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Accounting Policies of Flexituff International Ltd. Company

Mar 31, 2015

1. Basis of accounting

The financial statements are prepared under the historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles ("GAAP"), comprising of the mandatory Accounting Standards, Guidance Notes etc. issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 2013, as applicable on the Company.

2. Revenue recognition

a) Sales revenue is recognized when property in the goods with all significant risk and rewards as well as the effective control of goods usually associated with ownership are transferred to the buyer.

b) Promotional Benefits, Export Incentives and Export Growth Incentives are accounted for on accrual basis when virtual certainty and their probable use within reasonable time in the normal course of business, is established.

c) Claims and refunds due from Government authorities and parties, through receivable / refundable are not recognized in the accounts, if the amount thereof is not ascertainable. These are accounted for as and when ascertained or admitted by the concerned authorities / parties in favor of the Company.

d) Claims lodged with insurance companies are recognized as income on acceptance by the Insurance Company.

3. Fixed assets

a) Cost of Fixed Assets comprises of its purchase price including import duties and other non-refundable taxes or levies, expenditure incurred in the course of construction or acquisition, Start-up, Reconditioning, Commissioning, test runs and experimental production and other attributable costs of bringing the assets to its working conditions for the purpose of use for the business.

b) Borrowing cost directly attributable and / or funds borrowed generally and used for the purpose of acquisition / construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized, at its capitalization rate to expenditure on that assets, for the period as per provisions of AS 16, until all activities necessary to prepare qualifying assets for its intended use are complete.

4. Depreciation / amortization

Pursuant to the enactment of the Companies Act 2013 (the 'Act') being effective from 1 April 2014, the company revised depreciation rates of fixed assets as per useful life specified in Schedule II of the Act.

For certain class of assets, the depreciation rates have been revised on the basis of internal technical valuation and assessment.

Consequently, the depreciation charged for the year ended 31st March 2015 is higher by Rs.127.67 million. Further in accordance with the requirements of Schedule II of the Act, depreciation of Rs.26.25 million has been adjusted in Reserves and Surplus for the assets where remaining useful life as per Schedule 11/ technical estimated had already exhausted as on 1st April 2014.

Leased Assets are amortized over the operating period oflease.

5. Employee benefits

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

b) The eligible employees of the company are entitled to receive benefits under the provident fund a defined contribution plan in which both the employees and the Company make monthly contribution at a specified percentage of the covered employees salary ( currently 12% of the employee's basic salary). The contributions as specified under the law are paid to the Regional Provident Fund Commissioner. The Company recognizes such contribution as expense of the year in which the liability is incurred.

c) 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 at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The plan is managed by a trust and the fund is invested with Life Insurance Corporation of India under its Group Gratuity Scheme. The Company makes annual contributions to gratuity fund and the Company recognizes the liability for gratuity benefits payable in future based on Gratuity Report under AS-15 by Life Insurance Corporation of India.

d) Retirement benefit:- Contribution to Provident Fund is recognized in the accounts on actual liabilities basis

6. Investment

Non Current Investments are stated at cost. In case of diminution in value other than temporary, the carrying amount is reduced to recognize the decline.

7. Valuation of inventory

a) Inventories are valued at historical cost and net

realizable value whichever is lower. Historical cost is determined on FIFO/Weighted average basis on relevant categories of inventories and net realizable value, after providing for obsolete, slow moving and defective Inventories, wherever necessary on a consistent basis.

b) Cost of raw materials includes duties net of Cenvat Credit available. Finished goods exclude "excise duty" thereon.

8. Foreign currency transactions

a) All foreign currency transactions are accounted for at the exchange rates prevailing on the date of such transactions.

b) Monetary assets 8j liabilities are translated at the exchange rate prevailing on the balance sheet date and the resultant gain/loss is recognized in the financial statements.

c) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets..

d) The Company has recognized currency exchange difference of Rs 259.5 millions on FCCB of $ 34 Millons on 31-3-2015 by capitalizing it to fixed assets created out of proceeds of FCCB

9. Taxes on income

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognized subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. For this purpose, deferred tax liabilities and assets are reckoned on net basis, after inter-se set-off, for each component for the timing differences.

10. Impairment of fixed assets

Factors giving rise to any indication of Impairment of the carrying amounts of the Company's Assets are appraised at each Balance Sheet date by the Management to determine and provide / reverse an impairment loss following Accounting Standard (AS) 28 "Impairment of Assets"

11. Replenishment

Indigenous raw materials had to be used on occasions, for exports, to be subsequently replenished under Duty Free Entitlement Schemes of the Government of India. Therefore, the cost of such indigenous raw materials has been accounted for at its equivalent imported / duty free prices by adjusting the value of such entitlements granted for neutralization of the import duties and levies.

12. Others

Besides debit / credit in previous year adjustment account, amounts related to previous years, arisen / settled during the year have been debited / credited to respective heads of accounts.


Mar 31, 2014

1. BASIS OF ACCOUNTING

The financial statements are prepared under the historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles ("GAAP"), comprising of the mandatory Accounting Standards, Guidance Notes etc. issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, as adopted consistently by the Company.

2. REVENUE RECOGNITION

a) Sales revenue is recognized when property in the goods with all significant risk and rewards as well as the effective control of goods usually associated with ownership are transferred to the buyer.

b) Promotional Benefits, Export Incentives and Export Growth Incentives are accounted for on accrual basis when virtual certainty and their probable use within reasonable time in the normal course of business, is established

c) Claims and refunds due from Government authorities and parties, through receivable / refundable are not recognized in the accounts, if the amount thereof is not ascertainable. These are accounted for as and when ascertained or admitted by the concerned authorities / parties in favor of the Company.

d) Claims lodged with insurance companies are recognized as income on acceptance by the Insurance Company.

3. FIXED ASSETS

a) Cost of Fixed Assets comprises of its purchase price including import duties and other non-refundable taxes or levies, expenditure ncurred in the course of construction or acquisition, Start-up, Reconditioning, Commissioning, test runs and experimenta production and other attributable costs of bringing the assets to its working conditions for the purpose of use for the business

b) Borrowing cost directly attributable and / or funds borrowed generally and used for the purpose of acquisition / construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized, at its capitalization rate to expenditure on that assets, for the period as per provisions of AS 16, untill all activities necessary to prepare qualifying assets for its ntended use are complete

4. DEPRECIATION/AMORTIZATION

- Depreciation is provided under the straight line method at the rates provided by Schedule XIV to the Companies Act, 1956 on pro-rata basis. On the basis of technical evaluation by Chartered Engineer, the plant and machineries of all the three divisions are categorized as continuous process plant and therefore the depreciation rate applied are for the continuous process.

- Leased assets are amortized over the operating period of 99 years

5. EMPLOYEE BENEFITS

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered

b) The eligible employees of the company are entitled to receive benefits under the provident fund a defined contribution plan in which both the employees and the Company make monthly contribution at a specified percentage of the covered employees salary (currently 12% of the employee''s basic salary). The contributions as specified under the law are paid to the Regional Provident Fund Commissioner. The Company recognizes such contribution as expense of the year in which the liability is incurred

c) 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 at retirement, death while in employment or on termination of employment of an amount equivalent to 1 5 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The plan is managed by a trust and the fund is invested with Life Insurance Corporation of India under its Group Gratuity Scheme. The Company makes annual contributions to gratuity fund and the Company recognizes the liability for gratuity benefits payable in future based on an independent actuarial valuation

d) Retirement benefit:- Contribution to Provident Fund is recognized in the accounts on actual liabilities basis

6. INVESTMENT

Non Current Investments are stated at cost. In case of diminution in value other than temporary, the carrying amount is reduced to recognize the decline.

7. VALUATION OF INVENTORY

a) Inventories are valued at historical cost and net realizable value whichever is lower. Historical cost is determined on FIFO/Weighted average basis on relevant categories of inventories and net realizable value, after providing for obsolete, slow moving and defective nventories, wherever necessary on a consistent basis

b) Cost of raw materials includes duties net of Cenvat Credit available. Finished goods exclude "excise duty" thereon

8. FOREIGN CURRENCY TRANSACTIONS

a) All foreign currency transactions are accounted for at the exchange rates prevailing on the date of such transactions.

b) Monetary assets & liabilities are translated at the exchange rate prevailing on the balance sheet date and the resultant gain/loss is recognized in the financial statements

c) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

d) The company uses foreign currency forward contracts/options to hedge its actual underlying exposure and not for trading or speculation purpose to movement in foreign currency rates. The use of these forward contracts/options reduces the risk and/or cost to the company. Exchange difference on such contracts is recognized in the reporting period in which exchange rates change.

e) The Company, in view of uncertainty for conversion of FCCBs into equity and also due to chance of possible obligation, has decided to disclose as Contingent Liabilities, the difference between the amount at which FCCBs has been stated in the books and the amount of FCCBs as calculated on the basis of rate of Foreign Currency on the date of reporting period

9. TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognized subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. For this purpose, deferred tax liabilities and assets are reckoned on net basis, after inter-se set-off, for each component for the timing differences

10. IMPAIRMENT OF FIXED ASSETS

Factors giving rise to any indication of Impairment of the carrying amounts of the Company''s Assets are appraised at each Balance Sheet date by the Management to determine and provide/ reverse an impairment loss following Accounting Standard (AS) 28 "Impairment of Assets"

11. REPLENISHMENT

indigenous raw materials had to be used on occasions, for exports, to be subsequently replenished under Duty Free Entitlement Schemes of the Government of India. Therefore, the cost of such indigenous raw materials has been accounted for at its equivalent mported / duty free prices by adjusting the value of such entitlements granted for neutralization of the import duties and levies

12. OTHERS

Besides debit/credit in previous year adjustment account, amounts related to previous years, arisen/settled during the year have been debited / credited to respective heads of accounts

Nature of security on secured loans :

1. Term Loans are secured by equitable mortgage on all immovable fixed assets of the Company, hypothecation of the entire moveable machinery and other fixed assets & a second charge on all current assets of the company.

2. All term loans facilities are further secured by Personal Guarantee of Shri Manish Kalani, Shri Saurabh Kalani and corporate guarantee of M/S Kalani Industries Pvt. Ltd.

3. In case of G E Capital Services India - (i) First and exclusive charge over Equipment financed through the Facility in accordance with the Deed of Hypothecation, (ii) Personal Guarantee of Mr. Manish Kalani. (iii) Corporate Guarantee of M/s Kalani Industries Pvt Ltd


Mar 31, 2013

1. BASIS OF ACCOUNTING

The financial statements are prepared under the historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles ("GAAP"), comprising of the mandatory Accounting Standards, Guidance Notes etc. issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, as adopted consistently by the Company.

2. REVENUE RECOGNITION

a) Sales revenue is recognized when property in the goods with all significant risk and rewards as well as the effective control of goods usually associated with ownership are transferred to the buyer.

b) Promotional Benefits, Export Incentives and Export Growth Incentives are accounted for on accrual basis when virtual certainty and their probable use within reasonable time in the normal course of business, is established.

c) Claims and refunds due from Government authorities and parties, through receivable / refundable are not recognized in the accounts, if the amount thereof is not ascertainable. These are accounted for as and when ascertained or admitted by the concerned authorities / parties in favor of the Company.

d) Claims lodged with insurance companies are recognized as income on acceptance by the Insurance Company.

3. FIXED ASSETS

a) Cost of Fixed Assets comprises of its purchase price including import duties and other non-refundable taxes or levies, expenditure incurred in the course of construction or acquisition, Start-up, Reconditioning, Commissioning, test runs & experimental production and other attributable costs of bringing the assets to its working conditions for the purpose of use for the business.

b) Borrowing cost directly attributable and / or funds borrowed generally and used for the purpose of acquisition / construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized, at its capitalization rate to expenditure on that assets, for the period as per provisions of AS 16, until all activities necessary to prepare qualifying assets for its intended use are complete.

4. DEPRECIATION / AMORTIZATION

- Depreciation is provided under the straight line method at the rates provided by Schedule XIV to the Companies Act, 1956 on pro-rata basis, On the basis of technical evaluation by Chartered Engineer, the plant and machineries of all the three divisions are categorized as continuous process plant and therefore the depreciation rate applied are for the continuous process.

- Leased assets are amortized over the operating period of 99 years.

5. EMPLOYEE BENEFITS

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

b) The eligible employees of the company are entitled to receive benefits under the provident fund a defined contribution plan in which both the employees and the Company make monthly contribution at a specified percentage of the covered employees salary ( currently 12% of the employee''s basic salary). The contributions as specified under the law are paid to the Regional Provident Fund Commissioner. The Company recognizes such contribution as expense of the year in which the liability is incurred.

c) The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plant provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The plan is managed by a trust and the fund is invested with Life Insurance Corporation of India under its Group Gratuity Scheme. The Company makes annual contributions to gratuity fund and the Company recognizes the liability for gratuity benefits payable in future based on an independent actuarial valuation.

6. INVESTMENT

Non Current Investment are stated at cost. In case of diminution in value other than temporary, the carrying amount is reduced to recognize the decline.

7. VALUATION OF INVENTORY

a) Inventories are valued at historical cost and net realisable value whichever is lower.

Historical cost is determined on FIFO/Weighted average basis on relevant categories of inventories and net realizable value, after providing for obsolete, slow moving and defective Inventories, wherever necessary on a consistent basis.

b) Cost of raw materials includes duties net of Cenvat Credit available. Finished goods exclude "excise duty" thereon.

8. RETIREMENT BENEFIT

a) Contribution to Provident Fund is recognized in the accounts on actual liabilities basis.

b) Provision / contribution to Gratuity Funds are made on the basis of actuarial valuation certificate from a registered actuary.

9. FOREIGN CURRENCY TRANSACTIONS

a) All foreign currency transactions are accounted for at the exchange rates prevailing on the date of such transactions.

b) Monetary assets & liabilities are translated at the exchange rate prevailing on the balance sheet date and the resultant gain/loss is recognized in the financial statements.

c) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

d) The company uses foreign currency forward contracts/options to hedge its actual underlying exposure and not for trading or speculation purpose to movement in foreign currency rates. The use of these forward contracts/options reduces the risk and/or cost to the company. Exchange difference on such contracts is recognized in the reporting period in which exchange rates change.

10. TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognized subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. For this purpose, deferred tax liabilities and assets are reckoned on net basis, after inter-se set-off, for each component for the timing differences.


Mar 31, 2011

1. BASIC OF ACCOUNTING :

The financial statements are prepared under the historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles <"GAAP">, Comprising of the mandatory Accounting Standards, Guidance Notes etc. issued by the Institute of Chartered Accountants of India and the provisions of the Companies act. 1956, as adopted consistently by the Company.

2. REVENUE RECOGNITION

a> Sales revenue is recognized when property in the goods with all significant risk and rewards as well as the effective control of goods usually associated with ownership are transferred to the buyer.

b> Promotional Benefits, Export Incentives and Export Growth Incentives are accounted for on accrual bais when virtual certainty and their probable use within reasonable time in the normal course of business, is established.

c> Claims and refunds due from Government authorities and parties, through receivable/ refundable are not recognizes in the accounts. if the amount there of is not ascertainable. These are accounted for as and when ascertained or admitted any the concerned authorities/ parties in favour of the Company.

d> Claims Lodged with insurance companies are recognized as income acceptance by the insurance Company.

3. FIXED ASSETS

a> Cost of Fixed Assets comprises of its purchase price including import duties and other non-refundable taxes or levies, expenditure incurred in the course of Construction or acquisition, Start- u, Reconditioning, commissioning, test runs & experimental production and other attributable costs of bringing the assets to its working conditions for the purpose of use for the business.

b> Borrowing cost directly attributable and /or funds borrowed generally and used for the purpose of acquisition/ construction of asset that necessarily takes a substantial period of time to get ready for its intended use captialized. at its capitalization rate to expenditure on that assets, for the period as provisions of AS 16, until all activates necessary to repare qualifying assets for its intended use are complete.

4. DEPRECIATION/ AMORTIZATION

- Depreciation is provided under the straight lime method at the rates provided by Schedule XIV to the Companies Act, 1956 on pro- rata basis, On the basis of technical evaluation by Chartered Engineer, the plant and machines of all the three divisions are categorized as continuous process plant and therefore the depreciation applied are for the continuous process.

- Leased assets are amortized over the operating period of 99 years..

5. EMPLOYEE BENEFITS

a> Short teem employee benefits as an expense at the undiscounted amount in the profit and loss accent of the year in which the related service rendered.

b> The eligible employees of the company are entitled to receive benefits under the provident fund a defined contribution lan in which both the employee and the company make monthly contribution at a specified percentage of the covered employees salary the Contribution as expense of the year in which the liability is incurred.

c> The company has an obligation towards gratuity. a defined retirement plan covering eligible or on termination of employment of an amount equivalent to 15days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The land is managed by at rust and the fund is invested with Life insurance Corporation of recognizes the liability for benefits payable in future based on an independent actuarial valuation.

6. INVESTMENT

Long Term Investment are stated at cost of diminution in value other than temporary, the carrying amount is reduced to recognize the decline. Current investment are carried at cost or fair value which ever is lower.

7. VALUATION OF INVENTORY

a) Inventories are valued at historical cost and net realizable value whichever is lower. Historical cost is determined on FIFO / Weighted Average basis on relevant categories of Inventories and net realizable value, after providing for obsolete, slow moving and defective Inventories, wherever necessary on a consistent basis.

b) Cost of raw materials includes duties net of Cenvat Credit available. Finished goods exclude "excise duty" thereon.

8. RETIREMENT BENEFIT

a) Contribution to Provident Fund is recognized in the accounts on actual liabilities basis.

b) Provision / contribution to Gratuity Funds are made on the basis of actuarial valuation certificate from a registered actuary.

10. TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognized subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. For this purpose, deferred tax liabilities and assets are reckoned on net basis, after inter-se set-off, for each component for the timing differences.

11. IMPAIRMENT OF FIXED ASSETS:

Factors giving rise to any indication of Impairment of the carrying amounts of the Company's Assets are appraised at each Balance Sheet date by the Management to determine and provide / reverse an impairment loss following Accounting Standard (AS) 28 "Impairment of Assets"

12. REPLENISHMENT:

Indigenous raw materials had to be used on occasions, for exports, to be subsequently replenished under Duty Free Entitlement Schemes of the Government of India. Therefore, the cost of such indigenous raw materials has been accounted for at its equivalent imported /duty free prices by adjusting the value of such entitlements granted for neutralization of the import duties and levies.

13. OTHERS:

Besides debit/credit in previous year adjustment account, amounts related to previous years, arisen / settled during the year have been debited / credited to respective heads of accounts.

 
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