NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st December 2015 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES 1. Basis of Preparation of Financial Statements The financial statements have been brpared in accordance with generally accepted accounting principles in India, under the historical cost convention (with the exception of freehold land which has been revalued and derivative financial instruments which have been measured at fair value),on the accrual basis of accounting and comply in all material respects with the accounting standards notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014. The accounting policies have been consistently followed by the company. 2. Use of Estimates The financial statements are brpared in accordance with generally accepted accounting principles (GAAP) in India which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the financial statements which in management's opinion are prudent and reasonable. Actual results may differ from the estimates and assumptions used in brparing the accompanying financial statements. Any revision to accounting estimates is recognized prospectively in current and future periods. 3. Fixed Assets • Fixed assets are stated at cost (or revalued amounts as the case may be) less accumulated debrciation & impairment losses ,if any. Cost of fixed assets comprises of purchase price, duties, levies and any directly attributable cost of bringing each asset to its working condition for the intended use. • Financing costs relating to borrowed funds attributable to the acquisition of qualifying fixed assets upto the completion of construction or acquisition of such fixed assets are included in the gross book value of the asset. • Cenvat credit availed for excise duty and countervailing duty availed for customs duty payments made on fixed assets is reduced from the cost of fixed assets. • Machinery spares which are specific to a particular item of fixed asset and whose use is expected to be irregular are capitalised and debrciated over the residual useful life of the asset. • Capital work-in-progress includes the cost of fixed assets that are not ready to use at the balance sheet date. 4. Intangibles Intangible Assets acquired separately are measured on initial recognition at cost. Following, intial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred. 5. Debrciation a. Tangible Assets Buildings are debrciated on written down value method at the rates brscribed in Schedule II to the Companies Act, 2013, which coincide with management estimate of useful life.Other fixed assets are debrciated on straight line method at the rates brscribed in Schedule II to the Companies Act, 2013 except those specified below. (Refer note 3 (b)) Following assets are debrciated at the rates different from those brscribed in Schedule II to the Companies Act, 2013 based on technical evaluation of estimated useful lives done by the management. Assets Method of Debrciation Rate Plant & Machinery Straight Line Method 10.34% Computers excluding Laptops Straight Line Method 25.00% Motor Vehicles Straight Line Method 19.00% Cellphones and Photocopiers Straight Line Method 31.67% Airconditioning Equipment used in manufacturing process Straight Line Method 10.34% Electrical Fittings Straight Line Method 10.34% Debrciation on additions/deletions to fixed assets is provided prorata from the date of addition/till the date of deletion. Land - Premium paid for acquisition of leasehold land is amortised over the period of lease,viz 99 years. b. Intangible Assets ERP software is amortised over a period of 60 months commencing from the month in which software is put to use. Specialised software is amortised over a period of 36 months commencing from the month in which such expenditure is incurred. All upgradations/enhancements are generally charged to profit and loss account, unless they bring significant additional benefits. Corporate club membership fees paid are amortised over the period of use, viz 10 years. 6. Foreign Currency Transactions • Transactions denominated in foreign currency are recorded at the exchange rate brvailing on the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profit and loss account of the year. • Monetary assets and liabilities in foreign currency, which are outstanding as at the year-end are translated at the year end at the closing exchange rate and the resultant exchange differences are recognised in the profit and loss account. • Non-monetary foreign currency items are carried at cost. • The brmium or discount on forward exchange contracts covered by AS-11 The Effects of Changes in Foreign Exchange Rates is recognised over the period of the contracts in the profit and loss account. Exchange gain or loss on forward exchange contracts covered by AS-11 The Effects of Changes in Foreign Exchange Rates is recognised in the profit and loss account. • In compliance with the Institute of Chartered Accountants of India (ICAI) announcement dated 29th March,2008 on accounting for derivatives, the mark to market valuation loss on forward contracts entered into, to cover the forecast transactions is charged to profit and loss account. Gain on Mark to Market valuation is ignored. 7. Inventories • Inventories are valued at lower of cost and net realisable value, Cost is determined on Weighted Average Method. • Raw materials,Components,Stores and Spares 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. • The cost of manufactured inventories and Work-In-Process is the direct cost of manufacture plus appropriate allocated overheads & excise duty wherever applicable. • The cost of loose tools is amortised over its estimated useful life. 8. Revenue Recognition • Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and revenue can be reliably measured. It is recognised when significant risks and rewards of ownership of goods have passed to the buyer. • Gross sales are inclusive of Excise Duty. • Sales are net of returns & discounts. • Dividend income is recognised when the right to receive dividend is unconditional at the balance sheet date. • Interest on investments is accounted on a time proportion basis taking into account the amounts invested and the rate of interest. 9. Retirements Benefits a. Defined Contribution Plans: Contributions payable to the recognised provident fund, which is a defined contribution plan, are charged to the profit and loss account as incurred. b. Defined Benefit Plans: The Company’s gratuity benefit scheme is defined benefit plan. The Company’s net obligation in respect of the defined benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit are discounted to determine its brsent value, and the fair value of any plan assets is deducted. The brsent value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the brsent value of the estimated future cash flows. The discount rates used for determining the brsent value of the obligation under defined benefit plan is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the statement of profit and loss. c. Other Long Term Employment Benefits : Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are considered as long-term employee benefit for measurement purposes and are determined on the basis of valuations, as at balance sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the Profit and Loss Account. The company brsents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Long service awards and Pension scheme are other long term benefits. The brsent value of the obligation under these long term benefits are determined based on acturial valuation using Projected Unit Credit Method. d. Other Short Term Employment Benefits: Company provides short term benefit of sick leave to its employees with certain accumulation provisions and same being short term and expected to be utilised within twelve months are provided on undiscounted basis. 10. Investments • Investments, which are readily realisable and 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. • Long term investments are valued at cost and an appropriate provision is made for diminution, which is other than temporary, in their value. • Current investments are valued at cost or market value, whichever is lower. 11. Research Expenditure Research expenditure of a revenue nature is charged off in the year in which it is incurred and expenditure of a capital nature is capitalised to fixed assets. 12. Taxation Income tax expense comprises current income tax (i.e. amount of tax for the period determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed debrciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to 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 that 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 in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, 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. 13. Leases Operating Leases Lease payments under operating leases are recognised as an expense in the statement of profit and loss account on a straight line basis over the lease term. 14. Impairment of Assets The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal / external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value using a br-tax discount rate that reflects current market assessments of the time value of money and risks specific to the assets. After impairment, debrciation is provided on their revised carrying amount of the asset over its remaining useful life. 15. Government Grants and Subsidies Grants and Subsidies from the Governments are recognised when there is a reasonable assurance that (i) the company will comply with the conditions attached to them, and (ii) the grants / subsidy will be received. Government Grants of the nature of Promoter Contribution are credited to Capital Reserve and treated as part of the Shareholders Funds. 16. Provisions and Contingent Liabilities The Company creates a provision when there is brsent obligation as a result of a past event that probably requires an outflow of resources 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 resources. When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed. Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs. 17. Earnings Per Share (EPS) Basic EPS is computed by dividing the net profit for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the period, except where the results would be anti dilutive. 2 EXTRAORDINARY ITEM Extra-Ordinary Item in the in the brvious year, rebrsents Insurance claim for fire at Silvassa Plant during the year 2013 of Rs. 627.53 lacs (net of tax of Rs. 323.13 lacs). 3 On 8 July 2014, the Company and the Shareholders of Positive Packaging Industries Limited, India (‘PPIL’), had entered into a definitive agreement, pursuant to which the Company on 30th January 2015, has acquired 100% of PPIL. This has been completed, after all necessary approvals and for a total enterprise value of Rupees 78,819 lacs inclusive of debt of Rs. 27,917 lacs, subject to closing adjustments. The Company has funded the above acqusition through the following:- • Issue of 10,024,744 Equity shares of Rs. 2 each (face value) to Huhtavefa B.V. (’Holding Company’) on Preferential basis in August 2014 at a price of Rupees 134.08 per share. • Issue of 7% Non-convertible Debentures of Rupees 38,500 lacs on 27th January 2015 on private placement basis to Huhtalux S A R L. (’Huhtamaki Group entity’) 4 Investment in PPIL of Rs. 50,927 lacs comprises of consideration for investment amounting to Rs. 50,902 lacs and expenses capitalized as per Accounting Standard -13, 'Accounting for Investments' amounting to Rs. 25 lacs. Out of the total consideration of 50,902 lacs the Company has retained Rs. 6,330 lacs as holdback amount. 5 Amalgamations a The Board of Directors approved the amalgamation of Positive Packaging Industries Limited, (100% subsidiary), with the Company in their meeting held on 14 September 2015. The scheme has received approval from the stock exchanges on which the Company is listed and the Company is in the process of filing the scheme with High Court of Mumbai. In terms of the Scheme the appointed date is 30 January 2015. Since the Positive Packaging Industries Limited is a 100% subsidiary there is no share swap ratio. b The Board of Directors approved the amalgamation of Webtech Labels Private Limited, (51% subsidiary), with the Company in their meeting held on 14 September 2015. The scheme has received approval from the stock exchanges on which the Company is listed and the Company is in the process of filing the scheme with High Court of Mumbai. In terms of the Scheme the appointed date is 1st April 2015 and the share swap ratio will be 281 equity shares of face value of Rs. 2 each fully paid up of the Company for every 1 equity share of face value of Rs. 10 each fully paid up of Webtech Labels Private Limited. Pending the approval of High Court, no effect of the above proposed amalgamations have been recognized in the financial statements for the year ended 31 December 2015. 6 Pursuant to provisions of Section 2(41) of the Companies Act, 2013, the Company has obtained an order from the Company law Board permitting the Company to continue having 1st January - 31st December as its Financial Year. 7 Previous year figures have been regrouped or reclassified wherever necessary, to conform to this year classifications. As per our report of even date For S R B C & CO LLP Chartered Accountants ICAI Firm Registration No. 324982E per Vijay Maniar Partner Membership No. 36738 For and on behalf of the Board of Directors Suresh Gupta Chairman DIN: 00235354 A.Venkatrangan Managing Director DIN: 05294659 Parag Vyavahare Chief Financial Officer Membership No. 42739 D. V. Iyer Company Secretary Membership No. 13004 S. K. Palekar Director Mumbai Mumbai 16 February 2016 |
