Mar 31, 2017
1. Background
Eastern Treads Limited was incorporated on 02/07/1993. Its shares are listed in Bombay Stock Exchange. The Company is primarily engaged in the business of manufacturing and dealing of tread rubber and rubber based adhesives and retreading services.
2. Accounting Policies Significant Accounting Policies
The significant Accounting Policies followed by the Company are as stated below:
General
The financial statements are prepared under historical cost convention and in accordance with the applicable Accounting Standards in India.
Use of Estimates
The preparation of financial statements in conformity with the Generally Accepted Accounting Principal (GAAP) requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities on the date of the financial statements and reported amount of income and expenses during the period. Actual figures may differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.
Fixed Assets
Fixed Assets are stated at historical cost less accumulated depreciation. Advances paid towards acquisition of fixed assets and contractors are disclosed under ''Capital Advances''
Depreciation
Depreciation on tangible assets has been provided under Straight Line Method over the useful life of the assets estimated by the management which is in line with the terms prescribed in Schedule II to The Companies Act, 2013. Depreciation for assets purchased/sold during the period is proportionately charged.
Note: Depreciation on plant & Machinery has been charged on triple shift basis for the first quarter and on double shift basis for the remaining quarters as against double shift basis during the entire previous year. The useful life of plant & equipment given under lease is taken as 3 years and 5 years based on the lease agreements. The residual value of the same has been considered as the amount guaranteed by the lessees as per the lease agreements at the end of the lease period. Hence the useful lives and residual values for these assets are different from the useful lives/residual value as prescribed under Part C of Schedule II of the Companies Act 2013. The useful life of vehicles given to employees as per the car policy scheme approved by the Company is taken as 3 years to 5 years based on the tenure of scheme availed by the employee.
Amortization of Intangible Assets
Intangible assets, being Computer Software are written off over a period of five years under Straight Line Method.
Revenue Recognition
Revenue from sale of goods is recognized at the point of dispatch to the customers. Revenue from job work is recognized at the completion of the agreed services. Revenue from retreading services is recognized at the completion of the agreed services. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable.
Inventories and Tools & Spares
Raw materials are valued at cost on FIFO basis using weighted Average formula. Finished Goods are valued at lower of cost or net realizable value. Cost includes indirect costs. 25% of Tools & Spares are written off to revenue.
Employee Benefits
(a) Short term employee benefits such as salaries, wages, bonus and incentives which fall due within 12 months of the period in which the employee renders the related services which entitles him to avail such benefits are recognized on an undiscounted basis and charged to the profit and loss account.
(b) Defined Contribution Plans - Contributions made to the Recognized Provident Fund & Employee State Insurance Corporation are expensed to the Profit & Loss Account. The Company''s obligation is limited to the amount contributed by it.
(c) Defined Benefit Plans - Gratuity liability is a defined benefit obligation and is provided for interim period calculated on a year-to-date basis by using actuarially determined rates at the end of prior financial year.
Foreign Exchange Transactions
Revenue denominated in foreign currencies is translated into relevant functional currencies using the exchange rate in effect on the date of transaction. Transaction gain or loss realized upon the settlement of foreign currency transactions are included in determining net profit for the period in which transaction is settled.
The forward exchange contracts taken to hedge existing assets/liabilities are translated at the closing exchange rates and resultant exchange differences are recognized in the same manner as those on the underlying foreign currency asset/liability.
Borrowing Costs
Borrowing costs are expensed in the absence of outlay on qualifying assets.
Segment Reporting
In the absence of more than one distinguishable business/geographical segment, segment information is not given.
Taxes on Income
Income tax expense comprises current tax and deferred tax charge or credit. The current tax is determined as the amount of tax payable in respect of the estimated taxable income of the period. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rates. Where there are unabsorbed depreciation or carry forward losses, deferred tax asset are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets are reviewed at each Balance Sheet date based on the developments during the period.
MAT Credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the guidance note issued by The Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
Impairment of Assets
The carrying amount of assets is reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing the value in use; the estimated future cash flows are discounted to the present value using the weighted average cost of capital.
Provisions, Contingent Liabilities and Contingent Assets
The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is a possible obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognized nor disclosed in the financial statements.
Mar 31, 2015
General
The financial statements are prepared under historical cost convention
and in accordance with the applicable accounting standards in India.
Use of Estimates
The preparation of financial statements in conformity with the
Generally Accepted Accounting Principal (GAAP) requires the management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent liabilities on the
date of the financial statements and reported amount of income and
expenses during the period. Actual figures may differ from these
estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.
Fixed Assets
Fixed Assets are stated at historical cost less accumulated
depreciation. Advances paid towards acquisition of fixed assets and
contractors are disclosed under ''Capital Advances''
Depreciation
Depreciation on tangible assets has been provided under Straight Line
Method over the useful life of the assets estimated by the management
which is in line with the terms prescribed in Schedule II to The
Companies Act, 2013. Depreciation for assets purchased/sold during the
period is proportionately charged.
The management estimates the useful life of the fixed assets as
follows:
Factory Building : 30 years
Building -Godown : 30 years
Roads - Non RCC : 5 years
Plant & Equipment : 15 years (Depreciation charged
on double shift basis)
Electrification & Water Systems : 10 years
Lab Equipments : 10 years
Furniture & Fixtures : 10 years
Office Equipments : 5 years
Computer & Accessories : 3 years
Vehicles : 8 years
During the current year, the Company has reviewed the useful life of
its assets as per the Companies Act, 2013 and has re-estimated the same
accordingly. Consequently, an amount of Rs. 104,05,973/- being the
excess depreciation charged as per the earlier regime is written back
during the year.
Amortisation of Intangible Assets
Intangible assets, being Computer Software are written off over a
period of five years under Straight Line Method.
Revenue Recognition
Revenue from sale of goods is recognised at the point of despatch to
the customers. Revenue from job work is recognised at the completion of
the agreed services. Interest income is recognised on a time proportion
basis taking into account the amount outstanding and the interest rate
applicable.
Inventories and Tools & Spares
Raw materials are valued at cost on FIFO basis. Finished Goods are
valued at lower of cost or net realisable value. Cost includes indirect
costs. 25% of Tools & Spares are written off to revenue.
Employee Benefits
(a) Short term employee benefits such as salaries, wages, bonus and
incentives which fall due within 12 months of the period in which the
employee renders the related services which entitles him to avail such
benefits are recognised on an undiscounted basis and charged to the
profit and loss account.
(b) Defined Contribution Plans - Contributions made to the Recognised
Provident Fund & Employee State Insurance Corporation are expensed to
the Profit & Loss Account. The Company''s obligation is limited to the
amount contributed by it.
(c) Defined Benefit Plans - The Company is a member of Group Gratuity
Scheme administered by LIC of India. The liability for gratuity is
accounted on the basis of actuarial valuation done by LIC of India.
Foreign Exchange Transactions
Revenue denominated in foreign currencies is translated into relevant
functional currencies using the exchange rate in effect on the date of
transaction. Transaction gain or loss realised upon the settlement of
foreign currency transactions are included in determining net profit
for the period in which transaction is settled.
The premium or discount on a forward exchange contract taken to hedge
foreign currency risk of an existing asset/liability is recognised over
the period of the contract and is recognised in the statement of profit
and loss.
The forward exchange contracts taken to hedge existing
assets/liabilities are translated at the closing exchange rates and
resultant exchange differences are recognised in the same manner as
those on the underlying foreign currency asset/liability.
Borrowing Costs
Borrowing costs are expensed in the absence of outlay on qualifying
assets.
Segment Reporting
In the absence of more than one distinguishable business/ geographical
segment, segment information is not given.
Taxes on Income
Income tax expense comprises current tax and deferred tax charge or
credit. The current tax is determined as the amount of tax payable in
respect of the estimated taxable income of the period. The deferred tax
charge or credit is recognised using prevailing enacted or
substantively enacted tax rates. Where there are unabsorbed
depreciation or carry forward losses, deferred tax asset are recognised
only if there is virtual certainty of realisation of such assets. Other
deferred tax assets are recognised only to the extent there is
reasonable certainty of realisation in future. Deferred tax assets are
reviewed at each Balance Sheet date based on the developments during
the period.
MAT Credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the MAT credit
becomes eligible to be recognised as an asset in accordance with the
recommendations contained in the guidance note issued by The Institute
of Chartered Accountants of India, the said asset is created by way of
a credit to the profit and loss account and shown as MAT Credit
Entitlement. The company reviews the same at each Balance Sheet date
and writes down the carrying amount of MAT credit entitlement to the
extent there is no longer convincing evidence to the effect that
company will pay normal Income Tax during the specified period.
Impairment of Assets
The carrying amount of assets is reviewed at each Balance Sheet date if
there is any indication of impairment based on internal/external
factors. An impairment loss will be recognised wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount is greater of the assets net selling price and value
in use. In assessing the value in use; the estimated future cash flows
are discounted to the present value using the weighted average cost of
capital.
Provisions, Contingent Liabilities and Contingent Assets
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure for a contingent liability is made when there is a possible
obligation that may, but probably will not, require an outflow of
resources. When there is a possible obligation or a present obligation
in respect of which the likelihood of outflow of resources is remote,
no provision or disclosure is made. Contingent assets are neither
recognised nor disclosed in the financial statements.
Mar 31, 2013
The significant Accounting Policies followed by the Company are as
stated below:
General
The financial statements are prepared under historical cost convention
and in accordance with the applicable Accounting Standards in India.
Use of Estimates
The preparation of financial statements in conformity with the
Generally Accepted Accounting Principles (GAAP) requires the management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent liabilities on the
date of the financial statements and reported amount of income and
expenses during the period. Actual figures may differ from these
estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.
Fixed Assets
Fixed Assets are stated at historical cost less accumulated
depreciation.
Advances paid towards acquisition of fixed assets and contractors are
disclosed under ''Capital Advances''
Depreciation
Depreciation has been provided on fixed assets under Straight Line
Method at the rates and in the manner given
underScheduleXIVtoTheCompaniesAct, 1956.
Amortisation of Intangible Assets
Intangible assets are written off over a period of five years under
Straight Line Method
Revenue Recognition
Revenue from sale of goods is recognised at the point of despatch to
the customers. Revenue from job work is recognised at the completion
of the agreed services.
Inventories and Tools & Spares
Raw materials are valued at cost on FIFO basis.
Finished Goods are valued at lower of cost or net realisable value.
Cost includes indirect costs.
25% of Tools & Spares are written off to revenue.
Preference Share Issue Expenses
The expenses in relation to the preference share issue is written off
over a period of 5 years on straight line method.
Employee Benefits
a.Short term employee benefits such as salaries, wages, bonus and
incentives which fall due within 12 months of the period in which the
employee renders the related services which entitles him to avail such
benefits are recognised on an undiscounted basis and charged to the
profit and loss account.
b.Defined Contribution Plans - Contributions made to the Recognised
Provident Fund & Employee State Insurance Corporation are expensed to
the Profit & Loss Account. The Company''s obligation is limited to the
amount contributed by it.
c.Defined Benefit Plans - The Company is a member of Group Gratuity
Scheme administered by LIC of India. The liability for gratuity is
accounted on the basis of acturial valuation done by LIC of India.
Borrowing Costs
Borrowing costs are expensed in the absence of outlay on qualifying
assets.
Segment Reporting
In the absence of more than one distinguishable business/geographical
segment, segment information is not given.
Taxes on Income
Income tax expense comprises current tax and deferred tax charge or
credit. The current tax is determined as the amount of tax payable in
respect of the estimated taxable income of the period. The deferred tax
charge or credit is recognised using prevailing enacted or
substantively enacted tax rates. Where there are unabsorbed
depreciation or carry forward losses, deferred tax asset are recognised
only if there is virtual certainty of realisation of such assets. Other
deferred tax assets are recognised only to the extent there is
reasonable certainty of realisation in future. Deferred tax assets are
reviewed at each Balance Sheet date based on the developments during
the period.
MAT Credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the MAT credit
becomes eligible to be recognised as an asset in accordance with the
recommendations contained in the guidance note issued by The Institute
of Chartered Accountants of India, the said asset is created by way of
a credit to the profit and loss account and shown as MAT Credit
Entitlement. The company reviews the same at each Balance Sheet date
and writes down the carrying amount of MAT credit entitlement to the
extent there is no longer convincing evidence to the effect that
company will pay normal Income Tax during the specified period.
Impairment of Assets
The carrying amount of assets is reviewed at each Balance Sheet date if
there is any indication of impairment based on internal/external
factors. An impairment loss will be recognised wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount is greater of the assets net selling price and value
in use. In assessing the value in use; the estimated future cash flows
are discounted to the present value using the weighted average cost of
capital.
Provisions, Contingent Liabilities and Contingent Assets
The company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure for a contingent liability is made when there is a possible
obligation that may, but probably will not, require an outflow of
resources. When there is a possible obligation or a present obligation
in respect of which the likelihood of outflow of resources is remote,
no provision or disclosure is made. Contingent assets are neither
recognised nor disclosed in the financial statements.
Mar 31, 2012
General
The financial statements are prepared under historical cost convention
and in accordance with the applicable accounting standards in India.
Use of Estimates
The preparation of financial statements in confirm its with the
Generally Accepted Accounting Principles (GAAP) requires the management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent liabilities on the
date of the financial statements and reported amount of income and
expenses during the period. Actual figures may differ from these
estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.
Fixed Assets
Fixed Assets are stated at historical cost less accumulated
depreciation.
Advances paid towards acquisition of fixed assets and contractors are
disclosed under'Capital Advances'.
Depreciation
Depreciation has been provided on fixed assets under Straight Line
Method at the rates and in the manner given under Schedule XlV to The
Companies Act, 1956.
Revenue Recognition
Revenue from sale of goods is recognised at the point of despatch to
the customers.
Revenue from job work is recognised at the completion of the agreed
services.
Inventories and Tools & Spares
Raw materials are valued at cost on FIFO basis.
Finished Goods are valued at lower of cost or net realisable value.
Cost includes indirect costs.
25% of Tools & Spares are written off to revenue.
Preference Share Issue Expenses
The expenses in relation to the preference share issue is written off
over a period of 5 years on straight line method.
Employee Benefits
a. Short term employee benefits such as salaries, wages, bonus and
incentives which fall due within 12 months of the period in which the
employee renders the related services which entitles him to avail such
benefits are recognised on an undiscounted basis and charged to the
profit and loss account.
b. Defined Contribution Plans - Contributions made to the Recognised
Provident Fund & Employee State Insurance Corporation are expensed to
the Profit & Loss Account. The Company's obligation is limited to the
amount contributed by it.
c. Defined Benefit Plans - The Company is a member of Group Gratuity
Scheme administered by LIC of India. The liability for gratuity is
accounted on the basis of acturial valuation done by LIC of India
Borrowing Costs
Borrowing costs are expensed in the absence of outlay on qualifying
assets.
Segment Reporting
In the absence of more than one distinguishable business/ geographical
segment, segment information is not given.
Taxes on Income
Taxes on Income is accounted under the Tax Effect Method in accordance
with Accounting Standard -22 issued by the Institute of Chartered
Accountants of India. On account of the substantial amount of
unabsorbed losses and depreciation under the tax provisions, the net
DTA position of the previous year (Rs. 79.20 Lakhs) was not recognised as
on 31.03.2011. In view of the increased profitability and the positive
future outlook, Deferred Tax Asset of Rs. 4.12 lakhs is recognised during
the year.
Impairment of Assets
The carrying amount of assets is reviewed at each Balance Sheet date if
there is any indication of impairment based on internal/external
factors. An impairment loss will be recognised wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount is greater of the assets net selling price and value
in use. In assessing the value in use; the estimated future cash flows
are discounted to the present value using the weighted average cost of
capital.
Provisions, Contingent Liabilities and Contingent Assets
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure for a contingent liability is made when there is a possible
obligation that may, but probably will not, require an outflow of
resources. When there is a possible obligation or a present obligation
in respect of which the likelihood of outflow of resources is remote,
no provision or disclosure is made. Contingent assets are neither
recognised nor disclosed in the financial statements.
Mar 31, 2010
The significant Accounting Policies followed by the Company are as
stated below:
General
The financial statements are prepared under historical cost convention
and in accordance with the applicable accounting standards in India.
Use of Estimates
The preparation of financial statements in confirmity with the
Generally Accepted Accounting Principal (GAAP) requires the management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent liabilities on the
date of the financial statements and reported amount of income and
expenses during the period. Actual figures may differ from these
estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.
Fixed Assets
Fixed Assets are stated at historical cost less accumulated
depreciation. Advances paid towards acquisition of fixed assets are
disclosed under fixed capital expenditure.
Depreciation
Depreciation has been provided on fixed assets under Straight Line
Method at the rates and in the manner given under Schedule XIV to The
Companies Act, 1956.
Revenue Recognition
Revenue from sale of goods is recognised at the point of despatch to
the customers. Revenue from job work is recognised at the completion of
the agreed services.
Inventories and Tools & Spares
Raw materials are valued at cost on FIFO basis. Finished Goods are
valued at lower of cost or net realisable value. Cost includes indirect
costs. 25% of Tools & Spares are written off to revenue.
Preference Share Issue Expenses
The expenses in relation to the preference share issue is written off
over a period of 5 years.
Employee Benefits
a. Short term employee benefits such as salaries, wages, bonus and
incentives which fall due within 12 months of the period in which the
employee renders the related services which entitles him to avail such
benefits are recognised on an undiscounted basis and charged to the
profit and loss account.
b. Defined Contribution Plans - Contributions made to the Recognised
Provident Fund & Employee State Insurance Corporation are expensed to
the Profit & Loss Account. The CompanyÃs obligation is limited to the
amount contributed by it.
c. Defined Benefit Plans - The Company is a member of Group Gratuity
Scheme administered by LIC of India. The liability for gratuity is
accounted on the basis of acturial valuation done by L I C of India.
Borrowing Costs
Borrowing costs are expensed in the absence of outlay on qualifying
assets.
Segment Reporting
In the absence of more than one distinguishable business/ geographical
segment segment information is not given.
Taxes on Income
Taxes on Income is accounted under the Tax Effect Method in accordance
with Acounting Standard 22 issued by the Institute of Chartered
Accountants of India. On account of the substantial amount of
unabsorbed losses and depreciation under the tax provisions, the net
position is a Deferred Tax Asset of Rs.138.50 lacs. This has not been
recognised in the accounts as there is no virtual certainty of
sufficient taxable profits in the foreseable future, which would offset
the same.
Impairment of Assets
The carrying amount of assets is reviewed at each Balance Sheet date if
there is any indication of impairment based on internal/external
factors. An impairment loss will be recognised wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount is greater of the assets net selling price and value
in use. In assessing the value in use; the estimated future cash flows
are discounted to the present value using the weighted average cost of
capital.
Provisions, Contingent Liabilities and Contingent Assets
The company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure for a contingent liability is made when there is a possible
obligation that may, but probably will not, require an outflow of
resources. When there is a possible obligation or a present obligation
in respect of which the likelihood of outflow of resources is remote,
no provision or disclosure is made. Contingent assets are neither
recognised nor disclosed in the financial statements.