1. SIGNIFICANT ACCOUNTING POLICIES 1.1 The Financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act")/Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been brpared on accrual basis under the historical cost convention except for certain categories of fixed assets that are carried at re-valued amounts. 1.2 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 2013 Act. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current -noncurrent classification of assets and liabilities. 1.3 Use of estimates The brparation of the financial statements, in conformity with the generally accepted accounting principles, requires management to make estimates and assumptions that are considered in the reported amounts of assets including decline in carrying value of investments and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known / materialize. 2. Tangible and Intangible Assets 2.1 Tangible Fixed Assets Tangible fixed assets are carried at the cost of acquisition or construction, less accumulated debrciation/accumulated impairment. The cost of fixed assets comprises of its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use. Expenses directly attributable to new manufacturing facility during its construction period are capitalized. Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant tangible asset heads. Profit or Loss on disposal of tangible assets is recognised in the Statement of Profit and Loss. 2.2 Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets arising on acquisition of business are measured at fair value as at date of acquisition. Following initial recognition, intangible assets are carried at cost lessaccumulated amortization and accumulated impairment loss, if any. Profit or Loss on disposal of intangible assets is recognised in the Statement of Profit and Loss. 2.3 Capital Work in Progress & Capital Advances Cost of Assets not ready for intended use, as on the balance sheet date, is shown as capital work in progress. Advances given towards acquisition of fixed assets outstanding at each balance sheet date are disclosed as Long Term Loans & Advances. 2.4 Debrciation and Amortisation Debrciation on tangible fixed assets is provided using the Straight Line Method based on the useful life of the assets as provided in Schedule II of the Companies Act 2013 and is charged to the Statement of Profit and Loss. In respect of Individual assets costing less than Rs.5,000/- the policy of the Company is to charge debrciation at 95% of the cost on Prorata basis to the period of use, considering the useful life of assets as less than 1 year. 2.5 Impairment At Balance Sheet date, an assessment is done to determine whether there is any indication of impairment in the carrying amount of the Company's assets. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. An assessment is also done at each Balance Sheet date whether there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. If any such indication exists, the asset's recoverable amount is estimated. The carrying amount of the fixed asset is increased to the revised estimate of its recoverable amount but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss is recognised in the Statement of Profit and Loss for the year. After recognition of impairment loss or reversal of impairment loss as applicable, the debrciation charge for the fixed asset is adjusted in future periods to allocate the asset's revised carrying amount, less its residual value (if any), on straight line basis over its remaining useful life. 3. Revenue recognition 3.1 Revenue from sale of goods is recognised when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract, the Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Sales are recognised net of trade discounts, rebates, sales taxes and excise duties (on goods manufactured and outsourced). 3.2 Income from export incentives such as duty drawback and brmium on sale of import licenses, and lease license fee are recognised on accrual basis. 3.3 Income from services rendered is recognised based on agreements/ arrangements with the customers as the service is performed using the proportionate completion method when no significant uncertainty exists regarding the amount of the consideration that will be derived from rendering the service and is recognised net of service tax, as applicable. 3.4 Interest on investments is recognized on a time proportion basis taking into account the amounts invested and the rate of interest. 3.5 Dividend income on investments is recognized when the right to receive dividend is established. 4. Inventory valuation Inventories are valued as follows: 4.1 Raw materials, materials in process, finished goods and Goods for Trade are valued at Cost or Net Realizable Value, whichever is lower. 4.2 Stores, Spares, Etc., are valued, either at Cost or at Cost less amounts written off. 4.3 Goods in transit are valued at cost to date. 4.4 'Cost' comprises all cost of purchase, costs of conversion and other costs incurred in bringing the inventory to their brsent location and condition. Cost formula used is 'First in First Out' as applicable. 4.5 Surplus / obsolete / slow moving inventories are adequately provided for. 5 Investments 5.1 Current investments are carried at lower of cost and quoted / fair value, computed category-wise. 5.2 Long term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary. 6. Foreign currency Transactions 6.1 Transactions in foreign currencies entered into by the Company are accounted at the exchange rates brvailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the statement of profit and loss. 6.2 Foreign currency monetary assets and liabilities (other than those covered by forward contracts) as on the balance sheet date are revalued in the accounts on the basis of exchange rates brvailing at the balance sheet date and exchange difference arising there from is charged to statement Profit & Loss Account. 6.3 In the case of transactions covered by forward contracts, the difference between the contract rate and the exchange rate brvailing on the date of transaction is charged to profit & loss Account, proportionately over the contract period. Exchange differences on such contracts are recognized in the statement of Profit & Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expenses for the year. 6.4 Gains and losses on all other derivatives (including forward contracts not designated as Cash flow hedge) are recognised in the Statement of Profit and Loss in the period it arises. Premium or discount on forward contracts is amortized over the life of the contract. 7. Trade receivables Trade receivables are stated after writing off debts considered as bad. 8. Employee benefits 8.1 Provident fund is accounted on accrual basis with contribution to recognized funds. 8.2 Leave encashment benefit are paid annually as per the policy of the company. 8.3 Gratuity liability has been provided in the books of accounts as per the actuarial valuation certificate provided by Consulting Actuary. 8.4 Termination benefits Expenditure on termination benefits is recognised in the Statement of Profit and Loss in the period of incurrence. 9. Research and Development 9.1 Research and Development expenditure of a revenue nature is expensed out under the respective heads of account in the year in which it is incurred. 9.2 Fixed assets utilized for research and development are capitalized and debrciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets. 10. Income taxes 10.1 Income tax expenses comprise current and deferred taxes. Current tax is determined on income for the year chargeable to tax in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws and after considering credit for Minimum Alternate Tax (MAT) available under the said Act. MAT paid in accordance with the tax laws which gives future economic benefits in the form of adjustments to future tax liability, is considered as an asset if there is convincing evidence that the future economic benefit associated with it will flow to the Company resulting in payment of normal income tax. 10.2 Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversing in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax assets are recognised for timing differences other than unabsorbed debrciation and carry forward losses only to the extent that there is a reasonable certainty that there will be sufficient future taxable income to realise the assets. Deferred tax asset pertaining to unabsorbed debrciation and carry forward of losses are recognized only to the extent there is a virtual certainty of its realisation. 11. Provisions and Contingencies The Company creates a provision when there exists a 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 likelihood of outflow of resources is remote, no provision or disclosure is made. 12. Earnings Per Share The Basic and Diluted Earnings Per Share ("EPS") is computed by dividing the profit after tax for the year by weighted average number of equity shares outstanding during the year. 13. Operating lease Operating lease payments are recognized as expenditure in the statement of profit & loss Account on a straight line basis, which is rebrsentative of the time pattern of benefits received from the use of assets taken on lease. 14. Proposed Dividend Dividend recommended by the Board of Directors is provided for in the accounts, pending approval at the Annual General Meeting. 15. Borrowing Cost 15.1 Borrowing costs that are directly attributable to the acquisition / construction of a qualifying asset are capitalized as part of the cost of that asset till the time it is ready to put to use. 15.2 All other Borrowing costs are recognized as expenditure during the period in which these are incurred. 16. Cash Flow Statement : 16.1 The cash Flow statement is brpared by the indirect method set out in Accounting Standard 3 on cash flow statement and brsents cash flows by operating, investing and financing activities of the Company. 16.2 Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, demand deposits with banks and other short term highly liquid investments where the original maturity is three months or less. 17. Government Grants The company recognizes government grants only when there is reasonable assurance that the conditions attached to them shall be complied with and the grants will be received. Grants relating to specific fixed assets are shown as deduction from the gross value of the assets. Grants related to revenue is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. The capital grants towards promoters contribution is recognized as capital reserve. 17. Previous year's figures have been regrouped wherever considered necessary. Vide Our Report of even date for MOHAN & VENKATARAMAN Chartered Accountants FRN : 007321S (Sd/-) R.MOHAN Partner M.No.201229 (Sd/-) SANTOSSH.R Managing Director DIN : 00790493 (Sd/) Ramesh Shenoy K Chief Financial Officer (Sd/) VIMALA.R DIN : 00813706 Place : Coimbatore Date : 29.05.2015 |
