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Accounting Policies of Captain Polyplast Ltd. Company

Mar 31, 2016

1. Corporate Information

Captain Polyplast Ltd. (''the company") having its manufacturing facilities at Shapar (Veraval), Rajkot, is engaged in the business of manufacturing and selling of quality Micro Irrigation Systems and allied products. Further, the company also undertakes installation of micro irrigation systems and provision of agronomical services to farmers.

2. Significant accounting policies :

(i) Basis of preparation

These financial statements are prepared in accordance with Schedule III of the Companies Act, 2013 and under the historical cost basis of accounting and evaluated on a going concern basis, with revenues and expenses accounted for on their accrual to comply in all material aspects with the applicable accounting principles and applicable Accounting Standards notified under section 133 of the Companies Act, 2013 (The Act) read with rule 7 of Companies (Accounts) Rules, 2014. The accounting policies have been consistently applied by the Company; and the accounting policies not referred to otherwise, are in conformity with Indian Generally Accepted Accounting Principles (''Indian GAAP'').

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year unless otherwise stated.

(ii) Use of Estimates:

The preparation of financial statements require estimates and assumptions to be made that affect the reported balances of assets as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Accounting estimates could change from period to period. Actual results could differ from these estimates. Appropriate changes in estimates are made as and when the Management becomes aware of the changes in the circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which the changes are made and if material, their effects are disclosed in the notes to the financial statements.

(iii) Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

Sales of Goods:

Sales are recognized when significant risks and rewards of ownership of goods have been passed to the buyer.

Power Generation Income:

Power generation income was recognized on the basis of electrical units generated and eligible for captive consumption or captive consumed or sold as shown in the power generation reports issued by the concerned authorities. Power generation income was booked as the per unit electricity rate, being paid by the company / actually sold by the company.

Interest:

Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

Agronomy Consultancy Income:

Revenue is recognized on the basis of completion of services being provided to farmers in relation to crops and irrigation system

Installation Income:

Revenue is recognized on the basis of completion of services being provided.

Job work Income:

Revenue is recognized on the basis of completion of services being provided.

Land Trenching Income:

I Revenue is recognized on the basis of completion of services being provided.

(iv) Tangible Fixed Assets :

Fixed assets are stated at their cost of acquisition plus all expenditure incurred for bringing the assets to their present location and condition including the installation cost. All costs, including specific financing cost till assets put to use, net charges on foreign exchange contracts and adjustment arising from foreign exchange rate variations attributable to the fixed assets are capitalized.

(v) Depreciation / Amortization :

The company has charged depreciation on fixed assets on Written Down Value (WDV) method on the basis of useful life I remaining useful life and in the manner as prescribed in, Part C, Schedule II of the Companies Act, 2013. Depreciation on additions/ disposals during the year has been provided on pro-rata basis with reference to the nos. of days utilized.

Depreciation on additions/ disposals during the year has been provided on pro-rata basis.

Details of useful life of an asset and its residual value estimated by the management:-

(vi) Inventories:

Inventories of Raw Materials and Finished Goods are stated at cost or net realizable value, whichever is lower. Inventories of Waste & Scrap are valued at Net Realizable Value. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formula used is ‘First in first Out Method’. Due allowance is estimated and made for defective and obsolete items, wherever necessary, based on the past experience of the Company.

(vii) Retirement Benefits and other employee benefits :

Defined Contribution Plans :

Defined contribution to provident fund is charged to the profit and loss account on accrual basis. Defined Benefit Plans:

Provision for gratuity liability is provided based on actuarial valuation made at the end of the financial year.

Leave encashment expenditure is charged to profit and loss account at the time of leave encashed and paid, if any. Bonus expenditure is charged to profit and loss account on accrual basis.

(viii) Foreign Currency Transactions:

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.

Foreign currency current assets and current liabilities outstanding at the balance sheet date are translated at the exchange rate prevailing on that date and the net gain or loss is recognized in the profit and loss account.

Foreign currency translation differences relating to liabilities incurred for purchasing of fixed assets from foreign countries are adjusted in the carrying cost of fixed asset for differences up to the year-end in the year of acquisition, whereas differences arising thereafter to be recognized in the profit and loss account. All other foreign currency gain or losses are recognized in the profit and loss account.

(ix) Operating Lease :

Operating leases: Assets acquired as leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating lease. Lease rentals being income or expense are booked to the profit and loss account as incurred.

Initial direct costs in respect of the lease acquired are expenses off in the year in which such costs are incurred.

(x) Borrowing Cost:

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 asset is one that necessarily takes substantial period of time to get ready for intended use. Costs incurred in raising funds are amortized equally over the period for which the funds are acquired. All other borrowing costs are charged to profit and loss account.

(xi) Taxes on Income

Tax expenses comprise Current Tax / Minimum Alternate Tax (MAT) and deferred tax charge or credit.

Current Tax:

Provision for current tax / Minimum Alternate Tax (MAT) is made based on tax liability computed after considering tax allowances and exemptions, in accordance with the provisions of The Income Tax Act, 1961.

Deferred Tax:

Deferred tax assets and liability is recognized, on timing differences, being the 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 assets arising mainly on account of brought forward losses, unabsorbed depreciation and minimum alternate tax under tax laws, are recognized, only if there is a virtual certainty of its realization, supported by convincing evidence. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to reassure realization. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

(xii) Earnings/(Loss) per Share :

Basic earnings/(loss) per share are calculated by dividing the net profit / (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 are adjusted for any bonus shares issued during the year and also after the balance sheet date but before the date the financial statements are approved by the board of directors.

(xiii) Provisions, contingent liabilities and contingent assets :

A provision is recognized when the company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.

Contingent liabilities are disclosed by way of notes to the accounts.

Contingent assets are not recognized.

(xiv) Investments:

Investments being Non-Current Investments consist of investments made in equity shares of associate and investments in mutual funds. Investments are stated at cost of acquisition.

(xv) Cash and Cash Equivalents:

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand, cheques on hand and short-term investments with an original maturity of three months or less.

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated, accordingly.

(xvi) Government Grants & Assistance:

This includes cash subsidy being received from State Government and District Industries Center (DIC) for fixed assets being non-repayable is grouped under Capital Reserve.

(xvii) Segment Reporting:

In accordance with Accounting Standard-17 - “Segment Reporting” issued by the Institute of Chartered Accountants of India, the Company has identified its business segment as "Manufacturing of Micro Irrigation Systems & Allied Products". There are no other primary reportable segments. The major and material activities of the company are restricted to only one geographical segment i.e. India, hence the secondary segment disclosures are also not applicable.

(xviii) Share Issue Expenses:

Portion of share issue expenses being in nature of deferred revenue expenses incurred for raising the money through initial public offer for the expansion projects are amortized to profit and loss account over period of five years from the commencement of the relevant project.


Mar 31, 2015

2.1 Basis of Accounting :

The financial Statements are prepared under the historical cost basis of accounting and evaluated on a going-concern basis, with revenue and expenses accounted for on their accrual to comply in all material aspect with the Generally Accepted Accounting Principles in India Indian (GAAP), including the Accounting Standards notified under the rctevant provisions of the Companies Act. 2013.

2-2 Use of Accounting Estimates :

The preparation of financial statements in conformity with Indian GAAP requires judgments, estimates and assumptions to he made that affect the reported amount of assets and liabilities, riisdnsuras, of contingent liabilities on the date of the financial statements and (he reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materiaiized,

2.3 Revenue Recognition;

Revenue is b&ing recognized to the extent that it is probable that the economic benefits wilt flow to the Company and the revenue can be reliably measured.

2.4 Fixed Assets :

Fixed assets are staled at. cost net of recoverable taxes, trade discounts and rebates less

2.5 Depreciation and Amortization :

Depreciation on fixed assets has been charged on W, D. V method at the rates and useful life of the assets

Due to operation of the new mettled of depreciation on the basis of useful life of the asset as per Schedule -II of the Companies Act 2013 form 01-04-14 has resulted in significant transitional effect on opening retained earnings as well as current year's profit of the Company Change in the method of depreciation from WDV to useful life of the asset has resulted in more provision of depreciation amounting R$. 59.GOA lacs and reduction in opening retained earning by Rs. 3.59/- lacs due to charging of carrying amount of the assets having no useful life.

2-6 Inventories ;

Inventories are valued at cost. Cost is determined on hrsl-in first-cut method. Inventories of manufactured goods and raw materials are valued at lower of cost end net realizable value except for wastage 8 Scrap which are valued at net realizable value.. Cost of manufactured goods include related overheads

2.7 Investments ;

Non-currant Investments am recorded at cost.

2-8 Borrowing Costs :

Borrowing costs that are directly attributable to the acquisition or construction of a Qualifying assets are capitalized as part of the cost of that assets till such time the asset is ready for its intended use. Other borrowing costs are recognized as an expenses In the period in which they are incurred.

2-9 Provision and Contingencies :

Provisions : Provisions are recognized when there is a present obligation as 6 result of a pasl event, 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 present obligation at the Balance Sheet date and arc not discounted to its present value.

Contingent Liabilities : Contingent Liabilities are disclosed when there is a possible obligation arising from past events, the estimate 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 present obligation that arise 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

2.10 Provision for Current and /deferred Tax :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income-tax Act. 1961. Deferred Tax resulting from "liming difference" between taxable and accounting income is accounted for using the tax rales applicable on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

2.11 Cash Flow Statement:

Cash Flows are reported using indirect method, whereby prafit/(loi&) before extraordinary items and taxes js adjusted for the affect nf transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

2.12 Employee Benefits ,

Provident Fund Contribution towards provident Fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are claasified as Defined Contribution Scheme as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.

Gratuity Liability . The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees on retirement death while in employment or on termination of employment in an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service Contribution to Gratuity fund are made to recognized funds managed by Life Insurance Corporation of India. The Company accounts for the liability for future gratuity benefits on the basis of an independent actuarial valuation.

2.13 Segmental Reporting :

As the company has only one business segment, disclosure under AS 17 on "Segment Reporting issued by the Institute of Chartered Accountants of India is not applicable

2.14 Earning per Share (EPS) ;

Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighed average number of equity shares outstanding during the year, The weighted average number of equity shares outstanding during the year and for all years presented is adjusted for events, such as bonus shares, that have changed the number of equity shares outstanding without a corresponding change in resources For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.

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