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Accounting Policies of Rubfila International Ltd. Company

Mar 31, 2016

Corporate Information

Rubfila International Limited (RIL) is a Public Limited Company promoted by Rubpro Sdn. Bhd., Malaysia and Kerala State Industrial Development Corporation, with its plant located at New Industrial Development Area, Kanjikode, Palakkad, Kerala. Kerala is the heartland of natural rubber in India. The production facility of RIL is designed to produce both Talc Coated Rubber Thread (TCR) as well as Silicon Coated Rubber Thread (SCR). RIL is the market leader in India in the business of rubber threads and is also a leading exporter of the product from India. RIL produces rubber threads for various applications like apparel, food grade, furniture webbing, bungee jumping, toys, medical netting, diapers, catheter manufacturing etc.

1. Summary of Significant Accounting Policies

1.1 Basis of accounting and preparation of Financial Statements

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are prescribed by Central Government in consultation with and recommendations of the National Financial Reporting Authority, the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, as amended (the ''Rules''), continue to be applicable, accordingly, these financial statements have been prepared to comply in all material aspects with the accounting standards notified under the Rules and other relevant provisions of the Companies Act, 2013.

1.2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements. Any revisions to accounting estimates are recognized prospectively in current and future periods.

1.3 Current - Non Current Classification

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

1.4 Inventories

Raw Materials are valued at the lower of cost on FIFO basis and the net realizable value after providing for obsolescence and other losses, where considered necessary. Cost of inventory comprises of Cost of Purchase, Cost of Conversion and other costs incurred to bring them to their respective present location and condition including octroi and other levies, transit insurance and receiving charges. Finished goods include appropriate proportion of overheads and are valued at lower of the Cost or Net Realizable Value whichever is less.

1.5 Current Assets

Company had advanced Inter Corporate loans to companies for a particular period at a specific rate of interest against security. The amount yet to receive is shown as Inter Corporate Deposits in the Balance Sheet. Interest received from above is recognized in the Statement of Profit and Loss.

1.6 Cash and Cash Equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are term deposits with various banks with an original maturity of less than 90 days.

1.7 Cash flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing, and financing activities of the company are segregated based on available information.

1.8 Fixed Assets & Depreciation

i. Tangible assets are stated at cost of acquisition or construction less accumulated depreciation. All significant costs relating to the acquisition and installation of Tangible assets are capitalized. Subsequent expenditures related to an item of Fixed Asset are added to its book value only if they increase the future benefits from the existing assets beyond its previously assessed standard of performance. Depreciation based on the estimated useful life of each asset as determined by the management and are in line with the useful lives specified by Schedule II to the Companies Act, 2013.Consequent to this, where the Company has changed the estimate of useful life, the carrying amount of the asset as on April 1, 2015 is depreciated over the remaining useful life of the asset. Further where remaining useful life of an asset as on April 1, 2015 was Nil, the carrying amount of the asset after retaining the residual value has been recognized in the opening balance of retained earnings.

Pursuant to Companies Act, 2013 (''the Act'') being effective from 1 April 2014, the Company has aligned the depreciation rates based on the useful lives as specified in Part ''C'' of Schedule II to the Act, except for the following assets, which are being depreciated based on the managements estimate of the useful life of tangible fixed assets. In the case of buildings useful lives are lower than the lives as per Schedule II of the Act:

For plant and machinery involved in the production lines, based on internal technical evaluation, the management believes useful lives as given above best represent the period over which company expects to use these assets.

In accordance with transitional provision relating to depreciation as per Schedule II of the Companies Act, 2013 as mentioned above, the carrying amount of assets is not recognizable on one to one basis and considering the asset holding of the company the impact of the same is immaterial for year ended March 31, 2016 hence not recognized in the opening balance of retained earnings.

ii. Intangible assets are recorded at the consideration paid for acquisition. Intangible assets are amortized over their respective useful lives ranging between three years to seven years.

iii. Loss arising from the retirement of, and gains and losses arising from disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss.

iv. Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realizable value and are classified under other current assets in financial statements. Any expected loss is recognized immediately in the Statement of Profit and Loss.

1.9 Revenue Recognition

Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include Excise duty but exclude Sales Tax and Value Added Tax. Other operating revenues include income from sale of scrap and receipt from government by way of Duty Draw Back and Export Incentive, which is recognized on receipt basis.

1.10 Other Income

Interest Income are accounted on accrual basis.

1.11 Foreign Currency Transactions and Translations

Transactions in foreign currencies entered into by the company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Foreign currency monetary items of the companyand its net investment in non integral foreign operations outstanding at the Balance Sheet are restated at the year-end rates. Exchange differences arising on settlement / restatement of monetary assets and liabilities of the company are recognized as income or expense in the Statement of Profit or Loss under the head Finance Charges.

1.12 Government Grants, Subsidies and Export incentives

Government Grants and subsidies are recognized when there is reasonable assurance that the company will comply with the conditions attached to them and the grants / subsidy will be received. Export benefits are accounted on receipt basis only.

Advance License

The Company had obtained 12 advance licenses for duty free import of Raw Materials. Company has met the export obligation in full against 4 licenses . In respect of the other 8 Licenses export obligation has been partially met to the extent of $ 1,894,976 and the remaining obligation is $4,823,304 which is to be full filled by February 2017 .The liability to the company as on 31.03.2016, being customs duty availed, on this account is Rs.1,49,730,182 and applicable penalties.

1.13 Employee Benefits

Employee benefits include Provident fund, Superannuation fund, Gratuity fund, Medical facilities, ESI and Leave encashment facility.

Defined Contributions Plans

The Company has Defined Contribution Plans for Post-employment benefits in the form of Superannuation Fund for management employees and Provident Fund for non-management employees which is administered by Life Insurance Corporation / Regional Provident Fund Commissioner. In case of Superannuation Fund for management employees and Provident Fund for non-management employees, the Company has no further obligation beyond making the contributions. The Company''s contribution to superannuation fund is considered as defined contribution plans and is charged as an expense as they fall due based on the amount of contribution required to be made.

Defined Benefit Plans

Funded Plan: The Company has defined benefit plans for Post-employment benefits in the form of

Gratuity for all employees, pension for management employees and Provident Fund for management employees which are administered through Company managed Trust / Life Insurance Corporation (LIC). Liability for above defined benefit plans is provided on the basis of valuation, as at the Balance Sheet date, carried out by independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method. Actuarial gains & losses are recognized in the Statement of Profit & Loss in the period in which they occur. Contribution to Provident Fund is also a defined benefit plan. Both employee and the company make monthly contributions to provident fund plan at a specified rate.

1.14 Segment Reporting

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. The company has only one primary segment namely Manufacture and sale of Heat Resistant Latex Rubber Thread. Hence segment reporting for primary segment is not applicable. Secondary Segment is on the basis of Geographical revenues, allocated based on the location of the customer. Geographic segments of the company are disclosed as follows: Revenue outside India, i.e., Sales in Export Market, and Revenue within India, i.e., Sales in Domestic Market.

1.15 Earnings per Share

Basic earnings per share is computed by dividing the profit after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax (including post tax effects of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Since the company doesn''t have any potential Equity shares, Dilute & Basic EPS are the same.

1.16 Taxes on Income

Deferred tax assets and liabilities arising on account of timing difference and which are capable of reversal in subsequent periods, are recognized using tax rates and tax laws that have been enacted or substantively enacted as on Balance Sheet date. The company has worked out deferred tax asset as at 31st March, 2016. Deferred tax asset has been recognized in the financial statements with the certainty that there will be sufficient future taxable income against which such deferred tax asset can be realized.

1.17 Income Tax

Income Tax: Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing and applicable for the relevant assessment year. Deferred income taxes are recognized for the future tax consequences attributable to timing differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized using the tax rates and tax laws that have been enacted or substantively enacted on the balance sheet date. Deferred tax assets arising from unabsorbed depreciation or carry forward of losses under tax laws are recognized only to the extent that there is virtual certainty of realization supported by convincing evidence. Other deferred tax assets are recognized and carried forward to the extent that there is reasonable certainty of realization.

1.18 Minimum Alternate Tax

Minimum Alternate Tax (''MAT'') credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

1.19 Impairment of Asset

The Company tests for impairments at the close of the accounting period if and only if there are indications that suggest a possible reduction in the recoverable value of an asset. If the recoverable value of an Asset, i.e. the net realizable value or the economic value in use of a cash generating unit, is lower than the carrying amount of the asset the difference is provided for as impairment. However, if subsequently the position reverses and the recoverable amount becomes higher than the then carrying value the provision to the extent of the then difference is reversed, but not higher than the amount provided for.

1.20 Provisions and Contingencies

A provision is recognized when there is a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, and in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. A disclosure for a contingent liability is made where there is a possible obligation arising out of past event, 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 or a present obligation arising out of past event 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.

1.21 Job work and joint Management of Agartala unit

RIL has entered into a contract manufacturing facility with a unit at Agratala, India and the financial statements presented include the operating results and also the statement of tangible assets created by the company at its cost at the CM facility and the business assets and liabilities arising out of the contract manufacturing activities, as on 31st March 2016.

The Company has provided Rs.118.24 lakhs against the demand of Rs.231.20 lakhs during the year. In the opinion of the management, the provision made above is considered appropriate for the disputed amounts mentioned above on the ground that there are reasonable chances of successful outcome of appeals filed by the company.


Mar 31, 2014

1.1 Basis of accounting and preparation of Financial Statements The financial Statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The Financial statements have been prepared on accrual basis. The accounting policies adopted in the preparation of financial statements are consistent with those followed in the previous year.

1.2 Use of Estimates

The preparation of financial Statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liability) and the reported income and expenses during the year. The estimates and assumptions used in the financial statements are based upon the Management''s evaluation of relevant facts and circumstances as on the date of financial statements. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between actual results and the estimates are recognized in the periods in which the results are known / materialize.

Current - Non Current Classification All assets and liabilities are classified into current & non- current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

(a) It is expected to be realized in, or is intended for sale or consumption in, the entity''s normal operating cycle;

(b) It is held primarily for the purpose of being traded;

(c) It is expected to be realized within twelve months after balance sheet date; or

(d) It is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after balance sheet date.

All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

(a) It is expected to be settled in the entity''s normal operating cycle;

(b) It is held primarily for the purpose of being traded;

(c) It is due to be settled within twelve months after balance sheet date; or

(d) The company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

Operating Cycle

Operating Cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Based on this, the company has ascertained less than 12 months as its operating cycle and hence 12 months has been considered for the purpose of current - non-current classifications of assets and liabilities.

1.3 Inventories

Raw Materials are valued at the lower of cost on FIFO basis and the net realizable value after providing for obsolescence and other losses, where considered necessary. Cost of inventory comprises of Cost of Purchase, Cost of Conversion and other costs incurred to bring them to their respective present location and condition including octroi and other levies, transit insurance and receiving charges. Finished goods include appropriate proportion of overheads and are valued at lower of the Cost or Net Realizable Value whichever is less.

1.4 Current Assets

Company had advanced Inter Corporate loans to companies for a particular period at a specific rate of interest against security. The amount yet to receive is shown as Inter Corporate Deposits in the Balance Sheet. Interest received from above is recognized in the Statement of Profit and Loss.

1.5 Cash and Cash Equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are term deposits with various banks with an original maturity of less than 90 days.

1.6 Cash flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing, and financing activities of the company are segregated based on available information.

1.7 Fixed Assets and Intangible Asset

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost includes purchase consideration, all incidental expenses and transportation cost till commencement of commercial production and other directly attributable costs incurred to bring an Asset to its working condition for its intended use. Subsequent expenditure relating to Fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such asset. Intangible asset comprises of Computer Software (ERP) and it is carried at cost less amortization.

1.8 Depreciation and Amortization

Depreciation is provided on Straight Line Method (SLM) at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 on assets which have been installed and put to use during the year. Intangible asset, ie, capitalized Computer Software costs are amortized over a period of three years.

1.9 Revenue Recognition

Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include Excise duty but exclude Sales Tax and Value Added Tax. Other operating revenues include income from sale of scrap and receipt from government by way of Duty Draw Back and Export Incentive, which is recognized on receipt basis.

1.10 Other Income

Interest Income and Lease Rental Income are accounted on accrual basis.

1.11 Foreign Currency Transactions and Translations

Transactions in foreign currencies entered into by the company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Foreign currency monetary items of the company and its net investment in non integral foreign operations outstanding at the Balance Sheet are restated at the year-end rates. Exchange differences arising on settlement / restatement of monetary assets and liabilities of the company are recognized as income or expense in the Statement of Profit or Loss under the head Finance Charges.

1.12 Government Grants, Subsidies and Export incentives

GovernmentGrants and subsidies are recognized when there is reasonable assurance that the company will comply with the conditions attached to them and the grants / subsidy will be received. Export benefits are accounted on receipt basis only.

Advance License

The Company had obtained 5 advance licenses for duty free import of Raw Materials. Company has met export obligation in full for $403,169 against License No. 1402 dt. 16/08/2013. In respect of License No. 1475 dt. 22/08/2013 export obligation has been partially met to the extent of $320,791 and the remaining obligation is $203,637. Export obligation against License No. 6370 dt. 08/01/2014, No. 6996 dt. 19/02/2014 and No. 7276 dt. 11/03/2014 are still pending and has time up to June 2015, July 2015 and August 2015 respectively to fulfil the obligation. The Liability to the company as on 31/03/2014, being customs duty concession availed, on this account is Rs. 7,46,31,042 and applicable penalties. The documents for redemption are under process for License No. 1402 in respect of which export obligation has been met fully.

EPCG Scheme

The company availed benefit under EPCG Scheme and 3 Licenses were obtained with Nos. 2299 dt. 27/08/2012, 2377 dt. 18/01/2013 and 2501 dt. 23/08/2013 with a total export obligation of $446,520. Export obligation against License No. 2299 dt 27/08/2013 and License No. 2377 dt. 18/01/2013 has been fully met by the company. The obligation against third License (No. 2501 dt. 23/08/2013) is pending and has time upto the year 2020 to meet the obligation. The liability to the company as on 31/03/2014, being customs duty saved, on this account is Rs. 1,01,20,650/- and applicable penalities.

1.13 Employee Benefits

Employee benefits include Provident fund, Superannuation fund, Gratuity fund, Medical facilities, ESI and Leave encashment facility.

Defined Contributions Plans

The Company''s contribution to superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defined Benefit Plans

For defined benefit plans in the form of gratuity fund the cost of providing benefits is determined using the Projected Unit Credit Method, with Actuarial valuations being carried out at each Balance Sheet date. Actuarial gains & losses are recognized in the Statement of Profit & Loss in the period in which they occur. Contribution to Provident Fund is also a defined benefit plan. Both employee and the company make monthly contributions to provident fund plan at a specified rate.

1.14 Segment Reporting

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. The company has only one primary segment namely Manufacture and sale of Heat Resistant Latex Rubber Thread. Hence segment reporting for primary segment is not applicable. Secondary Segment is on the basis of Geographical revenues, allocated based on the location of the customer. Geographic segments of the company are disclosed as follows: Revenue outside India, i.e., Sales in Export Market, and Revenue within India, i.e., Sales in Domestic Market.

1.15 Leases

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as Operating Leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight line basis.

1.16 Earnings per Share

Basic earnings per share is computed by dividing the profit after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax (including post tax effects of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Since the company doesn''t have any potential Equity shares, Dilute & Basic EPS are the same.

1.17 Taxes on Income

In view of unabsorbed depreciation available for set off, the company does not envisage any tax liabilities under normal tax computation. However, the company is liable to pay "Minimum Alternate Tax (MAT)" on its book profits as computed under provisions of the Income Tax Act, 1961 which is recognized as a Current Tax in the Statement of Profit and Loss. The MAT Credit available to be carried forward for set off against normal tax liability under the provisions of the Income Tax Act, 1961 is recognized as an asset to the extent that there is a convincing evidence that the company will pay normal income tax during the specified period for which such MAT credit can be carried forward and set off in accordance with the recommendations contained in the Guidance Note issued by the Institute of Chartered Accountants of India. Such asset is created by way of a credit to the Statement of Profit and Loss account and is shown as MAT Credit Entitlement. Deferred tax assets and liabilities arising on account of timing difference and which are capable of reversal in subsequent periods, are recognized using tax rates and tax laws that have been enacted or substantively enacted as on Balance Sheet date. The company has worked out deferred tax asset as at 31st March, 2014. Deferred tax asset has been recognized in the financial statements with the certainty that there will be sufficient future taxable income against which such deferred tax asset can be realized.

1.18 Provisions and Contingencies

A provision is recognized if, as a result of past event, a company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligations at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provisions or disclosure is made.


Mar 31, 2013

1.1 Basis of accounting and preparation of Financial Statements The f financial Statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

Financial statements have been prepared on accrual basis. T he accounting policies adopted in the preparation of financial statements are consistent with those followed in the previous year.

1 .2 Use of Estimates

The preparation of financial Statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liability) and the reported income and expenses during the year. The estimates and assumptions used in the financial statements are based upon the Management s evaluation of relevant facts and circumstances as on the date of financial statements. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between actual results and the estimates are recognized in the periods in which the results are known materialize.

Current — Non Current Classification

All assets and liabilities are classified into current & non" current.

Assets

An asset is classified as current when it satisfies any of the follow wing criteria

(a) It is expected to be realized in, or is intended for sale or consu mption in, the entity s normal operating eye

(b) It is held primarily for the purpose of being traded

(c) It is expected to be realized within twelve months after balance sheet date) or

(d) It is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after balance sheet date.

All other assets are classified as noncurrent.

Liabilities

A liability is classified as current when it satisfies any of the fol lowing criteria

(a) It is expected to be settled in, the entity''s normal operating cycle

(b) It is held primarily for the purpose of being traded

(c) It is due to be settled within twelve months after balance sheet date or

(d) The cornpany does not have an unconditional right to defer settlement of the liability for at least 12nths after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruct ments do not affect its classification.

All other liabilities are classified as noncurrent.

Operating Cycle

operating Cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Based on this, the company has ascertained less than 12 months as its operating cycle and hence 12 months has been considered for the purpose of current — non "current classifications of assets and liabilities.

1.3 Inventories

Raw Materia Is are valued at the lower of cost on FIFO basis and the net realizable value after providing for obsolescence and other losses, where considered necessary. Cost of inventory comprises of Cost of Purchase, Cost of Conversion and other costs incurred to bring them to their respective present location and condition including control and other levies, transit insurance and receiving charges. Finished goods include appropriate proportion of overheads and are valued at lower of the Cost or Net Realizable Value whichever is less.

1.4 Current Assets

Company had advanced Inter Corporate loans to companies for a particular period at a specific rate of interest against security. The amount yet to receive is shown as Inter Corporate Deposits in the Balance Sheet. Interest received from above is recognized in the Statement of Profit and Loss.

1.5 Cash and Cash Equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are term deposits with various banks with an original maturity of less than 90 days.

1.6 Cash flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of noncash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing, and financing activities of the company are segregated based on available information.

1.7 Fixed Assets and Intangible Asset

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost includes purchase consideration, all incidental expenses and transportation cost till commencement of commercial production and other directly attributable costs incurred to bring an Asset to its working condition for its intended use. Subsequent expenditure relating to Fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such asset. Intangible asset comprises of Computer Software (ERP) and it is carried at cost Less amortization.

The costs of assets not ready for use as at the balance sheet date are disclosed under Capita Work" In" Progress.

1 .8 Depreciation and Amortization

Depreciation is provided on Straight Line Method (SLM) at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 on assets which have been installed and put to use during the year. Intangible asset, ie, capitalized Computer Software costs are amortized over a period of three years.

1.9 Revenue Recognition

Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include Excise duty but exclude Sales Tax and Value Added Tax. Other operating revenues include income from sale of scrap and receipt from government by way of Duty Draw Back, which is recognized on receipt basis.

1.10 Other Income

Interest Income and Lease Rental Income are accounted on accrual basis.

1.1 Foreign Currency Transactions and Translations

Transactions in foreign currencies entered into by the company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Foreign currency monetary items of the company and its net investment in non integral foreign operations outstanding at the Balance Sheet are restated at the year'' end rates. Exchange differences arising on settlement/restatement of monetary assets and liabilities of the company are recognized as income or expense in the Statement of Profit or Loss under the head Finance Charges.

1.12 Government Grants, Subsidies and Export incentives Government Grants and subsidies are recognized when there is reasonable assurance that the company wi11 com ply with the conditions attached to them and the grants / subsidy will be received. The Company has availed benefit under EPCG scheme and there is an export obligation of $278,563/- to be completed by 2018. Export benefits are accounted on receipt basis only.

1.13 Employee Benefits

Employees benefits include Provident fund, Superannuation fund, Gratuity fund, Medical facilities, ESI and Leave encashment facility.

Defined Contributions Plans

The Company''s contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fa11 due based on the amount of contribution required to be made.

Defined Benefit Plans

For defined benefit plans in the form of gratuity fund the cost of providing benefits is determined using the Projected Unit Credit Meth od, with Actuarial valuations being carried out at each Balance Sheet date. Actuarial gains & losses are recognized in the Statement of Profit & Loss in the period in which they occur. Contribution to Provident Fund is also a defined benefit plan. Both employee and the company make monthly contributions to provident fund plan at a specified rate.

1.14 Segment Reporting

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. The company has only one primary segment namely Manufacture and sale of Heat Resistant Latex Rubber Thread. Hence segment reporting for primary segment is not a applicable. Secondary Segment is on the basis of Geographical revenues, allocated based on the location of the customer. Geographic segments of the company are disclosed as follows! Revenue outside India, i.e., Sales in Export Market, and Revenue within India, i.e., Sales in Domestic Market.

1.15 Leases

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as Operating Leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight line basis.

1.16 Earnings per Share

Basic earnings per share is computed by dividing the profit after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax (including post tax effects of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Since the company doesn''t have any potential Equity shares,

Dilute & Basic EPS are the same.

1.17 Taxes on Income

In view of unabsorbed business loss and depreciation allowances available for set off, the company does not envisage any tax liabilities under normal tax computation. However, the company is liable to pay "Minimum Alternate Tax (MAT)" on its book profits as computed under provisions of the Income Tax Act, 1961 which is recognized as a Current Tax in the Statement of Profit and Loss. Tm„ MAT Credit available to be carried forward for set off against normal tax liability under the provisions of the Income Tax Act, 1961 is recognized as an asset to the extent that there is a convincing evidence that the company will pay normal income tax during the specified period for which such MAT credit can be carried forward and set off in accordance with the recommendations contained in the Guidance Note issued by the Institute of Chartered Accountants of India. Such asset is created by way of a credit to the Statement of Profit and Loss account and is shown as MAT Credit Entitlement.

Deferred tax assets and liabilities arising on account of timing difference and which are capable of reversal in subsequent periods, are recognized using tax rates and tax laws that have been enacted or substantively enacted as on Balance Sheet date. The company has worked out deferred tax asset as at 31st March, 201 3. Deferred tax asset has been recognized in the financial statements with the certainty that there will be sufficient future taxable income against which such d deferred tax asset can be realized .

1.18 Provisions and Contingencies

A provision is recognized if, as a result of past event, a company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligations at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provisions or disclosure is made.


Mar 31, 2012

1.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

Current - Non Current Classification

All assets and liabilities are classified into current and

non-current

Assets

An asset is classified as current when it satisfies any of the following criteria :

a) it is expected to be realized in, or is intended for sale or consumption in, the entity's normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is expected to be realized within twelve months after the balance sheet date; or

d) it is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the balance sheet date.

Current assets include the current portion of non- current financial assets.

All other assets are classified as non-current. Liabilities

A liability is classified as current when it satisfies any of the following criteria:

a) it is expected to be settled in, the entity's normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is due to be settled within twelve months after the balance sheet date; or

d) The company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Current liabilities include current portion of non- current financial liabilities.

All other liabilities are classified as non-current. Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Based on this, the Company has ascertained less than 12 months as its operating cycle and hence 12 months has been considered for the purpose of current - non-current classification of assets and liabilities.

1.3 Inventories

Raw Materials are valued at the lower of cost on FIFO basis and the net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of consumption, including octopi and other levies, transit insurance and receiving charges. Finished goods include appropriate proportion of overheads and are valued at Lower of the Cost or Net Realizable Value whichever is less.

1.4 Current Assets

Company had made Short term investments in shares of two companies, namely, UTV Software Communications and Carol Information Services. The Shares were surrendered during the financial year. Realizable value on sale of shares is shown as Asset as its realization falls due only after 31st March, 2012. Gain from sale of shares is shown in the statement of Profit & Loss as income. Company had advanced Inter Corporate loans to companies for a particular period at a specific rate of interest against security. The amount yet to receive is shown as Inter Corporate Deposits in the Balance sheet. Interest received from the above is recognized in the Statement of Profit and Loss.

1.5 Cash and cash equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are term deposits with various banks with an original maturity of less than 90 days.

1.6 Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.7 Fixed assets and Intangible Assets

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes all incidental expenses and transportation cost incurred up to that date for bringing the asset to its working condition for the intended use. Subsequent expenditure relating to fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such asset. Intangible Asset comprise of Computer Software (ERP) and it is carried at cost less amortization.

1.8 Depreciation and amortization Depreciation has been provided on the straight- line method as per the rates prescribed in Schedule XIV to the Companies Act, 1956 on assets which have been installed and put to use during the year. Intangible assets are amortized over their estimated useful life as follows :

During the year Company had purchased an ERP Software and has been capitalized as Computer Software. Since it is an Intangible Asset, Company has decided to amortize the cost incurred for Software development over a period of 3 years. Hence depreciation has been provided on Straight Line Method at a rate of 33% in order to amortize the asset over 3 years. The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.

1.9 Revenue recognition

Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax. Other operating revenues include income from sale of scrap and receipt from government by way of Duty Draw Back.

1.10 Other income

Interest income and Lease Rental Income are accounted on accrual basis. Income from export entitlement benefits is accounted as and when the certainty of entitlement is determined. Other Income also includes gain from sale of fixed asset and sale of investments in shares.

1.11 Foreign currency transactions and translations Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Foreign currency monetary items (other than derivative contracts) of the Company and its net investment in non-integral foreign operations outstanding at the Balance Sheet date are restated at the year-end rates. Exchange differences on settlement / restatement of monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.

1.12 Government grants, subsidies and export incentives

Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received. The Company had obtained 4 advance licenses for duty free import of raw material.

Company has met the export obligation in full for Rs. 55,00,047/- against License No. 4088; Rs. 11,888,042 against License No. 4241. Necessary applications for redemption of these licenses have been made and are awaiting approval of JDGFT. Export obligations in respect of the Third License No. 4490 along with the fourth, with No. 4760 have also been fully met for Rs. 26,662,385. The Company is in the process of submitting documents for redemption of licenses with JDGFT. Export benefits are accounted on receipt basis only.

1.13 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund, Medical facilities, ESI and Leave encashment facility. Defined contribution plans The Company's contribution superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made. Defined benefit plans

For defined benefit plans in the form of gratuity fund the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Contribution to Provident Fund is also a defined benefit plan. Both employee and the company make monthly contributions to provident fund plan at the specified rate.

1.14 Segment reporting

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. The Company has only one primary segment namely Manufacture and sale of Heat Resistant Latex rubber Thread. Hence segment reporting for primary segment is not applicable. Secondary Segment is on the basis of Geographical revenues, allocated based on the location of the customer. Geographic segments of the Company are disclosed as follows. Revenue outside India, i.e., Sales in Export Market to Countries in Asia, Africa and Europe, and Revenue within India, i.e., Sales in Domestic Market.

1.15 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis.

1.16 Earnings per share

Basic earnings per share is computed by dividing the profit after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Since the company doesn't have any potential Equity shares, Dilute & Basic EPS are the same

1.17 Taxes on income

In view of exemption from the purview of the provisions of Sec 115 JB of the Income Tax Act, 1961, being a Sick Industrial Company registered with BIFR, the entire book profit is exempt from tax and hence the company does not envisage any tax liability for the year. The Company has worked out deferred tax liabilities/assets as at 31st March 2012. In view of unclaimed allowances, unabsorbed depreciation and business losses under tax laws; net result of computation is net deferred tax assets. However, as a matter of prudence deferred tax assets has not been recognized.

1.18 Provisions and contingencies

A provision is recognized if, as a result of past event, a Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provisions or disclosure is made.


Mar 31, 2010

1. Basis of Accounting

The Company follows accrual method of - accounting. The Balance Sheet and Profit and Loss Account of the Company are in accordance with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956.

2. Income Recognition

2.1 Sales are recognized upon delivery of products at net of excise duty and sales tax..

2.2 Incomes from export entitlement benefits are accounted as and when the certainty of entitlement is determined.

2.3 Other Income is recognized when no significant uncertainty as to its determination or realization exists.

3. Fixed Assets & Depreciation

3.1 Expenditure that are of capital nature are capitalized at a cost that comprises of purchase price (net of Cenvat, rebate and discounts), import duties, levies and any directly attributable cost of bringing the asset to its working condition for the intended use.

3.2 Depreciation has been provided on Straight Line Method in accordance with the provisions of Schedule XIV of the Companies Act, 1956, on assets which have been installed and put to use during the year.

3.3 An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

4. Inventories

4.1 Raw Materials are valued at cost on FIFO basis, or net realizable value whichever is less.

4.2 Finished Goods are Valued at Lower of the Cost or net realizable value.

5. Exchange Fluctuation

5.1 Foreign Currency transactions are accounted at the exchange rates prevailing at the date of the transaction.

5.2 Gains and Losses resulting from the settlement of Foreign Currency transaction and from the translation of monetary assets and liabilities denominated in Foreign Currencies at year end rate, are recognized in the Profit and Loss account.

6. Miscellaneous Expenditure

Product Development expense are being written off equally over a period often years.

7. Retirement Benefits

7.1 Provident Fund remittances to the government are charged against revenue, each year on accrual basis.

7.2 Gratuity liability is determined on the basis of actuarial valuation obtained at the year end from the Life Insurance Corporation of India under the Group Gratuity Cash Accumulation Scheme

7.3 Leave encashment benefits are charged to Profit and Loss Account on the basis of actual estimation basis as at the year end.

B. Notes on Accounts

1. Previous year figures have been regrouped and reclassified wherever necessary to make them comparable.

2. Figures have been rounded off to the nearest lacs.

3. Accounting for Taxes as Income

a) In view of exemption from the preview of the provisions of Sec115 JB of the Income Tax Act, 1961, being a Sick Industrial Company registered with BIFR, the entire book profit is exempt from tax and hence the company does not envisage any tax liability for the year.

b) The Company has worked out deferred tax liabilities/assets as at 31st March 2010. In view of unclaimed allowances, unabsorbed depreciation and business losses under tax laws, net result of computation is net deferred tax assets. However, as a matter of prudence deferred tax assets have been recognized only to the extent there is deferred tax liability.

d) The Company has not created the deferred tax assets on unabsorbed business loss and balance of unabsorbed depreciation to the tune of Rs. 10.46 Crores.

5. In the opinion of Board of Directors, Current Assets, Loans and Advances, have at least the value as stated in the Balance Sheet, if realized in the ordinary course of the business.

6. Debtors, Creditors and Items included under other liabilities are subject to confirmation.

7. The Company have obtained 3 advance licenses for duty free import of raw material. Company have fully met the export obligation in full for Rs.55,00,047/- against Lie. No.4008 and Rs.11,888,042 against Lie No.4241. The Third License No.4490 have been utlised partially and export obi igation to the extend 86,88,391 has been completed. The liability to the company as on 31.03.10 on this is the customs duty concession availed to the extend of Rs. 13,80,740/- and applicable penalties. This has been subsequently fulfilled. The documents for redemption are in process for the first two licenses

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