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Notes to Accounts of Polychem Ltd.

Mar 31, 2019

Background

Polychem Limited is engaged in the manufacturing of specialty chemicals and property development. The Company has manufacturing plant in India and sells it in Domestic as well as International market. The Company is Public Limited Company domiciled in India and is listed on the Bombay Stock Exchange (BSE).

Authorization of standalone financial statements

The standalone financial statements were authorized for issue in accordance with a resolution of the directors on May 11, 2019.

a. Rights, preference and restrictions attached to shares: Equity Shares

The Company has one class of equity shares having a par value of Rs.10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

Description of the nature and purpose of each reserve within equity is as follows: (a) General Reserve :

The Company had transferred a portion of the net profit of the Company before declaring dividend to the general reserve pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve before declaration of dividend is not required under the Companies Act, 2013.

(b) Retained Earnings :

Retained earnings are the profits that the Company has earned till date and is net of amount transferred to other reserves such as general reserves etc., amount distributed as dividend and adjustments on account of transition to Ind AS.

(c) Securities Premium :

Securities premium reserve is credited when shares are issued at premium. It is utilised in accordance with the provisions of the Act, to issue bonus shares, to provide for premium on redemption of shares or debentures, write-off equity related expenses like underwriting costs, etc.

(d) Capital Redemption Reserve :

The Capital Redemption Reserve is created on redemption of 13.5% 50,000 Redeemable Cumulative Preference Shares of Rs.100/- in the Financial Year 2007-2008 pursuant to Section 80 of the Companies Act, 1956.

i) Claims against the Company not acknowledged as debts: 2,929 2,873 Relates to supplier of materials, employees and other claims etc. (No provision is made, as the Company is hopeful of successfully contesting the claims and as such does not expect any significant liability to crystallize).

ii) The Company has taken certain premises on sub-lease. The landlord, a Government Company issued a notice under the Public Premises (Eviction of Unauthorized Occupants) Act,1971 against the Company for eviction and has demanded damages and other charges, which are disputed by the Company. The proceedings in this connection are pending before the Estate officer. The Contingent liability in respect of damages, interest claimed by the Insurance Company cannot be quantified.

1.01 Amount of lease rental charged to the Statement Profit and Loss in respect of premises taken on cancellable operating lease is Rs.2,410 (March 2018 : Rs. 2,341).

1.02 Employee benefits

1) Defined Contribution Plans:

The amounts of contribution to provident fund and ESIC recognized as expenses during the year is Rs. 1,492 (March 31, 2018 : 1,296) for the year ended March 31, 2019.

2) Defined Benefit Plans:

The Company sponsors funded defined benefit plans for qualifying employee. The defined benefit plans are administered by separate fund that are legally separate fund from the entity. The board of the fund is responsible for the investment policy with regard to assets of the fund.

These plans typically expose the Company to Actuarial risks such as : investment risk, interest rate risk, longetivity risk and salary risk. No other post-retirement benefit are provided to the employees.

Investment Risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government bond yields. If the return on plan asset is below this rate, it will create a plan deficit. Currently the plan has investment with LIC of India.

Interest Risk A decrease in the interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity Risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary Risk The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

1. Sensitivity Analysis

Below is the sensitivity analysis determined for significant actuarial assumption for determination of defined benefit obligation and based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period.

Key assumptions for determination of Defined Benefit Obligation are Discount Rate (i.e. Interest Rate) Salary Growth Rate and Employee Turnover Rate

1.03 Segment Information

In accordance with Ind AS 108 on Operating Segments information has been given in the Consolidated Financial Statement of the Company and therefore no separate disclosure on segment information is given in the standalone financial statements.

1.04 Capital Management Risk management

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to maximize shareholder value.

For the purpose of the Company’s capital management, capital includes capital and all other equity reserves. In order to maintain or achieve a capital structure that maximizes the shareholder value, the Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans. As at March 31, 2019, the Company has only one class of equity shares and has no debts. Hence, there are no externally imposed capital requirements.

1.05 Financial Instruments

i) Methods & assumptions used to estimate the fair values

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

(a) The carrying amounts of receivables and payables which are short term in nature such as trade receivables, other bank balances, deposits, loans to employees, trade payables, other financial liabilities and cash and cash equivalents are considered to be the same as their fair values.

(b) For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

ii) Categories of financial instruments

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2: directly or indirectly observable market inputs, other than Level 1 inputs; and Level 3: inputs which are not based on observable market data

1.06 Financial Risk Management

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Board of Directors. The details of different types of risk and management policy to address these risks are listed below:

The Company’s activities are exposed to various risks viz. Credit risk, Liquidity risk and Market risk. In order to minimize any adverse effects on the financial performance of the Company, it uses various instruments and follows policies set up by the Board of Directors / Management.

i) Credit Risk

Credit risk arises from the possibility that counter party will cause financial loss to the Company by failing to discharge it’s obligation as agreed.

Credit risks from balances with banks are managed in accordance with the Company policy. For derivative and financial instruments, the Company attempts to limit the credit risk by only dealing with reputable banks having high credit-ratings assigned by credit-rating agencies.

Based on the industry practices and business environment in which the Company operates, management considers that the trade receivables are in default if the payment are more than 12 months past due.

ii) Liquidity Risk

Liquidity risk is risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company’s principal sources of liquidity are cash and cash equivalents, borrowings and the cash flow that is generated from operations. The Company has consistently generated sufficient cash flows from its operations and believes that these cash flows along with its current cash and cash equivalents and funding arrangements are sufficient to meet its financial obligations as and when they fall due. Accordingly, liquidity risk is perceived to be low.

iii) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed in the ordinary course of business to risks related to changes in foreign currency exchange rate and interest rate.

Market Risk - Foreign Exchange

Foreign currency risk is that risk in which the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company operates internationally and a portion of its business is transacted in several currencies and therefore the Company is exposed to foreign exchange risk through its overseas sales in various foreign currencies. The Company hedges the receivables by forming view after discussion with Forex Consultant and as per polices set by Management.

The carrying amount of the Company’s foreign currency denominated monetary assets and liabilities as at the end of the reporting period is as follows:

Market Risk - Price Risk

The Company is mainly exposed to the price risk due to its investment in mutual funds. The price risk arises due to uncertainties about the future market values of these investments. At March 31 2019, the investments in mutual funds is Rs.69,856 (March 31, 2018 : 26,624).These are exposed to price risk.In order to minimise price risk arising from investments in mutual funds, the Company predominately invests in those mutual funds which have higher exposure to high quality debt instruments with adequate liquidity & no demonstrated track record of price volatility.

Price risk sensitivity:

0.10% increase or decrease in prices will have the following impact on profit/loss before tax and on other components of equity

1.07 Revenue from Operations for year ended March 31, 2019 is shown net of Goods and Services Tax (GST).However, Revenue from Operations for the preceding period is shown inclusive of Excise Duty, wherever applicable. For comparison purposes revenue excluding excise duty is given below:

1.08 Proposed Dividend

A dividend of Rs. 2.50/- per equity share (Previous Year - Rs. NIL/-) (25% of the face value of Rs. 10/- each) has been recommended by the Board of Directors which is subject to the approval of the shareholders.

There are no amounts due for payment to the Investor Education and Protection fund under Section 125 as on March 31, 2019.

1.09 Revenue from contracts with customers Disaggregation of Revenue

Management conclude that disaggregation of revenue disclosed in Ind AS 108 meets the disclosure criteria of Ind AS 115 and segment revenue is measured on the same basis as required by Ind AS 115, hence separate disclosures as per Ind AS 115 is not required.

Contract Balances

Trade receivable is presented net of impairment in the Balance Sheet

The following table provides information about receivables, contract assets and contract liabilities for the contracts with the customers.

There is no significant changes in the contract assets and the contract liabilities balances during the period.

Performance Obligations And Remaining Performance Obligations

Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performances as the performance obligations relates to contracts where the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date.

1.10 Recent Pronouncements

On March 30, 2019, Ministry of Corporate Affairs (“MCA”) has notified the Ind AS 116 Leases which replaces the existing Ind AS 17 Leases. The new standard will come into force from April 1, 2019.

The core principle of the new standard lies in identifying whether the contract is or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The new standard modifies the accounting of leases in the books of lessee. At the commencement date, a lessee shall recognise a right-of-use asset and a lease liability, for all leases with a term of more than 12 months, unless the underlying asset is of a low value. The accounting for leases in the books of the lessor is substantially similar to the requirements of Ind AS 17.

The standard allows for two methods of transition: the full retrospective approach, requires entities to retrospectively apply the new standard to each prior reporting period presented and the entities need to adjust equity at the beginning of the earliest comparative period presented, or the modified retrospective approach, under which the date of initial application of the new leases standard, lessees recognize the cumulative effect of initial application as an adjustment to the opening balance of equity as of annual periods beginning on or after April 1, 2019.

The Company will adopt this standard using modified retrospective method effective April 1, 2019, and accordingly, the comparative for year ended March 31, 2019, will not be retrospectively adjusted.

The effect on adoption of Ind AS 116 is being ascertained.

1.11 Previous year’s figures have been reclassified / regrouped wherever necessary.


Mar 31, 2015

GENERAL INFORMATION

Polychem Limited is engaged in the manufacturing of specialty chemicals and property development. The Company has manufacturing plant in India and sells it in Domestic as well as International market. The Company is public limited Company and is listed on the Bombay Stock Exchange (BSE).

1.1 Reconciliation of the number of equity shares outstanding at the beginning and at the end of the reporting period

Based on information available with the Company, the balance due to Micro & Small enterprises as defined under MSMED Act, 2006 as at March 31, 2015 & March 31, 2014 is NIL. No interest during the year and previous year has been paid under the terms of the MSMED Act, 2006.

The useful life of Fixed Assets has been revised in accordance with Schedule II of the Companies Act,2013,which is applicable for accounting periods commencing on or after April 1, 2014 .

2 Contingent Liabilities

a) Claims against the Company not acknowledged as debts: 1,239 1,239

Relates to Octroi matter, employees claims etc. (No provision is made, as the Company is hopeful of successfully contesting the claims and as such does not expect any significant liability to crystallise).

b) Disputed income tax liabilities contested by the Company 8,257 17,418

3 During the year, the Company had exported 36,680 Kgs to a party in UK. The said party has raised quality issues relating to a portion of consignment. After various rounds of deliberations and review of reports, subsequent to the date of Balance sheet, the Company has agreed to take back the said consignment subject to receipt of requisite approvals. The necessary provision for expected claims has been recognised in the books of accounts.

4 Amount of lease rental charged to the Statement of Profit and Loss account in respect of premises taken on cancellable operating lease is Rs. 2089('000) (Previous Year Rs. 2165('000)).

5 Employee Benefits

(i) Defined Contribution plans :

Company's contribution to Provident Fund is Rs. 809(000's) (Previous year Rs. 606 (000's)).

(ii) Defined Benefits Plans :

The following table sets out the funded status of the Gratuity Plan and the amounts recognised in Company's financial statements as at March 31, 2015:

6 Earnings per share is calculated by dividing the profit/(loss) attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year as under:

7 Related Party Transactions

(a) Names of related parties and description of relationship

Nature of relationship Name of the related parties

Key Managerial Personnel Mr. T. R. Kilachand - Executive Chairman Mr. P.T. Kilachand - Managing Director Mr. A.H. Mehta - Dy. Managing Director Ms. K. V. Panchasara - Chief Financial Officer Ms. D.V. Chauhan - Company Secretary and Compliance Officer Entities where the key managerial personnel have significant influence Ginners & Pressers Limited

Rasayani Traders Pvt. Limited Sun Tan Trading Co. Limited Connell Bros Co. (India) Pvt. Limited Tulsi Global Logistics Pvt. Limited

Associate Gujarat Poly-AVX Electronics Limited

8 Segment information

(A) Segment information for primary segment reporting (by business segments) The Company has two business segments:

(i) Property Development

(ii) Specialty Chemicals

(B) Segment Information for secondary segment reporting (by geographical segments):

The Company operates only within India and hence the question of disclosure of segment information by geographical segments does not arise.


Mar 31, 2014

GENERAL INFORMATION

Polychem Limited is engaged in the manufacturing of specialty chemicals, the company has manufacturing plants in India and sells it in Domestic as well as International market. The company is a public limited company and is listed on the Bombay Stock Exchange (BSE).

1 Contingent Liabilities

i Claims against the Company not acknowledged as debts: 1,239 1,239 Relates to Octroi matter, employees claims etc. (No provision is made, as the Company is hopeful of successfully Contesting the claims and as such does not expect any significant liability to crystallise)

ii Guarantees given by the banks on behalf of the 534 534 Company for import licence in favour of Customs, Cental Excise and others.

iii Bonds executed in favour of the Collector of 1260 1260 Central Excise, Mumbai for export of goods



iv Disputed income tax liabilities contested by - 17,418 the company

2 Amount of lease rental charged to the profit and loss account in respect of premises taken on cancellable operating lease is Rs 2134 (''000) (Previous Year Rs 1920 (''000)).

3 Employee Benefits

(i) Defined Contribution plans:

Company''s contribution to Provident Fund is Rs 606 (000) (Previous year Rs. 505 (000)).

(ii) Segment Information for secondary segment reporting ( by geographical segments ) :

The Company operates only within India and hence the question of disclosure of segment information by geographical segments does not arise.

4. Previous years figures have been regrouped/rearranged wherever necessary to confirm with current year figures.


Mar 31, 2012

The company has one class of equity shares having a par value Rs 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

Based on information available with the company the balance due to Micro & small and medium enterprises as defined under MSMED Act, 2006 as at 31st March 2012 & 31st March 2011 is NIL. No interest during the year and previous year has been paid under the terms of the MSMED Act, 2006.

1 Contingent Liabilities

i Claims against the Company not acknowledged as debts: 1,239 1,239 Relates to Octroi matter, employees claims etc.

(No provision is made, as the Company is hopeful of successfully Contesting the claims and as such does not expect any significant liability to crystallize)

ii Guarantees given by the banks on behalf of the Company for import 534 534 licence in favour of Customs, Cental Excise and others.

iii Bonds executed in favour of the Collector of 1,260 1,260 Central Excise, Mumbai for export of goods.

iv Disputed tax liabilities contested by the company 85 85

v The Company has taken certain premises on sub-lease. The Landlord, a Government Company issued a notice under the Public Premises ( Eviction of Unauthorized Occupants)

Act, 1971 against the Company for eviction and has demanded damages and other charges, which are disputed by the Company. The proceedings in this connection are pending before the Estate Officer. The Contingent liability in respect of damages, interest claimed by the Insurance Company cannot be quantified.

2 Amount of lease rental charged to the profit and loss account in respect of premises taken on cancellable operating lease is Rs 209(000) ( Previous Year Rs 183(000)

3 Earnings per share is calculated by dividing the profit/(loss) attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year as under:

4. Till the year ended 31st March 2011, the company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act , 1956, has become applicable to the company. The company has re-classified previous year figures to confirm to this year's classification. On adoption of the revised Schedule VI, there has been no significant impact on recognition and measurement principles followed for preparation of financial statements.

GENERAL INFORMATION

Polychem Ltd is engaged in the manufacturing of specialty chemicals. The company has manufacturing plants in India and sells it in Domestic as well as International market. The company is a public limited company and is listed on the Bombay Stock Exchange (BSE).


Mar 31, 2010

1. Contingent Liabilities in respect of:

Current Previous

Year year

Rupees Rupees

in 000 in 000

(i) Claims against the Company 1,239 1,239 not acknowledged as debts:

Relates to Octroi matter, employees claims etc. No provision is made, as the Company is hopeful of successfully contesting the claims and as such does not expect any significant liability to crystallise.

(ii) Guarantees given by the banks 534 534 on behalf of the Company for import licence in favour of Customs, Central Excise and Others.

(iii) Bonds executed in favour of the 1,260 1,260 Collector of Central Excise, Mumbai for export of goods

(iv)Disputed tax liabilities contested 120,502 85 by the Company (Refer note no. 2)

(v) The Company has taken certain premises on sub-lease. The Landlord a Government Company issued a notice under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 against the Company for eviction and has demanded damages and other charges, which are disputed by the Company. The proceedings in this connection are pending before the Estate Officer. The Contingent liability in respect of damages, interest claimed by the Insurance Company cannot be quantified.

2. The Company has prefered an appeal against the order of the Assessing Officer assessing income arising from sale of plot of land, held as stock in trade, as capital gain and raising a demand of Rs 117,077(000).The Company has deposited a sum of Rs 25000(000) against such demand, in addition , a refund of tax Rs 29,211 (000) has also been adjusted.

The said appeal is pending and the Company has more than resonable chance of successin such appeal. Accordingly, no provision has been made in the accounts and amount paid/adjusted against demand have been shown under current assets.

3. Company is also pursuing the pending income tax and sales tax cases.

4. Amount of lease rental charged to the profit and loss account in respect of premises taken on cancellable operating lease is Rs.155(000) [previous year, Rs. 174(000)]

5. In view of unabsorbed losses and carried forwarded depreciation and in the absence of taxable income under provisions of the income tax act, 1961 in the current year, the company belives that there will be no tax liability. Accordingly no provision for income tax has been made in the accounts during the year.

6. Balance of Sundry creditors, Loans and advances, Deposits are subject to confirmation and subsequent reconciliation and adjustments, if any.

7. Employee Benefits

(i) Defined Contribution plans :

Companys contribution to Provident Fund is Rs.3.15 lacs

(Previous year Rs.2.78 lacs)

(ii) Defined Benefits Plans :

The following table sets out the funded status of the Gratuity Plan and the amounts recognised Companys financial statements as at 31st March, 2010.

8. Related Party Transactions

(a) Names of related parties and description of relationship

Sr. No. Nature of relationship Name of the related parties

1. Substantial Interest Ginners and Pressers Limited

Connell Bros. Co.(l) Pvt.Ltd.

Gujarat Poly-AVX Electronics Ltd.

Rasayani Traders Pvt. Ltd.

Sun Tan Trading Co. Ltd.

2. Key Managerial personnel Mr. TR.Kilachand Managing Director

Mr. RT.Kilachand Whole Time Director

9. Segment information

(A) Segment information for primary segment reporting ( by business segments): The Company has two business segments :

(i) Property Development

(ii) Specialty chemicals

(B) Segment information for secondary segment reporting (by geographical segments):

The Company operates only within India and hence the question of disclosure of segment information by geographical segments does not arise.

10. Figures for the previous year have been regrouped wherever necessary to correspond with the figures of the current year.

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