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Accounting Policies of Kokuyo Camlin Ltd. Company

Mar 31, 2018

1 SIGNIFICANT ACCOUNTING POLICIES

1.01 Revenue recognition Revenue from sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed,which is usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade / cash discounts and volume rebates.

Interest income

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

Dividend:

A dividend is recognised as revenue when the right to receive dividend payment has been established.

1.02 Property, plant and equipment

(i) Recognition and measurement

Freehold land is carried at historical cost. All other items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

The cost of an item of property, plant and equipment comprises:

a) its purchase price, including import duties and non-refundable taxes (net of Cenvat, VAT and GST), after deducting trade discounts and rebates.

b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

c) borrowing costs for long-term construction projects if the recognition criteria are met.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components ) of property, plant and equipments.

(ii) Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

(iii) Depreciation

Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values, if any, over their estimated useful lives using the straight line method in the manner and at the rates prescribed by Part ‘C’ of Schedule II of the Act. Depreciation is charged on a monthly pro-rata basis for assets purchased or sold during the year.

The Company has used the following rates to provide depreciation on its fixed assets.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other gains/(losses).

Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.

1.03 Intangible assets

Intangible assets comprise application software purchased / developed, which are not an integral part of the related hardware, and are amortized using the straight line method over a period of the software license, which in Management’s estimate represents the period during which the economic benefits will be derived from their use.

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

The useful lives of intangible assets are as mentioned below:

Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangibles recognised as at 1 April , 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of such intangibles.

1.04 Impairment of non financial assets

The Company’s non financial assets are tested for impairment at each reporting date to determine whether there are events or changes in circumstances which indicate that the carrying amount may not be recoverable. Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired.

The recoverable amount is higher of the asset’s net selling price or value in use, i.e. the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset is reversed if, and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

1.05 Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).

1.06 Borrowing cost

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

1.07 Leases

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

For arrangements entered into prior to 1 April 2016, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.

Company as a lessee

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership of the Company is classified as a finance lease.

Finance leases are capitalised at the commencement of the lease on the inception date at fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on the borrowing costs.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term except where the payments are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increase.

Company as a lessor

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

Transition to Ind AS

On transition to Ind AS, the Company has reclassified leasehold land from property, plant and equipment to other non current assets and freehold land to Investment property, at its carrying amount on the date of re-classification.

The fair value of investment property is disclosed in the notes.

1.08 Investment in subsidiary and associates

The Company’s investment in its subsidiary and associates are carried at cost.

1.09 Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both but not for sale in the ordinary course of business, or for use in the production or supply of goods or services or for administrative purpose. Upon initial recognition, an investment property is measured at cost. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses, if any.

On transition to Ind AS the Company has reclassified certain freehold land as investment property measured as per the previous GAAP and used that carrying value as the deemed cost of such investment property. The fair value of investment property is disclosed in note 4(b).

1.10 Income-tax

Income tax expense comprises of current and deferred tax. It is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in OCI.

(i) Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Minimum Alternate Tax (‘MAT’) under the provisions of Income-tax Act, 1961 is recognised as current tax in the statement of profit and loss. MAT paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is a convincing evidence that the Company will pay normal tax in future. Accordingly, MAT is recognized as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the Company.

Current tax assets and liabilities are offset only if, the Company:

a) has a legally enforceable right to set off the recognised amounts; and

b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

(ii) Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries, branches and associates and interest in joint arrangements where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries and associates where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the temporary difference can be utilised.

Deferred tax relating to items recognised outside profit or loss are recoginised as a part of these items (either in other comprehensive income or in equity).

Deferred tax assets and liabilities are offset only if:

a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and

b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.

1.11 Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

1.12 Inventories

Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

- Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on moving weighted average basis.

- Finished goods and work in progress: cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity. Cost is determined on moving weighted average basis.

- Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on moving weighted average basis.

1.13 Financial instrument

Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.

(i) Initial Recognition:

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss and ancillary costs related to borrowings) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in Statement of Profit and Loss.

(ii) Classification and Subsequent Measurement: Financial Assets

The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (“FVOCI”) or fair value through profit or loss (“FVTPL”) on the basis of following:

- the entity’s business model for managing the financial assets and

- the contractual cash flow characteristics of the financial asset.

Amortised Cost:

A financial asset shall be classified and measured at amortised cost if both of the following conditions are met:

- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and

- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Fair Value through OCI:

A financial asset shall be classified and measured at fair value through OCI if both of the following conditions are met:

- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investments that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment by investment basis.

Fair Value through Profit or Loss:

A financial asset shall be classified and measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through OCI.

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

(iii) Classification and Subsequent Measurement: Financial liabilities

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVPTL if it is classified as held for trading or it is derivative or it is designated as such on initial recognition. Financial liabities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gain and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

(iv) Impairment of financial assets:

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial asset. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk.

(v) Derecognition of financial assets and financial liabilities:

Financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial assets.

If the Company enters into transactions whereby it transfers assets recognised on its balance sheet but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.

Financial Liabilities

The Company derecognises a financial liability when the contractual obligations are discharged or cancelled, or expire.

The Company also derecognises financial liabilities when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.

(vi) Derivatives

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at fair value through Statement of Profit and Loss.

(vii)Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

1.14 Employee benefits

(i) Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) Compensated absences

The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the statement of profit and loss.

(iii) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(iv) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to the retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(v) Other long-term employee benefits

The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Re-measurement are recognised in profit or loss in the period in which they arise.

1.15 Provisions and contingent liabilities

Provisions are recognised when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value, wherever the Company can estimate the time of settlement, of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The increase in the provisions due to passage of time is recognised as interest expense.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly with in the control of the Company or a present obligation that arises 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 can not be made. Where the likelihood of outflow of resources is remote, no provision or disclosure is made.

1.16 Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for the events for bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).

Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on conversion of all dilutive potential equity shares.

1.17 Research and Development

Expenditure on research activities is recognised in profit and loss as incurred.

Development expenditure is capitalised as part of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset.Otherwise, it is recognised in profit and loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortisation and any accumulated impairment loss.

1.18 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). Chief operating decision maker’s function is to allocate the resources of the entity and assess the performance of the operating segment of the Company.

Fair value hierarchy

The Fair value of investment property has been determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.

The Fair value measurement of the property has been categorized as Level 3 fair value based on the inputs to the valuation technique used.(refer Note 2(f))


Mar 31, 2017

1. STATEMENT OF ACCOUNTING POLICIES AND PRACTICES

A. Basis of Preparation of Financial Statements:

The financial statements have been prepared under the historical cost convention on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India to comply with the accounting standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and the relevant provisions of the Companies Act, 2013 (“the Act")(“Indian GAAP").

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

All assets and liabilities have been classified as current and non - current as per the Company''s normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013. Based on the nature of services and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent classification of assets and liabilities.

B. Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities (including contingent liabilities) on the date of financial statements and the reported amount of revenues and expenses, during the reported period. Actual results could differ from those estimates.

C. Fixed Assets :

i. Fixed Assets are recorded at cost of acquisition or construction and they are stated at historical cost (net of Cenvat and Vat). Interest on project loans and all direct expenses attributable to acquisition of Fixed Assets are capitalized, up to the date of installation. Capitalized hardware/ software costs of Enterprise Resource Planning (ERP) System include cost of designing software, which provides significant future economic benefits over an extended period. The cost comprises of license fee, cost of system integration and initial customization. The costs are capitalized in the year in which the relevant system is ready for intended use. The up gradation/enhancements are also capitalized and assimilated with the initial capitalization cost.

ii. In compliance with Accounting Standard (AS-28)- “Impairment of Assets" issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognized wherever carrying amount exceeds the recoverable amount.

iii. The depreciation on all assets of the Company excluding freehold land & leasehold land has been charged to write off the cost less residual value using the straight-line basis over the expected/estimated useful life in the manner as specified in Schedule II of the Companies Act 2013. Residual values have been reviewed and considered by the management. The normal expected/estimated useful lives of major categories of Fixed Assets are as follows:

D. Investments :

Long-term investments are stated at cost and provision is made when there is decline, other than temporary, in the value thereof. Current investments are stated at cost or fair value whichever is lower.

F. Excise Duty :

Excise duty on finished goods manufactured is accounted on clearance of goods from factory premises and also in respect of year end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant input. Input credit not recoverable is charged to the Statement of Profit and Loss.

G. Derivatives :

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value (mark to market) at the end of each reporting period.

The Company enters into certain derivative contract to hedge risk which are not designated as hedges. Such contracts are accounted at fair value and are included in other gain/ (losses).

H. Foreign Currency Transactions :

i. Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Foreign currency assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are organized as income or expense in the year in which they arise.

ii. In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of contract is recognized as income or expense over the period of the contract.

iii. Gains or losses on cancellation/settlement of forward exchange contracts are organized as income or expense.

I. Research and Development :

Revenue expenditure incurred on Research and Development is charged to Statement of Profit and Loss for the year. Capital expenditure on Research and Development is accounted as Fixed Assets.

J. Employee Benefits:

i. Short term employee benefits are organized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

ii. Post-employment and other long-term employee''s benefits are organized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered the service. The expense is organized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to the Statement of Profit and Loss for the year.

K. Revenue / Expense Recognition :

i. Revenue from sale of goods is accounted for on the basis of dispatch of goods. Sales are inclusive of excise duty and net of sales returns / Trade Discount.

ii. Revenue in respect of overdue interest, insurance claim, etc is recognized to the extent the Company is reasonably certain of its ultimate realization.

iii. Remission from Excise Duty paid in respect of clearance from Jammu Plant is organized as revenue based on legal advice obtained by the Company [Refer Note No.18].

iv. Expenses are accounted for on accrual basis.

v. Provisions are organized when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease Rentals in respect of assets taken on “operating lease" are charged to the Statement of Profit and Loss on straight line basis over the lease term.

L. Government Grants :

i. Where the grants are of the nature of promoters’ contribution with reference to total investment in the undertaking or total capital outlay, they are treated as capital reserve.

ii. Grants related to specific fixed assets are deducted from the book value of the related asset.

iii. Grants related to revenue are credited to the Statement of Profit and Loss and presented as income from operations.

M. Borrowing Cost:

Borrowing cost attributable to acquisition of qualifying fixed assets which takes substantial period of time to get ready for its intended use is capitalised as part of the cost of such fixed assets. All other borrowing costs are charged to revenue.

N. Share Issue Expenses

Expenses incurred in connection with fresh issue of share capital are adjusted against Securities premium reserve in the year in which they are incurred.

O. Contingent Liabilities :

Liabilities are disclosed by way of Notes appended to the Balance Sheet in case there is an obligation that probably may not require cash outflow.

P. Accounting for Taxes on Income :

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax 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 is accounted for using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses are organized only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. Other deferred tax assets are organized only when there is a reasonable certainty of their realization.

Q. Earnings per share:

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS-20) on Earning per share issued by the Institute of Chartered Accountants of India (ICAI).Basic earnings per equity share is computed by dividing net income by weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.


Mar 31, 2016

1. STATEMENT OF ACCOUNTING POLICIES AND PRACTICES

A. Basis of Preparation of Financial Statements:

The financial statements have been prepared under the historical cost convention on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India to comply with the accounting standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and the relevant provisions of the Companies Act, 2013 ("the Act")("Indian GAAP").

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

All assets and liabilities have been classified as current and non - current as per the Company''s normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013. Based on the nature of services and their realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent classification of assets and liabilities.

B. Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities (including contingent liabilities) on the date of financial statements and the reported amount of revenues and expenses, during the reported period. Actual results could differ from those estimates.

C. Fixed Assets :

i. Fixed Assets are recorded at cost of acquisition or construction and they are stated at historical cost (net of Convert and Vat). Interest on project loans and all direct expenses attributable to acquisition of Fixed Assets are capitalized, up to the date of installation. Capitalized hardware/ software costs of Enterprise Resource Planning (ERP) System include cost of designing software, which provides significant future economic benefits over an extended period. The cost comprises of license fee, cost of system integration and initial customization. The costs are capitalized in the year in which the relevant system is ready for intended use. The up gradation/enhancements are also capitalized and assimilated with the initial capitalization cost.

ii. In compliance with Accounting Standard (AS-28)- "Impairment of Assets" issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognized wherever carrying amount exceeds the recoverable amount.

iii. The depreciation on all assets of the company excluding freehold land & leasehold land has been charged to write off the cost less residual value using the straight-line basis over the expected/estimated useful life in the manner as specified in Schedule II of the Companies Act 2013.Residual values have been reviewed and considered by the management. The normal expected/estimated useful lives of major categories of Fixed Assets are as follows:

D. Investments :

Long-term investments are stated at cost and provision is made when there is decline, other than temporary, in the value thereof. Current investments are stated at cost or fair value whichever is lower.

E. Valuation of Inventories :

A. Raw Materials and Packing : At moving weighted average cost, written down to Materials realizable value if the costs of related finished goods exceed net realizable value.

B. Work in process : At lower of moving weighted average cost or net realizable value.

C. Finished Goods : At lower of moving weighted average cost or net realizable value.

F. Excise Duty :

Excise duty on finished goods manufactured is accounted on clearance of goods from factory premises and also in respect of year end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant input. Input credit not recoverable is charged to the Statement of Profit and Loss.

G. Foreign Currency Transactions :

i. Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Foreign currency assets and liabilities are translated at year end exchange rates.

Exchange difference arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise.

ii. In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of contract is recognized as income or expense over the period of the contract.

iii. Gains or losses on cancellation/settlement of forward exchange contracts are recognized as income or expense.

H. Research and Development :

Revenue expenditure incurred on Research and Development is charged to Statement of Profit and Loss for the year. Capital expenditure on Research and Development is accounted as Fixed Assets.

I. Employee Benefits :

i. Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

ii. Post-employment and other long-term employee''s benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered the service. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to the Statement of Profit and Loss for the year.

J. Revenue / Expense Recognition :

i. Revenue from sale of goods is accounted for on the basis of dispatch of goods. Sales are inclusive of excise duty and net of sales returns / Trade Discount.

ii. Revenue in respect of overdue interest, insurance claim, etc is recognized to the extent the Company is reasonably certain of its ultimate realization.

iii. Remission from Excise Duty paid in respect of clearance from Jammu Plant is recognized as revenue based on legal advice obtained by the Company [Refer Note No.16].

iv. Expenses are accounted for on accrual basis.

v. Provisions are recognized when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease Rentals in respect of assets taken on "operating lease" are charged to the Statement of Profit and Loss on straight line basis over the lease term.

K. Government Grants :

i. Where the grants are of the nature of promoters'' contribution with reference to total investment in the undertaking or total capital outlay, they are treated as capital reserve.

ii. Grants related to specific fixed assets are deducted from the book value of the related asset.

iii. Grants related to revenue are credited to the Statement of Profit and Loss and presented as income from operations.

L. Borrowing Cost:

Borrowing cost attributable to acquisition of qualifying fixed assets which takes substantial period of time to get ready for its intended use is capitalized as part of the cost of such fixed assets. All other borrowing costs are charged to revenue.

M. Share Issue Expenses

Expenses incurred in connection with fresh issue of share capital are adjusted against Securities premium reserve in the year in which they are incurred.

N. Contingent Liabilities :

Liabilities are disclosed by way of Notes appended to the Balance Sheet in case there is an obligation that probably may not require cash outflow.

O. Accounting for Taxes on Income :

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax 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 is accounted for using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses are recognized only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. Other deferred tax assets are recognized only when there is a reasonable certainty of their realization.

P. Earnings per share:

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS-20) on Earning per share issued by the Institute of Chartered Accountants of India (ICAI). Basic earnings per equity share is computed by dividing net income by weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.

i) Terms/rights attached to equity shares

The Company has only one class of equity shares with a par value of Re. 1/- per share. Each holder of equity share is entitled to one vote per share.

The Company declares and pays dividends in Indian Rupees. The dividend proposed by The Board of Directors is subject to the approval of the shareholders in the Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive any of the remaining assets of the company after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to number of equity shares held by the shareholders.

ii) Shares held by the Holding/ultimate Holding Company and/or their Subsidiaries/Associates. Out of the equity shares issued by the Company, shares held by its Holding Company are as under

iii) Details of shareholders holding more than 5% shares in the Company

Other than Kokuyo Co. Ltd, there are no shareholders holding more than 5% shares in the Company.

a. Long term borrowing comprise

i. a) External Commercial borrowing (ECB) from Bank of Tokyo-Mitsubishi UFJ,Ltd. Singapore The terms of the loan are as follows:

1. Rate of Interest is based on LIBOR plus agreed spread.

2. Repayable in 8 equal half yearly installments starting from April 22, 2014 with last installment payable on October 18, 2017

i. b) External Commercial borrowing (ECB) from Sumitomo Mitsiu Banking Corporation

The terms of the loan are as follows:

1. Rate of Interest is based on a LIBOR plus agreed spread.

2. Repayable in 8 equal half yearly installments starting from September 2, 2017 with last installment payable on March 2, 2021.

ii) The secured loan from bank is a vehicle loan

The terms of the loan are as follows:

1 Rate of Interest is 10.25 %

2. Repayable in monthly installments starting from December 2014 with last installment payable on November 7, 2019.

3. Secured against hypothecation of vehicle.

Consequent to the enactment of the Companies Act, 2013, the Company has charged depreciation on its fixed assets as per the useful life mentioned in Schedule II to the Act. Useful life is assessed by the management (Refer accounting policies note 1.C.iii). Consequently, depreciation charged for the year is increased by Rs, 101.52 lacs. Further, total depreciation and amortization of Rs, 1165.86 lacs(aggregating Rs, 1133.95 lacs and Rs, 31.91 lacs) includes additional depreciation of Rs, 69.02 lacs on the fixed assets in respect of which useful life is fully exhausted as at April 1, 2014, which along with related deferred tax (See Note no 2.b. iii) is adjusted against the opening balance of General Reserve. The balance depreciation and amortization of Rs, 1096.84 lacs has been charged to the Statement of Profit & Loss for the year ended 31st March, 2015.


Mar 31, 2015

A. Basis of Preparation of Financial Statements:

The financial statements have been prepared under the historical cost convention on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013("the Act") read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and the relevant provisions of the Act.

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

B. Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities (including contingent liabilities) on the date of financial statements and the reported amount of revenues and expenses, during the reported period. Actual results could differ from those estimates.

C. Fixed Assets:

i. Fixed Assets are recorded at cost of acquisition or construction and they are stated at historical cost (net of Cenvat and Vat). Interest on project loans and all direct expenses attributable to acquisition of Fixed Assets are capitalised, upto the date of installation. Capitalised hardware/ software costs of Enterprise Resource Planning (ERP) System include cost of designing software, which provides significant future economic benefits over an extended period. The cost comprises of license fee, cost of system integration and initial customization. The costs are capitalised in the year in which the relevant system is ready for intended use. The upgradation/enhancements are also capitalised and assimilated with the initial capitalisation cost.

ii. In compliance with Accounting Standard (AS) 28 - "Impairment of Assets" issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognised wherever carrying amount exceeds the recoverable amount.

iii. The depreciation on all assets of the company excluding freehold land & leasehold land has been charged to write off the cost less residual value using the straight-line basis over the expected/ estimated useful life in the manner as specified in Schedule II of the Companies Act 2013. Residual values have been reviewed and considered by the management. The normal expected/ estimated useful lives of major categories of Fixed Assets are as follows:

Freehold Land NIL

Leasehold Land Lease term

Site developments 30 years

Buildings & sheds 30 years and 60 years

Plant & Machinery & Electrical Installation 7.5 years to 25 years

Office equipment 3 to 6 years

ERP Hardware & Software 5 years

Vehicles 8 to 10 years

D. Investments:

Long-term investments are stated at cost and provision is made when there is decline, other than temporary, in the value thereof. Current investments are stated at cost or fair value whichever is lower.

E. Valuation of Inventories:

A. Raw Materials and Packing Materials

At moving weighted average cost, written down to realizable value if the costs of related finished goods exceed net realisable value.

B. Work in process

At lower of moving weighted average cost or net realisable value.

C. Finished Goods

At lower of moving weighted average cost or net realisable value.

F. Excise Duty:

Excise duty on finished goods manufactured is accounted on clearance of goods from factory premises and also in respect of year end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant input. Input credit not recoverable is charged to the Statement of Profit and Loss.

G. Foreign Currency Transactions:

i. Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Foreign currency assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.

ii. In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of contract is recognised as income or expense over the period of the contract.

iii. Gains or losses on cancellation/settlement of forward exchange contracts are recognised as income or expense.

H. Research and Development:

Revenue expenditure incurred on Research and Development is charged to Statement of Profit and Loss for the year. Capital expenditure on Research and Development is accounted as Fixed Assets.

I. Employee Benefits:

i. Short term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

ii. Post employment and other long-term employees benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered the service. The expense is recognised at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post-employment and other long- term benefits are charged to the Statement of Profit and Loss for the year.

J. Revenue/Expense Recognition:

i. Revenue from sale of goods is accounted for on the basis of dispatch of goods. Sales are inclusive of excise duty and net of sales returns/Trade Discount.

ii. Revenue in respect of overdue interest, insurance claim, etc is recognized to the extent the Company is reasonably certain of its ultimate realisation.

iii. Remission from Excise Duty paid in respect of clearance from Jammu Plant is recognised as revenue based on legal advice obtained by the Company [Refer Note No.17].

iv. Expenses are accounted for on accrual basis.

v. Provisions are recognised when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease Rentals in respect of assets taken on "operating lease" are charged to the Statement of Profit and Loss on straight line basis over the lease term.

K. Government Grants:

i. Where the grants are of the nature of promoters'' contribution with reference to total investment in the undertaking or total capital outlay, they are treated as capital reserve.

ii. Grants related to specific fixed assets are deducted from the book value of the related asset.

iii. Grants related to revenue are credited to the Statement of Profit and Loss and presented as income from operations.

L. Borrowing Cost:

Borrowing cost attributable to acquisition of qualifying fixed assets which takes substantial period of time to get ready for its intended use is capitalised as part of the cost of such fixed assets. All other borrowing costs are charged to revenue.

M. Share Issue Expenses:

Expenses incurred in connection with fresh issue of share capital are adjusted against securities premium reserve in the year in which they are incurred.

N. Contingent Liabilities:

Liabilities are disclosed by way of Notes appended to the Financial Statements in case there is an obligation that probably may not require cash outflow.

O. Accounting for Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax 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 is accounted for using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. Other deferred tax assets are recognised only when there is a reasonable certainty of their realisation.

P. Earnings per share:

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS) 20 on Earning per share issued by the Institute of Chartered Accountants of India (ICAI). Basic earnings per equity share is computed by dividing net income by weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.


Mar 31, 2014

A. Basis of Preparation of Financial Statements:

The Financial Statements are prepared under the historical cost convention, in accordance with the Indian Generally Accepted Accounting Principles and the provisions of Companies Act, 1956. All Income and Expenditure having a material bearing in the Financial Statements are recognized on accrual basis.

B. Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses, during the reported period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

C. Fixed Assets:

i. Fixed Assets are recorded at cost of acquisition or construction and they are stated at historical cost (net of Cenvat and Vat). Interest on project loans and all direct expenses attributable to acquisition of Fixed Assets are capitalised, upto the date of installation. Capitalised hardware/ software costs of Enterprise Resource Planning (ERP) System include cost of designing software, which provides significant future economic benefits over an extended period. The cost comprises of license fee, cost of system integration and initial customization. The costs are capitalised in the year in which the relevant system is ready for intended use. The up gradation/enhancements are also capitalised and assimilated with the initial capitalisation cost.

ii. In compliance with Accounting Standard (AS) 28 – "Impairment of Assets" issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognised wherever carrying amount exceeds the recoverable amount.

iii. Depreciation on all assets of the Company except leasehold land, is provided on Straight Line basis as applicable under the Companies Act, 1956. Leasehold land is amortised over respective period of lease. Cost of Intellectual Property Rights is amortised on Straight Line Method over the useful life of 36 months as estimated by the Management. Capitalised Hardware/Software costs of ERP are amortised over the estimated useful economic life not exceeding fve years.

D. Investments:

Long-term investments are stated at cost and provision is made when there is decline, other than temporary, in the value thereof. Current investments are stated at cost or fair value whichever is lower.

F. Excise Duty:

Excise duty on finished goods manufactured is accounted on clearance of goods from factory premises and also in respect of year end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant input. Input credit not recoverable is charged to the Statement of Profit and Loss.

G. Foreign Currency Transactions:

i. Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Foreign currency assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.

ii. In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of contract is recognised as income or expense over the period of the contract.

iii. Gains or losses on cancellation/settlement of forward exchange contracts are recognised as income or expense.

H. Research and Development:

Revenue expenditure incurred on Research and Development is charged to Statement of Profit and Loss for the year. Capital expenditure on Research and Development is accounted as Fixed Assets.

I. Employee Benefits:

i. Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

ii. Post employment and other long-term employees benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered the service. The expense is recognised at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long-term benefits are charged to the Statement of Profit and Loss for the year.

J. Revenue/Expense Recognition:

i. Revenue from sale of goods is accounted for on the basis of dispatch of goods. Sales are inclusive of excise duty and net of sales returns/Trade Discount.

ii. Revenue in respect of overdue interest, insurance claim, etc is recognized to the extent the Company is reasonably certain of its ultimate realisation.

iii. Remission from Excise Duty paid in respect of clearance from Jammu Plant is recognised as revenue based on legal advice obtained by the Company [Refer Note No. 18].

iv. Expenses are accounted for on accrual basis.

v. Provisions are recognised when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease Rentals in respect of assets taken on "operating lease" are charged to the Statement of Profit and Loss on straight line basis over the lease term.

K. Government Grants:

i. Where the grants are of the nature of promoters'' contribution with reference to total investment in the undertaking or total capital outlay, they are treated as capital reserve.

ii. Grants related to specific fixed assets are deducted from the book value of the related asset.

iii. Grants related to revenue are credited to the Statement of Profit and Loss and presented as income from operations.

L. Borrowing Cost:

Borrowing cost attributable to acquisition of qualifying fixed assets which takes substantial period of time to get ready for its intended use is capitalised as part of the cost of such fixed assets. All other borrowing costs are charged to revenue.

M. Contingent Liabilities:

Liabilities are disclosed by way of Notes appended to the Balance Sheet in case there is an obligation that probably may not require cash outflow.

N. Accounting for Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence, in respect of deferred tax assets, on timing differences, being the differences between taxable income and accounting income that originated in one period and are capable of reversal in one or more subsequent periods.

O. Earnings per share:

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS) 20 on Earning per share issued by the Institute of Chartered Accountants of India (ICAI).Basic earnings per equity share is computed by dividing net income by weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.

P. Segment Reporting – Basis of Information:

As the entire operations of the Company relate to products categorized under ''Consumer Products'' as the single primary reportable segment, no separate segment reporting is required under Accounting Standard (AS) 17 issued by the Institute of Chartered Accountants of India (ICAI).

(i) Terms/rights attached to equity shares

The Company has only one class of equity shares with a par value of Rs. 1/- per share. Each holder of equity share is entitled to one vote per share.

(ii) On September 2nd, 2013 the Company pursuant to its rights issue of equity shares allotted 312,83,831 Equity Shares of face value of Rs. 1/- each to the eligible equity shareholders in the ratio of 14 equity shares for every 29 equity shares held on the record date i.e. August 2nd, 2013 at a price of Rs. 33/- per share (inclusive of Share Premium of Rs. 32/- per share). The aggregate amount collected pursuant to the rights issue was Rs. 10,323.66 lacs. The aforesaid rights shares were listed on NSE and BSE and the Company received trading approval on September 5th, 2013.


Mar 31, 2013

A. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, in accordance with the Indian Generally Accepted Accounting Principles and the provisions of the Companies Act, 1956. All income and expenditure having a material bearing in the financial statements are recognised on accrual basis.

B. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reported period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

C. Fixed Assets

i. Fixed Assets are recorded at cost of acquisition or construction and are stated at historical cost (net of CENVAT and VAT). Interest on project loans and all direct expenses attributable to acquisition of fixed assets are capitalised upto the date of installation. Capitalised hardware/software costs of Enterprise Resource Planning (ERP) system includes cost of designing software which provide significant future economic benefits over an extended period.The cost comprises of license fee, cost of system integration and initial customisation.The costs are capitalised in the year in which the relevant system is ready for intended use.The upgradation/enhancements are also capitalised and assimilated with the initial capitalisation costs.

ii. In compliance with Accounting Standard (AS) 28 - "Impairment of Assets" issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses on each Balance Sheet date, whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognized wherever carrying amount exceeds the recoverable amount.

iii. Depreciation on all assets of the Company, except on leasehold land, is provided on straight line basis in terms of the requirements of Schedule XIV to the Companies Act, 1956. Leasehold land is amortised over the respective period of lease. Cost of intellectual property rights is amortised on straight line method over the useful life of 36 months as estimated by the management. Capitalised hardware/software costs of ERP are amortised over the estimated useful economic life not exceeding five years.

D. Investments

Long-term investments are stated at cost and provision is made when there is a decline, other than temporary, in the value thereof. Current investments are stated at cost, or fair value, whichever is lower.

E. Valuation of Inventories

A. Raw Material and Packing Material : At moving weighted average cost, written down to realisable value if the costs of related finished goods exceeds its net realisable value._

B. Work-in-process : At lower of moving weighted average cost, or at net_realisable value.

C. Finished Goods : At lower of moving weighted average cost, or at net realisable value.

F. Excise Duty

Excise duty on finished goods manufactured is accounted on clearance of goods from the factory premises and also in respect of year-end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant input. Input credit not recoverable is charged to the Statement of Profit and Loss.

G. Foreign Currency Transactions

i. Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Foreign currency assets and liabilities are translated at year-end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise,

ii. In respect of forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense over the period of the contract,

iii. Gains or losses on cancellation/settlement of forward exchange contracts are recognised as income or expense.

H. Research and Development

Revenue expenditure incurred on research and development is charged to Statement of Profit and Loss for the year. Capital expenditure on research and development is accounted as fixed assets.

I. Employee Benefits

i. Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

ii. Post-employment and other long-term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered the service. The expense is recognised at the present value of the amount payable which is determined using actuarial valuation techniques. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to the Statement of Profit and Loss for the year.

J. Revenue/Expense Recognition

i. Revenue from sale of goods is accounted for on the basis of dispatch of goods. Sales are inclusive of excise duty and net of sales returns/trade discount.

ii. Revenue in respect of overdue interest, insurance claim, etc is recognised to the extent the Company is reasonably certain of its ultimate realisation.

iii. Remission from excise duty paid in respect of clearance from Jammu plant is recognised as revenue based on legal advice obtained by the Company [refer note no. 18].

iv. Expenses are accounted for on accrual basis.

v. Provisions are recognised when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease rentals in respect of assets taken on "operating lease" are charged to the Statement of Profit and Loss on straight line basis over the lease term.

K. Government grants

i. Grants in the nature of promoters'' contribution with reference to total investment in the undertaking or total capital outlay, are treated as capital reserve.

ii. Grants relating to specific fixed assets are deducted from the book value of the related asset.

iii. Grants relating to revenue are credited to the Statement of Profit and Loss and presented as income from operations.

L. Borrowing Costs

Borrowing costs attributable to acquisition of qualifying fixed assets which takes substantial period of time to get ready for its intended use is capitalised as part of the cost of such fixed assets. All other borrowing costs are charged to revenue.

M. Contingent Liabilities

Liabilities are disclosed by way of notes appended to the Balance Sheet in case there is an obligation that probably may not require cash outflow.

N. Accounting for Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets on timing differences, being the differences between taxable income and accounting income that originated in one period and are capable of reversal in one or more subsequent periods.

O. Earnings per share

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS) 20 on Earning per share issued by the ICAI. Basic earnings per equity share is computed by dividing net income by weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.

R Segment Reporting - basis of information

As the entire operations of the Company relate to products categorised under ''consumer products'' as the single primary reportable segment, no separate segment reporting is required in terms of Accounting Standard (AS) 17 issued by the ICAI.


Mar 31, 2012

A. Basis of Preparation of Financial Statements:

The Financial Statements are prepared under the historical cost convention, in accordance with the Indian Generally Accepted Accounting Principles and the provisions of Companies Act, 1956. All Income and Expenditure having a material bearing in the Financial Statements, are recognised on accrual basis.

B. Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reported period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

C. Fixed Assets:

i. Fixed Assets are recorded at cost of acquisition or construction and they are stated at historical cost (net of Cenvat and VAT). Interest on project loans and all direct expenses attributable to acquisition of Fixed Assets are capitalized, up to the date of installation. Capitalized hardware/ software costs of Enterprise Resource Planning (ERP) System includes cost of designing software, which provides significant future economic benefits over an extended period. The cost comprises of licence fee, cost of system integration and initial customization. The costs are capitalized in the year in which the relevant system is ready for the intended use. The up gradation/enhancements are also capitalized and assimilated with the initial capitalization cost.

ii. I n compliance with Accounting Standard (AS) 28 - "Impairment of Assets" issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognized wherever carrying amount exceeds the recoverable amount.

iii. Depreciation on all assets of the Company except leasehold land, is provided on Straight Line basis as applicable under the Companies Act, 1956. Leasehold land is amortized over respective period of lease. Cost of Intellectual Property Rights is amortized on Straight Line Method over the useful life of 36 months as estimated by the Management. Capitalized Hardware/Software costs of ERP are amortized over the estimated useful economic life not exceeding five years.

D. Investments:

Long-term investments are stated at cost and provision is made when there is a decline, other than temporary, in the value thereof. Current investments are stated at cost or fair value whichever is lower.

E. Valuation of Inventories:

A. Raw Materials and Packing Materials : At moving weighted average cost, written down to realizable value if the costs of related finished goods exceed net realizable value.

B. Work in process : At lower of moving weighted average cost or net realizable value.

C. Finished Goods : At lower of moving weighted average cost or net realizable value.

F. Excise Duty:

Excise duty on finished goods manufactured is accounted on clearance of goods from the factory premises and also in respect of year end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant inputs.

G. Foreign Currency Transactions:

i. Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise.

ii. In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of contract is recognized as income or expense over the period of the contract.

iii. Gains or losses on cancellation/settlement of forward exchange contracts are recognized as income or expense.

H. Research and Development:

Revenue expenditure incurred on Research and Development is charged to Profit & Loss Account for the year. Capital expenditure on Research & Development is accounted as Fixed Assets.

I. Employee Benefits:

i. 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.

ii. Post employment and other long-term employee benefits are recognized as an expense in the Profit and Loss Account for the year in which the employee has rendered service. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long-term benefits are charged to the Profit and Loss Account.

J. Revenue/Expense Recognition:

i. Revenue from sale of goods is accounted for on the basis of dispatch of goods. Sales are inclusive of excise duty and net of sales returns/Trade Discount.

ii. Revenue in respect of overdue interest, insurance claimed is recognized to the extent the Company is reasonably certain of its ultimate realization.

iii. Remission from Excise Duty paid in respect of the clearances from Jammu Plant is recognized as revenue based on legal advice obtained by the Company [Refer Note No. 18].

iv. Expenses are accounted for on accrual basis.

v. Provisions are recognized when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease Rentals in respect of assets taken on "operation of lease" are charged to Profit & Loss Account on straight line basis over the lease term.

K. Government Grants:

i. Where the grants are of the nature of promoters' contribution with reference to total investment in the undertaking or total capital outlay, they are treated as capital reserve.

ii. Grants related to specific fixed assets are deducted from the book value of the related assets.

iii. Grants related to revenue are credited to the Profit and Loss Account and presented as income from operations.

L. Borrowing Cost:

Borrowing cost attributable to acquisition/construction of qualifying fixed assets which take substantial period of time to get ready for its intended use is capitalized as part of the cost of such fixed assets. All other borrowing costs are charged to revenue.

M. Contingent Liabilities:

Liabilities are disclosed by way of Notes appended to the Balance Sheet in case there is an obligation that probably may not require cash outflow.

N. Accounting for 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 differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

O. Earnings per Share:

The Company reports basic and diluted earnings per equity share in accordance with Accounting Standard (AS) 20, Earning per Share issued by the Institute of Chartered Accountants of India (ICAI). Basic earning per equity share is computed by dividing net income by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.

P. Segment Reporting - Basis of Information:

As the entire operations of the Company relate to products categorized under Consumer Products' as the single primary reportable segment, no separate segment reporting is required under Accounting Standard (AS) 17 issued by the Institute of Chartered Accountants of India (ICAI).

(i) Terms/rights attached to equity shares

The Company has only one class of equity shares with a par value of Rs 1/- per share. Each holder of equity shares is entitled to one vote per share.

(ii) The Company has issued 69,34,000 equity shares of Rs 1/- each at a price of Rs 85/- per share (inclusive of share premium of Rs 84/- per share) on preferential basis to KOKUYO S&T Co., Ltd. a Company incorporated under laws of Japan. The said shares have lock in period of one year from the date of allotment i.e. from 8th July, 2011.

(i)a. Loan from Banks

Term Loans from Banks are secured by mortgage/hypothecation of related immovable/movable assets of the Company, both present and future. Vehicle Loans are secured by hypothecation of related vehicles. These loans are repayable in 60 equated monthly installments.

(i)b. Loan from Financial Institutions

Vehicle Loans are secured by hypothecation of related vehicles. These loans are repayable in 60 equated monthly installments.


Mar 31, 2011

A. Basis of Preparation of Financial Statements

The Financial Statements are prepared under the historical cost convention, in accordance with the Indian Generally Accepted Accounting Principles and the provisions of Companies Act, 1956. All Income and Expenditure having a material bearing in the Financial Statements, are recognised on accrual basis.

B. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reported period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

C. Fixed Assets

i. Fixed Assets, including Intellectual Property Rights, are recorded at cost of acquisition or construction and they are stated at historical cost (net of Cenvat and VAT) Interest on project loans and all direct expenses attributable to acquisition of Fixed Assets are capitalised, upto the date of installation. Capitalised hardware/software costs of Enterprise Resource Planning (ERP) System includes cost of designing software, which provides significant future economic benefits over an extended period. The cost comprises of licence fee, cost of system integration and initial customisation.The costs are capitalised in the year in which the relevant system is ready for the intended use.The upgradation/ enhancements are also capitalised and assimilated with the initial capitalisation cost.

ii. In compliance with Accounting Standard (AS) 28 - "Impairment of Assets" issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognised wherever carrying amount exceeds the recoverable amount.

iii. Depreciation on all assets of the Company except leasehold land, is provided on Straight Line basis as applicable under the Companies Act, 1956. Leasehold land is amortised over respective period of lease. Cost of Intellectual Property Rights is amortised on Straight Line Method over the useful life of 36 months as estimated by the Management. Capitalised Hardware/Software costs of ERP are amortised over the estimated useful economic life not exceeding five years.

D. Investments:

Long term investments are stated at cost and provision is made when there is a decline, other than temporary, in the value thereof. Current investments are stated at cost or fair value whichever is lower.

E. Valuation of Inventories:

A. Raw Materials and Packing Materials : At moving weighted average cost, written down to realisable value if the costs of related finished goods exceed net realisable value.

B. Work in process : At lower of moving weighted average cost or net realisable value.

C. Finished Goods : At lower of moving weighted average cost or net realisable value

F. Excise Duty

Excise duty on finished goods manufactured is accounted on clearance of goods from the factory premises and also in respect of year end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant inputs.

G. Foreign Currency Transactions

i. Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.

ii. In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of contract is recognised as income or expense over the period of the contract.

iii. Gains or losses on cancellation/settlement of forward exchange contracts are recognised as income or expense.

H. Research and Development

Revenue expenditure incurred on Research and Development is charged to Profit and Loss Account of the year. Capital expenditure on Research and Development is accounted as Fixed Assets.

I. Employee Benefits:

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

ii. Post employment and other long term employee benefits are recognised as an expense in the profit and loss account for the year in which the employee has rendered service. The expense is recognised at the present value of the amount payable determined using acturial valuation techniques. Actuarial gains and loses in respect of post employment and other long-term benefits are charged to the profit and loss account.

J. Revenue/Expense Recognition:

i. Revenue from sale of goods is accounted for on the basis of despatch of goods. Sales are inclusive of excise duty and net of sales return. ii. Revenue in respect of overdue interest, insurance claim, etc is recognised to the extent the company is reasonably certain of its ultimate realisation.

iii. Remission from Excise Duty paid in respect of the clearances from Jammu Plant is recognised as revenue based on legal advice obtained by the Company [Refer Note no. 22 K v].

iv. Expenses are accounted for on accrual basis.

v. Provisions are recognised when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease Rentals in respect of assets taken on "operation of lease" are charged to Profit and Loss Account on straight line basis over the lease term.

K. Government Grants

Where the grants are of the nature of promoters contribution with reference to total investment in the undertaking or total capital outlay, they are treated as capital reserve.

Grants related to specific fixed assets are deducted from the book value of the related assets.

Grants related to revenue are credited to the profit and loss account and presented as income from operations.

L. Borrowing Cost

Borrowing cost attributable to acquisition/construction of qualifying fixed assets which takes substantial period of time to get ready for its intended use is capitalised as part of the cost of such fixed asset. All other borrowing costs are charged to revenue.

M. Contingent Liabilities

Liabilities are disclosed by way of Notes appended to the Balance Sheet in case there is an obligation that probably may not require cash outflow.

N. Accounting for Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence, in respect of deferred tax assets, 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.

O. Earning per Share

The Company reports basic and diluted earning per equity share in accordance with Accounting Standard (AS) 20, Earning per Share issued by the Institute of Chartered Accountants of India(ICAI). Basic earning per equity share is computed by dividing net income by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.

P. Segment Reporting - Basis of Information

As the entire operations of the Company relate to products categorised under Consumer Products as the single primary reportable segment, no separate segment reporting is required under Accounting Standard (AS)17 issued by the Institute of Chartered Accountants of India.

Q. Voluntary Retirement Scheme

Expenditure on Voluntary Retirement Scheme is amortised over a period of 60 months.


Mar 31, 2010

A. Basis of Preparation of Financial Statements

The Financial Statements are prepared under the historical cost convention, in accordance with the Indian Generally Accepted Accounting Principles and the provisions of Companies Act, 1956. All Income and Expenditure having a material bearing in the Financial Statements, are recognised on accrual basis.

B. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reported period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

C. Fixed Assets

i. Fixed Assets, including Intellectual Property Rights, are recorded at cost of acquisition or construction and they are stated at historical cost (net of Cenvat and VAT) Interest on project loans and all direct expenses attributable to acquisition of Fixed Assets are capitalised, upto the date of installation. Capitalised hardware/software costs of Enterprise Resource Planning (ERP) System includes cost of designing software, which provides significant future economic benefits over an extended period. The cost comprises of licence fee, cost of system integration and initial customisation. The costs are capitalised in the year in which the relevant system is ready for the intended use. The upgradation/ enhancements are also capitalised and assimilated with the initial capitalisation cost.

ii. In compliance with Accounting Standard (AS) 28- "Impairment of Assets" issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognised wherever carrying amount exceeds the recoverable amount.

iii. Depreciation on all assets of the Company except leasehold land, is provided on Straight Line basis as applicable under the Companies Act, 1956. Leasehold land is amortised over respective period of lease. Cost of Intellectual Property Rights is amortised on Straight Line Method over the useful life of 36 months as estimated by the Management. Capitalised Hardware/Software costs of ERP are amortised over the estimated useful economic life not exceeding five years.

D. Investments

Long term investments are stated at cost and provision is made when there is a decline, other than temporary, in the value thereof. Current investments are stated at cost or fair value whichever is lower.

F. Excise Duty

Excise duty on finished goods manufactured is accounted on clearance of goods from the factory premises and also in respect of year end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant inputs.

H. Research and Development

Revenue expenditure incurred on Research and Development is charged to Profit and Loss Account of the year. Capital expenditure on Research and Development is accounted as Fixed Assets.

I. Employee Benefits

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

ii. Post employment and other long-term employee benefits are recognised as an expense in the profit and loss account for the year in which the employee has rendered service. The expense is recognised at the present value of the amount payable determined using acturial valuation techniques. Actuarial gains and loses in respect of post employment and other long-term benefits are charged to the profit and loss account.

J. Revenue/Expense Recognition

i. Revenue from sale of goods is accounted for on the basis of despatch of goods. Sales are inclusive of excise duty and net of sales return.

ii. Revenue in respect of overdue interest, insurance claim, etc is recognised to the extent the company is reasonably certain of its ultimate realisation.

iii. Remission of Excise Duty in respect of Jammu operations pertaining to incremental value additions will be recognised on the processing and admission of claim.

iv. Expenses are accounted for on accrual basis.

v. Provisions are recognised when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease Rentals in respect of assets taken on "operation of lease" are charged to Profit and Loss Account on straight line basis over the lease term.

K. Borrowing Cost

Borrowing cost attributable to acquisition/construction of qualifying fixed assets which takes substantial period of time to get ready for its intended use is capitalised as part of the cost of such fixed asset. All other borrowing costs are charged to revenue.

L. Contingent Liabilities

Liabilities are disclosed by way of notes appended to the Balance Sheet in case there is an obligation that probably may not require cash outflow.

M. Accounting for taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence, in respect of deferred tax assets, 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.

N. Earning Per Share

The Company reports basic and diluted earning per equity share in accordance with Accounting Standard (AS) 20, Earning per Share issued by the Institute of Chartered Accountants of India(ICAI). Basic earning per equity share is computed by dividing net income by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.

O. Segment Reporting - Basis of Information

As the entire operations of the Company relate to products categorised under Consumer Products as the single primary reportable segment, no separate segment reporting is required under Accounting Standard (AS) 17 issued by the Institute of Chartered Accountants of India.

P. Voluntary Retirement Scheme

Expenditure on Voluntary Retirement Scheme is amortised over a period of 60 months.

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