SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS FORMING PART OF THE BALANCE SHEET AS ON 31ST MARCH' 2016. Overview Rajratan Global Wire Company Limited ('the Company') alongwith its wholly owned subsidiary, M/s. Rajratan Thai Wire Company Limited is engaged in the business of manufacturing and sale of Tyre Bead Wire. The Company is having 68% holding in Swaraj Technocrafts Pvt. Ltd. which is engaged in manufacturing of Wiredrawing Machinery and Tools. In addition, the Company has a Wind Mill located in India for generation of electricity. 1 Significant Accounting Policies 1.1 Basis of Preparation of Financial Statements The financial statements are brpared and brsented under the historical cost convention, on the accrual basis of accounting in accordance with the accounting principles generally accepted in India ('Indian GAAP') and comply with the Accounting Standards specified u/s 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rule, 2014. 1.2 Use of Estimates The brparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. 1.3 Fixed assets and Debrciation Fixed assets are stated at acquisition cost less accumulated debrciation. The cost of fixed assets comprises its purchase price including import duties and other non-refundable taxes or levies and any directly, attributable cost of bringing the asset to the working condition for its intended use. Debrciation is provided on the straight-line method ('SLM'). The technical estimates of useful life are in confirmatory with those brscribed in Schedule II of the Companies Act 2013. The debrciation on the assets capitalized/sold during the year is charged on prorata basis. Capital Work-In-Progress includes the cost of fixed assets that are not ready to use at the Balance Sheet date. Advances paid for Capital Assets are not considered as Capital Work-in-Progress but classified as Long Term Advances. 1.4 Impairment of Assets The Company assesses at each balance sheet date whether there is any indication that an asset or a group of assets (Cash Generating Unit) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset or a group of assets. 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 & Loss . If at the Balance Sheet date there is an indication that a brviously assessed impairment loss no longer exits, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of debrciable historical cost.. 1.5 Investments The Investments are classified into current and non-current investments. Investments classified as Non Current investment are carried at cost. Provision for diminution, if any, is made to recognize a decline other than temporary, in the value of the investment. Investment in Rajratan Thai Wire Ltd., Thailand, being a non-monetary item which is carried in terms of historical cost denominated in Thai Baht, is reported using the exchange rate at the date of transaction. Exchange differences arising on loans, which in substance form part of net investments in Rajratan Thai Wire Co. Ltd., are accumulated in Foreign Currency Translation Reserve. Non Current Investments in subsidiary companies intended to promote the trade or business, are classified as Trade Investments. Current investments are stated at lower of cost and fair value. 1.6 Inventories (a) Inventories are valued at cost or net realizable value whichever is lower. (b) The cost of inventories comprise all costs of purchase including duties and taxes (other than those subsequently recoverable from the taxing authorities), conversion cost and other costs incurred in bringing the inventories to their brsent location and condition. (c ) The cost formulas used are Weighted Average Cost in case of Raw Material and First-in- First Out ('FIFO') in case of Ancillary Raw Material and Consumable Spares. (d) Excise Duty is included in the value of finished goods inventory. 1.7 Revenue recognition (a) Revenue from sale of products is recognized on transfer of all significant risk and rewards of ownership of products to the customers, which is generally on dispatch of goods. Sales are stated exclusive of Value Added Tax. (b) Dividend income is recognized when the right to receive the dividend is established. (c ) Interest income is recognized on the time proportion basis. (d) Export incentives receivable are accrued for when the right to receive the credit is established and there is no significant uncertainty regarding the ultimate collection of export proceeds. 1.8 Employee Benefits (a) Short Term Employee Benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, and short term compensated absences, etc. are recognized in the period in which the employee renders the related services. (b) Post- Employment Benefits (i) Defined Contribution Plans: The Employee State Insurance Scheme and Contributory Provident Fund administered by Provident Fund Commissioner are defined contribution plans. The Company's contribution paid/payable under the schemes is recognized as expense in the Profit & Loss account during the period in which the employee renders the related service. (ii) Defined Benefit Plans: The Company has taken Group Gratuity and Cash Accumulation Policy issued by the Life Insurance Corporation of India (LIC). The brsent value of the obligation under such defined benefit plans is determined based on actuarial valuation as advised by LIC, using the Projected Unit Credit Method, which recognizes 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 plans, are as advised by LIC. Actuarial gains and losses are recognized immediately in the Profit & Loss Account. 1.9 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 & Loss Account of the year. Monetary assets and liabilities in foreign currency, which are outstanding as at the year-end, are translated at the closing exchange rate and the resultant exchange differences are recognized in the Profit & Loss Account. The brmium or the discount on forward exchange contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculation purpose is amortized as expense or income over the life of the contract.. 1.10 Borrowing Costs The borrowing costs that are directly attributable to the acquisition, construction or productions of a qualifying asset are capitalized as part of the cost of that asset. The amount of borrowing cost eligible for capitalization is determined in accordance with Accounting Standard (AS) 16- Borrowing Costs issued by the Institute of Chartered Accountants of India (ICAI) and specified u/s 133 of the Act read with Rule 7 of the Companies (Accounts) Rule, 2014. 1.11 Research and Development Expenditure on research phase is recognized as an expense when it is incurred. Expenditure on development phase is recognized as an intangible asset if it is likely to generate probable future economic benefits. 1.12 Taxation Tax expenses for the current year comprises of current tax and deferred tax. Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income Tax Act 1961. Deferred tax is recognized, on timing differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. 1.13 Lease The Company classifies leases, where the lessor effectively retains substantially all the rights and benefits of ownership over the lease term, as Operating Leases. Operating lease rentals are recognized as an expense over the lease period. The leasehold land for 99 years lease with an option to renew for a further period of 30 years has been in substance considered as equivalent to ownership of land. The brmium paid on land acquisition together with the incidental cost is amortized over the period of lease. 1.14 Earning Per Share Basic and diluted earnings per share is computed by dividing the net profit attributable to equity shareholders for the year, by the weighted average number of equity shares outstanding during the year. There are no diluted potential equity share. 1.15 Provisions for contingencies Provisions comprise liabilities of uncertain timing or amount. Provisions are recognized when the company recognizes it has a brsent obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated. Disclosures for 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. Loss contingencies arising from claims, litigation, assessment, fines, penalties, etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Contingent assets are not recognized in the financial statements. 2. Details of expenses on Corporate Social Responsibility The Company has incurred a sum of Rs. 699,600/- on expenses related to Corporate Social Responsibility. However the Company has not spent the total amount of Rs. 1,985,628/- being 2% of average Profit of last three year. Therefore there is a shortfall of Rs. 1,286,928/- for the year to be spent on CSR activities. The total shortfall as on Balance Sheet date is Rs. 2,782,410/-. The Management is in the process of identifying some good projects that can be supported by the Company. 3. In the opinion of the Board of Directors of the Company, the Current Assets, Loans and Advances have a value realizable in the ordinary course of business at least equal to the amount at which they are stated and provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary. 4. Micro, Small and Medium Enterprises Development Act, 2006 Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2nd October 2006. Certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The Management has confirmed that none of the suppliers have confirmed that they are registered under the provisions of this Act. In view of this, the liability of the interest and disclosures are not required to be disclosed in the financial statement. In accordance with the Accounting Standard (AS) 17 "Segment Reporting" issued by The Institute of Chartered Accountants of India (ICAI) and specified u/s 133 of the Act read with Rule 7 of the Companies (Accounts) Rule, 2014 the Company has only one reportable segment "Bead Wire" for the current year. 5. Previous Year's figures have been regrouped and recast wherever considered necessary to make them comparable with the current year's figures. FOR FADNIS AND GUPTE CHARTERED ACCOUNTANTS FRN : 006600C (CA. VIKRAM GUPTE) PARTNER M.No. 074814 FOR AND ON BEHALF OF BOARD (SHUBHAM JAIN) COMPANY SECRETARY (CHANDRASHEKHAR BOBRA) DIRECTOR DIN:00209498 (SUNIL CHORDIA) MANAGING DIRECTOR DIN:00144786 Place : Indore, Dated : 11th May 2016 |
