect of duty entitlement pass book scheme, focus claims and duty drawback scheme is recognized on an accrual basis on export of goods if the entitlement can be estimated with reasonable accuracy. 1.14 Leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight line basis over the lease term. 1.15 Provisions and contingent liabilities The Company creates a provision when there is a brsent obligation as a result of a past event, where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. A disclosure for a contingent liability is made where there is a : (i) possible obligation, the existence of which will be confirmed by the occurrence/non-occurrence of one or more uncertain events, not fully within the control of the Company; (() brsent obligation, where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation. (i) or where reliable estimate of the obligation cannot be made. Where there is a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. 1.16 Earning per share Basic earnings per share is 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. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue and share split. 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. 1.17 Cash and bank equivalents Cash and cash equivalents comprise cash on hand, in current accounts and deposits accounts with an original maturity of three months or less and exclude restricted cash. Restricted cash rebrsents deposits that have been pledged with banks against performance guarantees issued to customers as security to meet contractual obligations. 1.18 Government grants Grants in the nature of contribution towards capital cost of setting up projects are treated as capital reserve. 1.19 Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying asset are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. Capitalization of borrowing costs ceases when substantial all the activities necessary to brpare the qualifying assets for its intended use are complete. 1.20 Segment reporting Identification of segments: The Company's operating businesses are organized and managed separately according to the nature of goods produced, with each segment rebrsenting a strategic business unit that serves different markets. The Company operates in India and other countries and accordingly geographical segments have been reported. Intersegment transfers: Inter segment revenues have been accounted for based on the transaction price agreed to between segments which is primarily market led. Allocation costs: Direct revenues and direct expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenues and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis are brsented as"Unallocable"in the segment disclosure. 3 The Company has entered into operating leases for its guest houses and employees' residences that are renewable on a periodic basis and are cancellable at Company's option. Total lease payments recognized in the statement of profit and loss with respect to aforementioned brmises is Rs 23,64,065 (brvious year Rs. 28,14,265) 4 Previous year figures have been regrouped/rearranged wherever considered necessary to make them comparable with those of the current year. For Walker Chandiok & Associates Chartered Accountants PTC Industries Limited per Siddharth Talwar Partner Place : Delhi Date : May 25, 2015 For and on behalf of the Board of Directors Sachin Agarwal Managing Director Smita Agarwal Chief Financial Officer Alok Agarwal Director (Quality & Technical) A. K. Gupta Company Secretary Place : Lucknow Date : May 25, 2015 |