Accounting Policies of Prima Plastics Ltd. Company
Mar 31, 2018
NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS Note 32 (A): Company Overview and Significant Accounting Policies Company Overview:
The Prima Plastics Limited (âthe Companyâ) is a Public Limited Company, incorporated in India and has registered office at 98/4 Prima House, Daman Industrial Estate, Nani Daman, Daman - 396210. It is incorporated under the Companies Act, 2013 and its shares are listed on the Bombay Stock Exchange Limited. The Company is one of the leading plastic moulded article manufacturing company in India having 4 manufacturing facilities spread across the country.
Significant Accounting Policies: a) Statement of Compliance:
These financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time, the relevant provisions of the Companies Act, 2013 (the Act) and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.
The Financial Statements for the year ended March 31, 2018 are the Company''s first Ind AS financial statements. The date of transition to Ind AS is April 1, 2016. Accordingly, the Company has prepared an Opening Ind AS Balance Sheet as on April 1, 2016 and comparative figures for the year ended March 31, 2017 are also in compliance with Ind AS. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 51.
The financial statements are authorized for issue by the Board of Directors of the Company at their meeting held on May 28, 2018.
b) Basis of Preparation of Accounts:
Basis of Preparation:
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities:
i. Financial Instruments measured at Fair Value.
ii. Certain financial assets and liabilities measured at fair value through profit or loss; and
iii. Employee''s Defined Benefit Plan as per Actuarial Valuation.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique.
Functional and Presentation Currency:
The financial statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates.
Classification of Assets and Liabilities into Current/Non-Current:
The Company has ascertained its operating cycle as twelve months for the purpose of Current/ Non-Current classification of its Assets and Liabilities.
For the purpose of Balance Sheet, an asset is classified as current if:
i. It is expected to be realized, or is intended to be sold or consumed, in the normal operating cycle; or
ii. It is held primarily for the purpose of trading; or
iii. It is expected to realize the asset within twelve months after the reporting period; or
iv. The asset is a cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
Similarly, a liability is classified as current if:
i. It is expected to be settled in the normal operating cycle; or
ii. It is held primarily for the purpose of trading; or
iii. It is due to be settled within twelve months after the reporting period; or
NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS
iv. The Company does not have an unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could result in its settlement by the issue of equity instruments at the option of the counterparty does not affect this classification.
All other liabilities are classified as non-current.
c) Property, Plant and Equipment (PPE):
The initial cost of PPE comprises of its purchase price, including import duties and non-refundable purchase taxes, and any directly attributable costs of bringing an asset to working condition and location for its intended use, including relevant borrowing costs and any expected costs of decommissioning, less accumulated depreciation and accumulated impairment losses, if any.
Subsequent expenditure relating to PPE are capitalized only when it is probable that future economic benefits associated with these will flow to the Company and cost of the item can be measured reliably. Repairs and maintenance cost are charged to the Statement of Profit and Loss in the period in which the costs are incurred.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
d) Capital Work in Progress:
Expenditure/ Income during construction period (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE) is included under Capital Work-in-Progress, and the same is allocated to the respective PPE on the completion of their construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under âOther non-current Assets".
e) Depreciation:
Depreciation on PPE is the systematic allocation of the depreciable amount over its useful life and is provided on a straight-line basis over such useful lives as prescribed in Schedule II to the Act or as per technical assessment.
Depreciable amount of PPE is the cost of PPE less its estimated residual value. The useful life of PPE is the period over which PPE is expected to be available for use by the Company.
In case of certain classes of PPE, the Company uses different useful lives than those prescribed in Schedule II to the Act. The useful lives have been assessed based on technical advice, taking into account the nature of the PPE and the estimated usage of the asset on the basis of management''s best estimation of obtaining economic benefits from those classes of assets.
f) Depreciation on additions is provided on a pro-rata basis from the date of acquisition. Depreciation on deductions/disposals is provided on a pro-rata basis till the date of such sale or disposal.
g) Intangible Assets and Amortization
Intangible assets with finite useful life that are acquired separately are stated at acquisition cost less accumulated amortization and impairment losses, if any. The Company determines the useful life as the period over which the future economic benefits will flow to the Company after taking into account all relevant facts and circumstances. The estimated useful life and amortization method is reviewed periodically, with the effect of any changes in estimate being accounted for on a prospective basis.
h) Impairment of Non-Financial Assets:
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less cost of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
i) Inventories:
Inventories are valued as follows:
- Raw materials:
Value at lower of cost and net realizable value(NRV). However, these items are considered to be realizable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. Cost is determined on First in First out (FIFO) basis.
- Work-in-progress (WIP), finished goods, stock in trade and trial run inventories:
Valued at lower of cost or NRV. Cost of finished goods and WIP includes cost of raw materials, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is computed on weighted average basis.
- Stores & spare parts and packing materials are valued at cost
- Waste / Scrap
Waste/Scrap inventory is valued at NRV.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated cost necessary to make the sale.
j) Borrowing Costs:
General and Specific Borrowing Cost Attributable to acquisition of Qualifying Assets, are capitalized as a part of the cost of such asset up to the date when such assets are ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing cost are recognized as an expense in the period in which they are incurred.
k) Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized when the Company has a present obligation (legal or constructive) 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.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects current market assessment of time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognized in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
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 cannot be made, is disclosed as a contingent liability. Contingent liabilities are also 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 within the control of the Company.
Claims against the Company where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
Contingent assets are not recognized in financial statements since this may result in the recognition of income that may never be realized. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and is recognized.
l) Revenue Recognition:
Revenue is recognized to the extent that is probable that the economic benefits will flow to the Company and the amount can be reliably measured.
- Revenue is measured at the fair value of consideration received or receivable taking into account the amount of discounts, volume rebates, outgoing sales taxes and are recognized when all significant risks and rewards of ownership of the goods sold are transferred.
- Dividend income is accounted for when the right to receive the income is established.
- Interest income is recognized using effective interest rate method. m) Lease:
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as Operating Leases.
- Operating Lease:
Lease rentals are charged or recognized 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.
- Finance Lease:
Assets held under finance leases are recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to 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 policy on borrowing costs.
n) Employee Benefit Expense:
- Defined benefit plan:
The Company has defined benefit Plans for post-employment benefits, for all employees in the Form of Gratuity administered through trust funded with Life Insurance Corporation of India. The Company''s liabilities under Payment of Gratuity Act are determined on the basis of independent actuarial valuation.
The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees'' services.
Re-measurement of defined benefit plans in respect of post-employment are charged to the Other Comprehensive Income. Remeasurement recognized in OCI is reflected immediately in retained earnings and will not be reclassified to Statement of Profit and Loss.
The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
The defined benefit obligation recognized in the Balance Sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
- Defined contribution plan:
Payments to defined contribution plans are recognized as an expense when employees have rendered service entitling them to the contributions.
The eligible employees of the Company are entitled to receive benefits in respect of provident fund, for which both the employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions as specified under the law are made to the Government Provident Fund monthly.
- Short-term employee benefits:
A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave in the period the related service is rendered. Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
o) Income Taxes:
The tax expense for the period comprises current and deferred tax. Tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items recognized in the comprehensive income or in equity. In which case, the tax is also recognized in other comprehensive income or equity.
- Current Tax:
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance Sheet date.
- Deferred Tax:
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting date.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period date and are reduced to the extent that it is no longer probable.
p) Foreign Currency Transactions:
Foreign currency transactions are recorded at exchange rate prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities are restated into the functional currency using exchange rates prevailing on the Balance sheet date. Gains and losses arising on settlement and restatement of foreign currency denominated monetary assets and liabilities are recognized in the statement of profit and loss. Non- monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.
Non-Monetary items that are measured in terms of historical cost in a foreign currency are translated using exchange rate as at the date of initial transactions.
q) Earnings Per Share:
The basic Earnings Per Share (âEPSâ) is computed by dividing the net profit / (loss) after tax for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, net profit/loss after tax for the year attributable to the to the equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive equity shares
r) Investment in Subsidiary & Joint Venture:
The Company''s investment in its Subsidiary and Joint Venture are carried at cost. s) Financial Instruments:
Financial Assets & Financial Liabilities are recognized when the Company becomes party to contractual provisions of the relevant instrument.
Initial Recognition and Measurement:
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition. Transaction costs directly attributable to acquisition or issue of financial assets or financial liabilities at fair value through profit or loss at recognized immediately in the Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
- Financial assets carried at Amortized Cost:
A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold the asset 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.
- Financial assets at fair value through Other Comprehensive Income (FVTOCI):
A financial asset is measured at FVTOCI if it 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.
- Financial assets at fair value through profit or loss (FVTPL):
A financial asset shall be classified and measured at fair value through profit or loss unless it is measured at Amortized cost or at fair value through OCI.
- Classification and Subsequent Measurement: Financial Liabilities
Financial liability are classified as either financial liabilities at FVTPL or âother financial liabilities''.
- Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition at FVTPL. Gain or losses on liabilities held for trading are recognized in the Statement of profit or loss.
- Other Financial Liabilities:
Other Financial liabilities (including borrowings and trade and other payables) are subsequently measured at Amortized cost using the effective interest method.
The effective interest method is the method of calculating the Amortized cost of a financial liability and of allocating interest expenses over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
- Impairment of financial assets:
In accordance with Ind AS 109, the Company uses âExpected Credit Loss'' (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL). Expected credit losses are measured through a loss allowance at an amount equal to:
In case of trade receivables Company applies âsimplified approach'' which requires expected lifetime losses to be recognized from initial recognition of the receivables. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
For other assets, the Company uses 12-month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.
- Derecognition of Financial Instruments:
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind
AS 109.
A financial liability (or a part of a financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
t) Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand that are readily convertible into cash which are subject to insignificant risk of changes in value and are held for the purpose of meeting short-term cash commitments.
u) Financial Liabilities & equity instruments:
- Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of financial liability and an equity instrument.
- Equity Instrument
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognized at the proceeds received.
v) Segment Reporting - Identification of Segments:
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the company''s management to make decisions for which discrete financial information is available.
Based on the management approach as defined in Ind AS 108, the management evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments.
Note 32 (B): Critical accounting judgments and key sources of estimation uncertainty:
The preparation of the financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:
a) Useful Lives of Property, Plant & Equipment:
The Company uses its technical expertise along with historical and industrial trends for determining the economic life of an asset. The useful life is reviewed by the management periodically and revised, if appropriate. In case of a revision, the unamortized depreciable amount is charged over the remaining useful life of the asset.
b) Defined Benefit Plans and Compensated Absences:
The cost of the defined benefit plans, compensated absences and the present value of the defined benefit obligation are based on actuarial valuation using the projected unit credit method. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates.
Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
c) Fair Value Measurement of Financial Instruments:
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility.
d) Expected Credit Losses on Financial Assets:
The impairment provisions of financial assets are based on assumptions about risk of default and expected timing of collection. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, customer''s creditworthiness, existing market conditions as well as forward looking estimates at the end of each reporting period.
Mar 31, 2017
NOTES TO FINANCIAL STATEMENT FOR THE YEAR ENDED MARCH 31, 2017 NOTE NO.1
COMPANY OVERVIEW BACKGROUND
The Prima Plastics Ltd. (âthe Company''â) is a public limited Company, incorporated in India and has register office at 98/4 Prima House, Daman Industrial Estate, Nani Daman, Daman -396210. It is incorporated under the Companies Act, 2013 and its shares are listed on the Bombay Stock Exchange Limited. The Company is one of the leading plastic moulded articles manufacturing company in India having 3 manufacturing facilities spread across the country.
NOTE NO. 2 SIGNIFICANT ACCOUNTING POLICIES: 1) Basis of Preparation of Financial Statements:
The financial statements are prepared in accordance with generally accepted accounting principles in India under the historical cost convention on an accrual basis Pursuant to section 133 of the Companies Act, 2013 (âThe Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, these financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211(3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006, as amended] and other relevant provisions of the Companies Act, 2013.
The preparation of financial statements requires to make estimates and assumptions by the Management and that may affect the reported amount of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reported year. Differences between the actual results and estimates are recognized in the year in which the results are known/ materialized.
All the assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle of twelve months and other criteria set out in Schedule III to the Companies Act, 2013.
2) Revenue Recognition:
a) Sales are recognized at the time of transfer of ownership and significant risk of goods to the customer. Service income is recognized when the service is rendered. Sales & Services are accounted for net of Excise Duty, VAT, Service tax, returns & claims etc.
b) Sales exclude recovery of charges separately collected from customers like transport, packing etc.
c) The Company adopts the mercantile method in the preparation of the accounts. claims / Refunds not ascertainable with reasonable certainty are accounted for, on final settlement.
d) Export sales are recognized based on the shipped on board date as per bill of lading, which is when substantial risks and rewards of ownership are passed to the customers.
e) Dividend income is recognized when right to receive dividend is established and there is no uncertainty as to its reliability.
f) Revenue in respect of other income is recognized when a reasonable certainty as to its realization exists.
3) Tangible and Intangible Fixed Assets
(a) Tangible Fixed Assets
Tangible fixed assets are carried at the cost of acquisition or construction, less accumulated depreciation/accumulated impairment. The cost of fixed assets comprises of its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use.
Capital Work-in-Progress includes expenditure during construction period incurred on projects under implementation treated as pre-operative expenses pending allocation to the assets. These expenses are apportioned to the respective fixed assets on their completion / commencement of commercial production.
(b) Intangible Fixed Assets
Intangible fixed assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization
Gains/losses arising from retirement or disposal of fixed assets which are carried at cost are recognized in the Statement of Profit t and Loss.
4) Depreciation:
Depreciation on tangible fixed assets is provided using the Straight Line Method based on the useful lives of the assets as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013.
Leasehold land is amortized over the primary period of lease.
Intangible Assets are amortized on a Straight Line basis over the estimated useful economic life.
5) Impairment of Assets:
At Balance Sheet date, an assessment is done to determine whether there is any indication of impairment in the carrying amount of the Company''s assets. If any such indication exists, the asset''s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.
An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable amount. An impairment loss, if any, is charged to the Profit and Loss Account in the year in which the asset is identified as impaired. Reversal of impairment loss recognized in prior years are recorded when there is an indication that impairment loss recognized for the asset no longer exists or has been decreased.
6) Investments:
Investment in Subsidiary / Joint Venture are held for long term and valued at cost reduced by diminution of permanent nature therein, if any.
7) Inventories:
Inventories includes Raw Material, Work-in-Progress, finished goods, Store & Spare, Packing Material are valued at lower of cost and net realizable value.
Raw Material and Components: Cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Cost is determined using First in first out (FIFO) basis.
Finished Goods: Cost includes cost of direct material, labor, other direct cost and a proportion of fixed manufacturing overhead allocated based on the normal operating capacity but excluding borrowing cost. Cost is determined on weighted average cost basis. The excise duty in respect of the closing inventory of finished goods in included as part of the finished goods.
Store, spare parts, Packing Material etc.: cost is determined on FIFO basis.
Inter divisional transfers are valued at works/factory costs of the transferor unit/division, plus transport and other charges.
8) Provisions, Contingent Liabilities and Contingent Assets:
The Company creates a provision when there exists a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are not recognized.
9) Taxes on Income:
I. Current Tax Provision
Provision for Current Tax is made on the basis of estimated taxable income for the current accounting year and in accordance with the provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) eligible for set-off in subsequent years (as per tax laws) is recognized as on asset by way of credit to the Profit and Loss Account only if, there is convincing evidence of its realization. At each Balance Sheet date, the carrying amount of MAT Credit Entitlement receivable is reviewed to reassure realization.
II. Deferred Tax Provision
Deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).
The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognisedonly to the extent there is reasonable certainty that the assets can be realized in future. Deferred tax assets and liabilities are reviewed as at each Balance Sheet date to reassess realization.
10) Foreign Currency Transactions:
(a) Initial recognition:
Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss.
(b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non-monetary items are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising out of these translations are recognized in the Statement of Profit and Loss.
11) Employee Benefits: Defined Contribution Plan
Defined Benefit Plan:
Gratuity liability is covered under the Gratuity-cum-Insurance Policy of Life Insurance Corporation of India (LIC). The present value of the obligation is determined based on an actuarial valuation. Actuarial gains and losses arising on such valuation are recognized immediately in the Statement of Profit and Loss Account. The amount funded by the Trust administered by the Company under the aforesaid Policy is reduced from the gross obligation under the defined benefit plan to recognize the obligation on a net basis.
Contribution to provident fund etc. is accounted on accrual basis.
A defined contribution plan is a post employment benefit plan under which the Company and employee make monthly contribution to the Provident Fund Plan equal to a specified percentage of the covered employee''s salary. The Company''s contribution is recognized as an expense in the Statement of Profit and Loss during the period in which employee renders the related service.
12) Earning per Share:
Basic and Diluted earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period.
13) Borrowing Cost:
Borrowing Cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as adjustment to the interest cost. Interest and other borrowing costs attributable to acquisition, construction or production of qualifying assets that takes a substantial period of time to get ready for its intended use or sale are capitalized. All other borrowing costs are expenses in the period they occur.
B. Terms/rights attached to Equity Shares:
The Company has issued only one class of Equity Shares having a par value of '' 10/- per share. Each holder of Equity Shares is entitled to one vote per share.
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.
D. Share reserved for issue under options and contracts / commitments:
The Company has not made any contracts / commitments to issue under option (PY Nil)
A) Working capital loan from a banker are secured by hypothecation of inventories, receivable, other current assets and other tangible fixed assets, pledge of immovable properties and personal guarantee of promoter directors. Secured working capital Loans are repayable on demand and carries interest @ 11.65% p.a.
B) FCNR loan in Foreign currency (US$) to fund working capital requirement from a banker is secured against current assets, fixed assets of the Company and personal guarantee from promoter directors and carries interest @ Libor plus 2.5% .
In absence of any intimation received from vendors the status of their registration under "The Micro, Small and Medium Enterprises Development Act.2006", the Company is unable to comply with disclosures required to be made under said Act. There are no amount is payable to any Small Scale Industrial undertaking.
A. Long term secured loan in foreign currency (US$) granted to Subsidiary Company as part of original project cost and carries Interest rate of 5%
B. Security deposits with related parties are interest free and given against occupation of office premises on rent.
C. Loan to employees is interest free as per Company policy.
Mar 31, 2016
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016 NOTE NO.1
COMPANY BACKGROUND
Prima Plastics Limited (âthe Companyâ) is a public Limited Company, incorporated in India under the provisions of the Companies Act, 2013. The Company is engaged in the business of manufacturing of Plastic Moulded Articles.
NOTE NO. 2 SIGNIFICANT ACCOUNTING POLICIES:
1) Basis of Preparation of Financial Statements:
The financial statements are prepared in accordance with generally accepted accounting principles in India under the historical cost convention on an accrual basis. Pursuant to Section 133 of the Companies Act, 2013 (âThe Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, these financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211(3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006, as amended] and other relevant provisions of the Companies Act, 2013.
The preparation of financial statements requires estimates and assumptions to be made that affects the reported amount of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reported year. Differences between the actual results and estimates are recognized in the year in which the results are known/ materialized.
All the assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle of twelve months and other criteria set out in Schedule III to the Companies Act, 2013.
2) Revenue Recognition:
a) Sales are recognized at the time of transfer of ownership and significant risk of goods to the customer. Service income is recognized when the service is rendered. Sales & Services are accounted for net of Excise Duty, VAT Service tax, returns & claims etc.
b) Sales exclude recovery of charges separately collected from customers like transport, packing etc.
c) The Company adopts the mercantile method in the preparation of the accounts. claims / Refunds not ascertainable with reasonable certainty are accounted for, on final settlement.
d) Government Benefits on account of export sales is estimated and accounted for in the year of export and when there is no significant uncertainty regarding the ultimate collections of export proceeds as applicable.
e) Dividend income is recognized when right to receive dividend is established and there is no uncertainty as to its reliability.
f) Revenue in respect of other income is recognized when a reasonable certainty as to its realization exists.
3) Tangible and Intangible Fixed Assets
(a) Tangible Fixed Assets
Tangible fixed assets are carried at the cost of acquisition or construction, less accumulated depreciation/accumulated impairment. The cost of fixed assets comprises of its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use.
Projects under which assets are not ready for their intended use are shown as Capital Work-in-Progress.
(b) Intangible Fixed Assets
Intangible fixed assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization.
Gains/losses arising from retirement or disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss.
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016
4) Depreciation:
Depreciation on tangible fixed assets is provided using the Straight Line Method based on the useful lives of the assets as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013.
In case of certain assets, the Company uses different useful life than those prescribed in Schedule II to the Companies Act, 2013. The useful life has been assessed based on technical advice which considered the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support, etc.
Leasehold land is amortized over the primary period of lease.
Intangible Assets are amortized on a Straight Line basis over the estimated useful economic life.
5) Impairment of Assets:
At Balance Sheet date, an assessment is done to determine whether there is any indication of impairment in the carrying amount of the Company''s assets. If any such indication exists, the asset''s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.
An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable amount. An impairment loss, if any, is charged to the Profit and Loss Account in the year in which the asset is identified as impaired. Reversal of impairment loss recognized in prior years are recorded when there is an indication that impairment loss recognized for the asset no longer exists or has been decreased.
6) Investments:
All long term investments are stated at cost. Provision for diminution, if any, in the value of investments is made to recognize a decline, other than temporary, in the opinion of the management.
Investment in Joint Ventures are held for long term and valued at cost reduced by diminution of permanent nature therein, if any. Current investments are carried at the lower of cost and fair value, determined on a category-wise basis
7) Inventories:
a) Raw Material & Components - at cost using identified on First in first out (FIFO) or net realizable value whichever is lower.
b) Finished Good - at cost using weighted average cost basis or net realizable value whichever is lower. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventory to their respective present location and condition. The excise duty in respect of the closing inventory of finished goods is included as part of the finished goods.
c) Stores, Spare Parts, Packing Materials etc. - at cost using FIFO or at net realizable value whichever is lower.
d) Inter divisional transfers are valued at works/factory costs of the transferor unit/division, plus transport and other charges.
8) Provisions, Contingent Liabilities and Contingent Assets:
The Company creates a provision when there exists a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are not recognized.
9) Taxes on Income:
I. Current Tax Provision
Provision for Current Tax is made on the basis of estimated taxable income for the current accounting year and in accordance with the provisions of the Income Tax Act, 1961.
Mar 31, 2015
1) Basis of Preparation of Financial Statements:
The financial statements of the Company are prepared in accordance with
Section 129 of Companies Act, 2013 and accounting principles generally
accepted, the Accounting Standards specified under Section 133 of the
Companies Act, 2013 and Rule 7 of the Companies (Accounts) Rules, 2014.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosure regarding contingent liabilities as at the
date of the financial statements and the reported amounts of income and
expenses during the year. Examples of such estimates include provision
for doubtful debts and advances, obligation under employee's retirement
benefits and Income Tax.
The financial statements are prepared on accrual basis under the
historical cost convention.
2) Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP
requires judgments, estimates and assumptions to be made that affect
the reported amount of assets and liabilities, disclosure of contingent
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period.
3) Revenue Recognition:
Revenue on sales is recognized when risk and rewards of ownership of
products are passed on to customers, which are generally on dispatch of
goods. Incomes from services are recognized when services are rendered.
Sales are net of discounts, sales tax and returns; excise duty
collected on sales is shown by way of deduction from sales. Dividend
income is recognized when right to receive dividend is established and
there is no uncertainty as to its reliability. Revenue in respect of
other income is recognized when a reasonable certainty as to its
realization exists.
4) Fixed Assets:
Fixed assets (other than "Freehold land where no depreciation is
charged) are stated at cost less accumulated depreciation. Cost of
acquisition is inclusive of purchase price and any directly
attributable cost of bringing the assets to working condition for the
intended use. Cenvat Receivable and Value added tax, if any on plant &
machinery and moulds have been reduced from the cost of acquisition of
the said assets.
Subsequent expenditures related to an item of tangible asset are added
to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.
Projects under which assets are not ready for their intended use are
shown as Capital Work-in-Progress.
5) Depreciation:
Depreciation on Fixed Assets is provided on life assigned to each asset
in accordance with the Schedule - II of the Companies Act, 2013 except
in respect of certain assets where the useful life was determined by
technical evaluation.
The carrying amount of the assets as on April 1, 2014 is depreciated
over the remaining useful life. Where the useful life of asset has
expired, the carrying amount as on April 1,2014 has been charged to the
retained earnings as on April 1,2014.
Depreciation for additions to/deductions from, owned assets is
calculated pro rata.
6) Impairment of Assets:
As at each Balance Sheet date, the carrying amount of assets is tested
for impairment so as to determine the provision for impairment loss and
the reversal of impairment loss recognized in previous periods if any.
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable amount. An impairment loss, if any, is charged
to the Profit and Loss Account in the year in which the asset is
identified as impaired. Reversal of impairment loss recognized in prior
years are recorded when there is an indication that impairment loss
recognized for the asset no longer exists or has been decreased.
7) Investments:
Long term investments are stated at cost of acquisition. Provision for
diminution in value is made only if, in the opinion of management such
a decline is other than temporary. Investments in foreign currency are
stated at cost by converting at exchange rate prevailing at the time of
acquisition / remittance.
Investment in Joint Ventures are held for long term and valued at cost
reduced by diminution of permanent nature therein, if any.
8) Inventories:
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in bringing them
NOTE TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31,2015
to their respective present location and condition. Cost of raw
materials, stores and spares, packing materials, trading and other
products are determined on First-In-First-Out (FIFO) basis. The excise
duty in respect of the closing inventory of finished goods is included
as part of the finished goods. Cost formula used is 'Weighted Average
Cost'.
9) Provisions, Contingent Liabilities and Contingent Assets:
A provision is recognized when there is a present obligation as a
result of a past event, it is probable that an outflow of economic
resources will be required to settle the obligation and in respect of
which reliable estimate can be made. At each Balance Sheet date, the
carrying value of provisions is reviewed and adjusted to reflect the
best current estimate.
Contingent liabilities are not recognized but disclosed in the
financial statements.
Contingent assets are neither recognized nor disclosed in the financial
statements.
10) Taxes on Income:
I. Current Tax Provision
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting year and in accordance with the
provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) eligible for set-off in subsequent years
(as per tax laws) is recognized as on asset by way of credit to the
Profit and Loss Account only if, there is convincing evidence of its
realization. At each Balance Sheet date, the carrying amount of MAT
Credit Entitlement receivable is reviewed to reassure realization.
II. Deferred Tax Provision
Deferred tax asset or liability is recognized for timing differences
between the profit as per financial statements and the profit offered
for income tax, based on tax rates that have been enacted or
substantively enacted at the Balance Sheet date. Deferred tax assets
are recognized only if, there is virtual certainty that sufficient
future taxable income will be available, against which they can be
realized.
11) Foreign Currency Transactions:
a) Transactions in foreign currencies are recognized at rate of
overseas currency ruling on the date of transactions. Gain / Loss
arising on account of rise or fall in overseas currencies vis-a-vis
reporting currency between the date of transaction and that of payment
/ receipts is charged to Profit & Loss Account.
b) Receivables / payables (excluding for fixed assets) in foreign
currencies are translated at the exchange rate ruling at the year end
date and the resultant gain or loss is accounted for in the Profit &
Loss Account.
c) Increase / Decrease in foreign currency loan on account of exchange
fluctuation are debited / credited to profit and loss account.
12) Employee Benefits:
Defined Contribution Plan
Defined Benefit Plan:
Gratuity liability is covered under the Gratuity-cum-Insurance Policy
of Life Insurance Corporation of India (LIC). The present value of the
obligation is determined based on an actuarial valuation. Actuarial
gains and losses arising on such valuation are recognized immediately
in the Statement of Profit and Loss Account. The amount funded by the
Trust administered by the Company under the aforesaid Policy is reduced
from the gross obligation under the defined benefit plan to recognize
the obligation on a net basis. Contribution to provident fund etc. is
accounted on accrual basis.
A defined contribution plan is a post employment benefit plan under
which the Company and employee make monthly contribution to the
Provident Fund Plan equal to a specified percentage of the covered
employee's salary. The Company's contribution is recognized as an
expense in the Statement of Profit and Loss during the period in which
employee renders the related service.
13) Earning per Share:
Basic earnings per share are computed by dividing the net profit after
tax by the weighted average number of equity shares outstanding during
the period. Diluted earnings per share computed by dividing the net
profit after tax by the weighted average number of equity shares
considered for deriving basic earnings per share and also weighted
average number of shares that could have been issued upon conversion of
all dilutive potential Equity shares.
14) Borrowing Cost:
Borrowing Cost directly attributable to the acquisition & construction
of an asset, which take a substantial period of time to get ready for
its intended use are capitalized as part of the cost of such asset,
until such time assets is substantially ready for its intended use. All
other borrowing costs are recognized in the Profit and Loss Accounts in
the period in which they are incurred.
15) Current/ Non Current Items:
All Assets and Liabilities are presented as Current or Non Current as
per the Company's normal operating cycle and the other criteria set out
in Schedule - III to the Companies Act, 2013.
Mar 31, 2014
1) Basis of preparation of Financial Statements:
These financial statements have been prepared to comply with Accounting
Principles Generally accepted in India (Indian GAAP), the Accounting
Standards notified under the Companies (Accounting Standards) Rules,
2006 and the relevant provisions of the Companies Act, 1956.
The financial statements are prepared on accrual basis under the
historical cost convention. The financial statements are presented in
Indian rupees rounded off to the neared rupees.
2) Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP
requires judgments, estimates and assumptions to be made that affect
the reported amount of assets and liabilities, disclosure of contingent
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period.
3) Revenue Recognition:
Revenue on sales is recognized when risk and rewards of ownership of
products are passed on to customers, which are generally on dispatch of
goods. Incomes from services are recognized when services are rendered.
Sales are net of discounts, sales tax and returns; excise duty
collected on sales is shown by way of deduction from sales. Dividend
income is recognized when right to receive dividend is established and
there is no uncertainty as to its reliability. Revenue in respect of
other income is recognized when a reasonable certainty as to its
realization exists.
4) Fixed Assets:
Tangible Assets are stated at cost net of recoverable taxes, trade
discounts and rebates. The cost of tangible assets comprises its
purchase price, borrowing cost and any cost directly attributable to
bringing the asset to its working condition for its intended use, net
charges on foreign exchange contracts and adjustments arising from
exchange rate variations attributable to the assets.
Subsequent expenditures related to an item of tangible asset are added
to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.
Projects under which assets are not ready for their intended use are
shown as Capital Work-in-Progress.
5) Impairment of Assets:
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable amount. An impairment loss, if any, is charged
to the Statement of Profit and Loss in the year in which the asset is
identified as impaired. Reversal of impairment loss recognized in prior
years are recorded when there is an indication that impairment loss
recognized for the asset no longer exists or has been decreased.
6) Depreciation:
i) Depreciation is provided on Straight Line method at the rates
specified in Schedule XIV of the Companies Act,1956.
ii) Premium on leasehold land and improvement to leasehold premises are
being written off over the period of lease.
7) Investments:
Long term investments are stated at cost of acquisition. Provision for
diminution in value is made only if, in the opinion of management such
a decline is other than temporary. Investments in foreign currency are
stated at cost by converting at exchange rate prevailing at the time of
acquisition / remittance.
Investment in Joint Ventures are held for long term and valued at cost
reduced by diminution of permanent nature therein, if any.
8) Inventories:
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in bringing them to their
respective present location and condition. Cost of raw materials,
stores and spares, packing materials, trading and other products are
determined on First-In-First-Out (FIFO) basis. The excise duty in
respect of the closing inventory of finished goods is included as part
of the finished goods. Cost formula used are ''Weighted Average Cost''.
9) Provisions, Contingent Liabilities and Contingent Assets:
A provision is recognized when there is a present obligation as a
result of a past event, it is probable that an outflow of economic
resources will be required to settle the obligation and in respect of
which reliable estimate can be made. At each Balance Sheet date, the
carrying value of provisions is reviewed and adjusted to reflect the
best current estimate. Contingent liabilities are not recognized but
disclosed in the financial statements. Contingent assets are neither
recognized nor disclosed in the financial statements.
10) Taxes on Income:
I. Current Tax Provision
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting year and in accordance with the
provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) eligible for set-off in subsequent years
(as per tax laws) is recognized as on asset by way of credit to the
Statement of Profit and Loss only, if there is convincing evidence of
its realization. At each Balance Sheet date, the carrying amount of MAT
Credit Entitlement receivable is reviewed to reassure realization.
II. Deferred Tax Provision
Deferred tax asset or liability is recognized for timing differences
between the profit as per financial statements and the profit offered
for income tax, based on tax rates that have been enacted or
substantively enacted at the Balance Sheet date. Deferred tax assets
are recognized only if, there is virtual certainty that sufficient
future taxable income will be available, against which they can be
realized.
11) Foreign Currency Transactions:
a) Transactions in foreign currencies are recognized at rate of
overseas currency ruling on the date of transactions. Gain / Loss
arising on account of rise or fall in overseas currencies vis-`-vis
reporting currency between the date of transaction and that of payment
is charged to Statement of Profit & Loss.
b) Receivables / payables (excluding for fixed assets) in foreign
currencies are translated at the exchange rate ruling at the year end
date and the resultant gain or loss is accounted for in the Statement
of Profit & Loss.
c) Increase / Decrease in foreign currency loan on account of exchange
fluctuation are debited / credited to Statement of Profit & Loss.
12) Employee Benefits:
Defined Contribution Plan
Defined Benefit Plan:
Gratuity liability is covered under the Gratuity-cum-Insurance Policy
of Life Insurance Corporation of India (LIC). The present value of the
obligation is determined based on an actuarial valuation. Actuarial
gains and losses arising on such valuation are recognized immediately
in the Statement of Profit & Loss. The amount funded by the Trust
administered by the Company under the aforesaid policy is reduced from
the gross obligation under the defined benefit plan to recognize the
obligation on a net basis.
Contribution to provident fund etc. is accounted on accrual basis.
A defined contribution plan is a post employment benefit plan under
which the Company and employee make monthly contribution to the
Provident Fund Plan equal to a specified percentage of the covered
employee''s salary. The Company''s contribution is recognised as an
expense in the Statement of Profit and Loss during the period in which
employee renders the related service.
13) Earning Per Share:
Basic earnings per share is computed by dividing the net profit after
tax by the weighted average number of equity shares outstanding during
the period. Diluted earnings per share computed by dividing the net
profit after tax by the weighted average number of equity shares
considered for deriving basic earnings per share and also weighted
average number of shares that could have been issued upon conversion of
all dilutive potential equity shares.
Mar 31, 2013
1) Accounting Convention:
The accounts have been prepared in accordance with the historical cost
convention (except for specifically excluded treatment of accounts
referred to in B 16(a) under accrual basis of accounting as per Indian
GAAP. Accounts and disclosures thereon comply with the Accounting
Standards specified in Companies (Accounting Standard) Rules, other
pronouncements of ICAI, provisions of the Companies Act, 1956 and
guidelines issued by SEBI as applicable.
Preparation of financial statements in conformity with generally
accepted accounting principles, requires estimates and assumption to be
made, that affect reported amounts of assets and liabilities on the
date of financial statements and reported amount of revenues and
expenses during the reported period. Actual results could differ from
these estimates and differences between the actual results and
estimates are recognized in the period in which results are known /
materialized.
2) Revenue Recognition:
Revenue on sales is recognized when risk and rewards of ownership of
products are passed on to customers, which are generally on dispatch of
goods. Incomes from services are recognised when services are rendered.
Sales are net of discounts, sales tax and returns; excise duty
collected on sales is shown by way of deduction from sales. Dividend
income is recognized when right to receive dividend is established and
there is no uncertainty as to its reliability. Revenue in respect of
other income is recognised when a reasonable certainty as to its
realization exists.
3) Fixed Assets:
Fixed assets are recorded at cost of acquisition or construction net of
cenvat credit wherever eligible. Cost includes all expenses related to
acquisition or construction, including attributable borrowing cost on
qualifying assets.
Fixed assets, which are not in use or are held for disposal, are stated
at cost less accumulated depreciation or at net realizable value,
whichever is lower.
The cost of fixed assets not ready for their intended used before such
days are disclosed under Capital Work-in-Progress.
Advances paid towards the acquisition of fixed assets outstanding at
each balance sheet date are disclosed under Long-Term Loans and
Advances.
4) Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date,
if there is an indication of impairment based on the internal and
external factors.
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable amount. An impairment loss, if any, is charged
to the Profit and Loss Account in the year in which the asset is
identified as impaired. Reversal of impairment loss recognized in prior
years are recorded when there is an indication that impairment loss
recognized for the asset no longer exists or has been decreased.
5) Depreciation:
i) Depreciation is provided on Straight Line method at the rates
specified in Schedule XIV of the Companies Act, 1956. ii) Premium on
leasehold land and improvement to leasehold premises are being written
off over the period of lease.
6) Investments:
Long term investments are stated at cost of acquisition. Provision for
diminution in value is made only if, in the opinion of management such
a decline is other than temporary. Investments in foreign currency are
stated at cost by converting at exchange rate prevailing at the time of
acquisition / remittance.
Investment in Subsidiaries and Joint Ventures are held for long term
and valued at cost reduced by diminution of permanent nature therein,
if any.
7) Inventories:
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in bringing them to their
respective present location and condition. Cost of raw materials,
stores and spares, packing materials, trading and other products are
determined on First In First Out (FIFO) basis. The excise duty in
respect of the closing inventory of finished goods is included as part
of the finished goods. Cost formula used are ''Weighted Average Cost''.
8) Provisions, Contingent Liabilities and Contingent Assets:
A provision is recognized when there is a present obligation as a
result of a past event, it is probable that an outflow of economic
resources will be required to settle the obligation and in respect of
which reliable estimate can be made. At each Balance Sheet date, the
carrying value of provisions is reviewed and adjusted to reflect the
best current estimate. Contingent liabilities are not recognized but
disclosed in the financial statements. Contingent assets are neither
recognized nor disclosed in the financial statements.
9) Taxes on Income:
I. Current Tax Provision
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting year and in accordance with the
provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) eligible for set-off in subsequent years
(as per tax laws) is recognized as on asset by way of credit to the
Profit and Loss Account only if, there is convincing evidence of its
realization. At each Balance Sheet date, the carrying amount of MAT
Credit Entitlement receivable is reviewed to reassure realization.
II. Deferred Tax Provision
Deferred tax asset or liability is recognized for timing differences
between the profit as per financial statements and the profit offered
for income tax, based on tax rates that have been enacted or
substantively enacted at the Balance Sheet date. Deferred tax assets
are recognized only if, there is virtual certainty that sufficient
future taxable income will be available, against which they can be
realized.
10) Foreign Currency Transactions:
a) Transactions in foreign currencies are recognized at rate of
overseas currency ruling on the date of transactions. Gain / Loss
arising on account of rise or fall in overseas currencies vis-Ã -vis
reporting currency between the date of transaction and that of payment
is charged to Profit & Loss Account.
b) Receivables / payables (excluding for fixed assets) in foreign
currencies are translated at the exchange rate ruling at the year end
date and the resultant gain or loss is accounted for in the Profit &
Loss Account.
c) Increase / Decrease in foreign currency loan on account of exchange
fluctuation are debited / credited to profit and loss account.
11) Employee Benefits: Defined Contribution Plan
Contribution to provident fund etc. is accounted on accrual basis.
Defined Benefit Plan:
Gratuity liability is covered under the Gratuity-cum-Insurance Policy
of Life Insurance Corporation of India (LIC). The present value of the
obligation is determined based on an actuarial valuation. Actuarial
gains and losses arising on such valuation are recognized immediately
in the Profit and Loss Account. The amount funded by the Trust
administered by the Company under the aforesaid Policy is reduced from
the gross obligation under the defined benefit plan to recognize the
obligation on a net basis.
Mar 31, 2012
1) Accounting Convention:
The accounts have been prepared in accordance with the historical cost
convention (except for specifically excluded treatment of accounts
referred to in B 16(a) under accrual basis of accounting as per Indian
GAAP Accounts and disclosures thereon comply with the Accounting
Standards specified in Companies (Accounting Standard) Rules, other
pronouncements of ICA!. provisions of the Companies Act, 1956 and
guidelines issued by SEBI as applicable.
Preparation of financial statements in conformity with generally
accepted accounting principles, requires estimates and assumption to be
made, that affect reported amounts of assets and liabilities on the
date of financial statements and reported amount of revenues and
expenses during the reported period. Actual results could differ from
these estimates and differences between the actual results and
estimates are recognized in the period in which results are known /
materialized.
2) Revenue Recognition:
Revenue on sales is recognized when risk and rewards of ownership of
products are passed on to customers, which are generally on dispatch of
goods. Incomes from services are recognised when services are rendered.
Sales are net of discounts, sales tax and returns; excise duty
collected on sales is shown by way of deduction from sales. Dividend
income is recognized when right to receive dividend is established and
there is no uncertainty as to its reliability. Revenue in respect of
other income is recognised when a reasonable certainty as to its
realization exists.
3) Fixed Assets:
Fixed assets are recorded at cost of acquisition or construction net of
Cenvat credit wherever eligible. Cost includes all expenses related to
acquisition or construction, including attributable borrowing cost on
qualifying assets.
Fixed assets, which are not in use or are held for disposal, are stated
at cost less accumulated depreciation or at net realizable value,
whichever is lower.
The cost of fixed assets not ready for their intended used before such
days are disclosed under Capital Work-in-Progress.
Advances paid towards the acquisition of Fixed Assets outstanding at
each Balance Cheet date are disclosed under Long-Term Loans and
Advances.
4) Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date,
if there is an indication of impairment based on the internal and
external factors.
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable amount. An impairment loss, if any, is charged
to the Profit and Loss Account in the year in which the asset is
identified as impaired. Reversal of impairment loss recognized in prior
years in recorded when there is an indication that impairment loss
recognized for the asset no longer exists or has been decreased.
5) Expenditure during Construction and Expenditure on New Projects:
In case of new Projects and in case of substantial modernization /
Expansion at existing units of the Company, all pre-operating
expenditure specifically for the project, incurred up to the date of
installation, is capitalized and added pro-rata to the cost of fixed
assets.
6) Depreciation:
i) Depreciation is provided on Straight Line method at the rates
specified in Schedule XIV of the Companies Act, 1956.
ii) Premium on leasehold land and improvement to leasehold premises are
being written off over the period of lease.
7) Investments:
Long term investments are stated at cost of acquisition. Provision for
diminution in value, is made only if, in the opinion of management such
a decline is other than temporary. Investments in foreign currency are
stated at cost by converting at exchange rate prevailing at the time of
acquisition / remittance.
Investment in Subsidiaries and Joint Ventures are held for long term
and valued at cost reduced by diminution of permanent nature therein,
if any.
No profit or losses of subsidiaries are accounted for.
8) Inventories:
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in brining them to their
respective present location and condition. Cost of raw materials,
stores and spares, packing materials, trading and other products are
determined on First In First Out basis (FIFO).
Scraps are valued at net realizable value.
9) Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
10) Taxes on Income:
I. Current Tax Provision
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting year and in accordance with the
provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) eligible for set-off in subsequent years
(as per tax laws), is recognized as on asset by way of credit to the
Profit and Loss Account only if there is convincing evidence of its
realization. At each Balance Sheet date, the carrying amount of MAT
Credit Entitlement receivable is reviewed to reassure realization.
II. Deferred Tax Provision
Deferred tax asset or liability is recognized for timing differences
between the profit as per financial statements and the profit offered
for income tax, based on tax rates that have been enacted or
substantively enacted at the Balance Sheet date. Deferred tax assets
are recognized only if there is virtual certainty that sufficient
future taxable income will be available, against which they can be
realized.
11) Foreign Currency Transactions:
a) Transactions in foreign currencies are recognized at rate of
overseas currency ruling on the date of transactions. Gain / Loss
arising on account of rise or fall in overseas currencies vis-a-vis
reporting currency between the date of transaction and that of payment
is charged to Profit & Loss Account.
b) Receivables / payables (excluding for fixed assets) in foreign
currencies are translated at the exchange rate ruling at the year end
date and the resultant gain or loss, is accounted for in the Profit &
Loss Account.
c) Increase / decrease in foreign currency loan on account of exchange
fluctuation are debited / credited to Profit and Loss Account.
d) Impact of exchange fluctuation is separately disclosed in notes to
accounts.
12) Employee Benefits:
Defined Contribution Plan
Contribution to provident fund and ESIC is accounted on accrual basis.
Defined Benefit Plan:
Gratuity liability is covered under the Gratuity-cum-lnsurance Policy
of Life Insurance Corporation of India (LIC). The present value of the
obligation is determined based on an actuarial valuation. Actuarial
gains and losses arising on such valuation are recognized immediately
in the Profit and Loss Account. The amount funded by the Trust
administered by the Company under the aforesaid Policy, is reduced from
the gross obligation under the defined benefit plan, to recognize the
obligation on a net basis.
Mar 31, 2010
1. Basis of Accounting
The financial statements are prepared under the historical cost
convention on an accrual basis and in accordance with the applicable
accounting standards and other relevant provisions of the Company Act,
1956.
2. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principle (GAAP) requires estimates and assumptions
that affect the reported amounts of income and expenses during the
reported period and the reported amount of assets and liabilities on
the date of the financial statements. Differences, if any, between
actual results and estimates is recognized in the period in which the
results are known.
3. Revenue Recognition
i) Revenue from sale of products is recognized when all the significant
risks and rewards of ownership of the products are passed on to the
customers, which is generally on dispatch of goods. The sales(Net) for
the year are net of inter-unit transactions, excise duty and Value
Added Tax. Accordingly, the purchases are also given net of inter-unit
transactions.
ii) Revenue/Income and Cost/Expenditure are generally accounted on
accruals, as they are earned or incurred, except in case of significant
uncertainties.
iii) Liability for Excise duty and Custom duty payable on stock in
bonded warehouse at the year-end is provided for.
iv) Dividend income is recognized when the right to receive the same is
established.
v) Interest income is accrued over the period of
loan/deposit/investment.
4. Fixed Assets
Fixed Assets are stated at cost (including other expenses related to
acquisition and installation) less accumulated depreciation /
amortization.
5. Impairment of Assets
The carrying amount of assets is reviewed at each Balance Sheet date if
there is any indication of impairment based on internal and external
factors.
An asset is impaired when the carrying amount of the asset exceeds the
recoverable amount. An impairment loss, if any, is charged to the
Profit and Loss Account in the year in which the asset is identified as
impaired. Reversal of impairment loss recognized in prior years, is
recorded when there is an indication that impairment losses recognized
for the asset no longer exists or has decreased.
6. Investments
Long -term investments are stated at cost. Provision is made for
diminution, which are other than temporary, in the value of
Investments.
7. Depreciation
i) Depreciation on Fixed Assets has been provided on straight-line
method at the rates and in the manner specified in schedule XIV to the
Companies Act, 1956, except in the case of leasehold land, which is
amortised our the remaining period of lease.
ii) Assets like mobile phones, telephone instruments, etc. are fully
write off in the year of purchase / acquisition.
8. Valuation of Inventories
Inventories are valued at lower of cost and estimated net realizable
value except stores and spares which are valued at cost. The excise
duty in respect of the closing inventory of finished goods is included
as part of the finished goods. The cost formula used for determination
cost is on the basis of First in First out.
9. Taxes on Income
I. Current Tax Provision
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting year and in accordance with the
provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) eligible for set-off in subsequent years
(as per tax laws), is recognized as on asset by way ot credit to the
Profit and Loss Account only if there is convincing evidence of its
realization. At each Balance Sheet date, the carrying amount of MAT
Credit Entitlement receivable is reviewed to reassure realization.
II. Deferred Tax Provision
Deferred tax asset or liability is recognized for timing differences
between the profit as per financial statements and the profit offered
for income tax, based on tax rates that have been enacted or
substantively enacted at the Balance Sheet date. Deferred tax assets
are recognized only if there is virtual certainty that sufficient
future taxable income will be available, against which they can be
realized.
10. Foreign Currency Transactions
The reporting currency of the Company is Indian Rupee.
(i) Foreign currency transactions during the year are recorded at the
rates of exchange prevailing at the date of transaction-. Exchange
gains or losses realized and arising due to translation of the foreign
currency monetary items outstanding at the year end are accounted in
the profit and loss account.
(ii) Forward Exchange Contracts: In case of transactions covered by
forward exchange contracts, which are not intended for trading or
speculation purposes, premium or discounts are amortized as expense or
income over the life of the contract. Exchange difference on such
contracts is recognized in the profit and loss account in the year in
which the exchange rate changes. Profit or loss arising on cancellation
or renewal of such forward exchange contracts are recognized as income
or as expense for the year.
11. Employee Benefits
Short Term Employee Benefits: All employee benefits payable within
twelve months of rendering the service are recognized in the period in
which the employee renders the related service.
Post Employment / Retirement Benefits: Contribution to Defined
Contribution Plans such as Provident Fund etc., are charged to the
Profit and Loss Account as incurred.
Defined Benefit Plan:
Gratuity: Gratuity liability is covered under the
Gratuity-cum-lnsurance Policy of Life Insurance Corporation of India
(LIC). The present value of the obligation is determined based on an
actuarial valuation. Actuarial gains and losses arising on such
valuation are recognized immediately in the Profit and Loss Account.
The amount funded by the Trust administered by the Company under the
aforesaid Policy, is reduced from the gross obligation under the
defined benefit plan, to recognize the obligation on a net basis.
12. Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed, while
Contingent Assets are neither recognized nor disclosed, in the
financial statements.
13. Segment Reporting
The company operates in two segments namely: I- Moulded Furniture II -
Aluminium Composite Sheet. Segments have been identified and reported
taking into account the nature of the product, the differential risk
and return of the segment, the organizational structure and the
internal financial reporting system.
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