Mar 31, 2018
1. FIRST-TIME ADOPTION OF IND AS:
These are the Companyâs first financial statements prepared in accordance with Ind AS.
The Company has adopted Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate Affairs with effect from 1st April, 2017, with a transition date of 1st April, 2016. Ind AS 101 - First time adoption of Indian Accounting Standards requires that all Ind AS''s and interpretations that are issued an effective for the first Ind AS financial statements which is for the year ended 31st March, 2018 for the Company, be applied retrospectively and consistently for all financial years presented. Set out below are the Ind AS 101 optional exemptions availed as applicable and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A. Optional Exemptions availed:
(a) Deemed Cost
The Company has elected to continue with the carrying value for all of its property, plant and equipment and Intangible assets as recognized in the financial statement as at 31.03.2016, measured as per the previous GAAP and use that as its deemed cost as at the transition date.
(b) Investments in subsidiary
The Company has elected to continue with the carrying amount of investment as recognized in the financial statement as at 31.03.2016, measured as per the previous GAAP and used that as its deemed cost as at the transition date.
B. Applicable Mandatory Exceptions
(a) Estimates
An entityâs estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies).
Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
(i) Impairment of financial assets based on expected credit loss model.
(b) Derecognition of financial assets and financial liabilities
Ind AS 101 requires a first time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows the first time adopter to apply the derecognition requirement in Ind AS 109 retrospectively from the date to the entities choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities to de-recognized as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provision of Ind AS 109 prospectively from the date of transition to Ind AS.
(c) Classification and measurement of financial assets
As required under Ind AS 101 the Company has assessed the classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Where practicable, measurement of financial assets accounted at amortized cost has been done retrospectively.
(d) Impairment of Financial Assets
Ind AS 101 requires an entity to apply the Ind AS requirements retrospectively if it is practicable without undue cost and effort to determine the credit risk that debt financial instruments where initially recognized. The company has measured impairment losses on financial assets as on the date of transition i.e. 1st April, 2016 in view of cost and effort.
C. Transition to Ind AS - Reconciliations
The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS as required under Ind AS 101:
(i) Reconciliation of Balance sheet as at 1st April, 2016 (Transition Date);
(ii) Reconciliation of Balance sheet as at 31st March, 2017;
(iii) Reconciliation of Total Comprehensive Income for the year ended 31st March, 2017
(iv) Reconciliation of Total Equity as at 1st April, 2016 and as at 31st March, 2017;
(v) Adjustments to Cash Flow Statements as at 31st March, 2017
The presentation requirements under previous GAAP differs from Ind AS, and hence, previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The re-grouped previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with previous GAAP.
(v) Adjustments to the Statement of Cash Flows as at 31st March, 2017
The Ind AS adjustments are non-cash adjustments. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31st March, 2017 as compared with the previous GAAP
Notes to reconciliations:-A Financial Guarantee
Under previous GAAP, financial guarantee obligation given to subsidiary was only disclosed and not recognized Under Ind AS, the company recognises the same as income and obligation B Trade receivables
"Under previous GAAP, the Company had recognized provision on trade receivables based on the expectation of the Company. Under Ind AS the Company provides loss allowance on receivables based on the Expected Credit Loss (ECL) model which is measured following the ""simplified approach"" at an amount equal to the lifetime ECL at each reporting date."
C Interest free loan to subsidiary
Under previous GAAP, there was no treatment of interest received on interest free loan given to subsidiary company
Under Ind AS, loan given to subsidiary has been fair valued and interest is recognized on EIR basis
D Remeasurement of defined benefit liabilities
"Under previous GAAP, actuarial gains and losses were recognized in profit or loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability/asset which is recognized in other comprehensive income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of profit or loss."
E Deferred Tax
"Under previous GAAP, deferred tax accounting was done using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Under Ind AS, accounting of deferred taxes is done using the Balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base.â
For detailed working refer note 13 in the financial statement
F Other Comprehensive Income
"Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS specified items of income, expense, gains or losses are required to be presented in other comprehensive income. â
2. Earnings per share (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year.
3. Financial instruments A. Capital Management:
"The Companyâs policy is to maintain a strong capital base so as to ensure that the Company is able to continue as going concern to sustain future development of the business. The capital structure of the Company is based on managementâs judgment of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market conditions.â
Its guiding principles:
i) Maintenance of financial strength to ensure the highest ratings;
ii) Ensure financial flexibility and diversify sources at financing;
iii) Manage Company exposure in forex to mitigate risks to earnings;
iv) Leverage optimally in order to maximum shareholders returns while maintaining strength and flexibility of the balance sheet.
The policy is also adjusted based on underlying macro-economic factors affecting business environment, financial and market conditions.
The Company monitors capital on the basis of the following debt equity ratio:
The fair values of the financial assets and liabilities are defined as 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. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended 31st March, 2017.
The financial instruments are categorized into three levels based on the inputs used to arrive at fair value measurements as described below:
i) Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
ii) Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. In the case of Derivative contracts, the Company has valued the same using the forward exchange rate as at the reporting date.
iii) Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
C Calculation of fair values:
Financial assets and liabilities measured at fair value as at Balance Sheet date:
Other financial assets and liabilities:
- Cash and cash equivalents , trade receivables, other financial assets , trade payables, and other financial liabilities have fair values that approximate to their carrying amounts due to their short-term nature.
- Loans have fair values that approximate to their carrying amounts as it is based on the net present value of the anticipated future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
4. Financial risk management Risk management framework
The Companyâs financial risk management is an integral part of how to plan and execute its business strategies. The Companyâs business activities are exposed to a variety of financial risks, namely liquidity risk, market risks, commodity risk and credit risk. The Companyâs senior management has the overall responsibility for establishing and governing the Companyâs risk management framework. The Companyâs risk management policies are established to identify and analyze the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
The Company has exposure to the following risks arising from financial instruments:
A) Credit risk;
B) Liquidity risk;
C) Market risk; and
D) Interest rate risk
E) Commodity Risk A Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations. Trade and other receivables
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer and including the default risk of the industry, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
Other than trade and other receivables, the Company has no other financial assets that are past due but not impaired.
"The Company uses an allowance matrix to measure the expected credit losses of trade receivables. The loss rates are computed using a ''roll rate'' method based on the probability of receivable progressing through successive stages of delinquency to write off. â
The following table provides information about the exposure to credit risk and ECLs for trade receivables:
Cash and cash equivalents
The Company held cash and cash equivalents of Rs. 15,31,177 as at 31st March, 2018 (31st March, 2017: Rs. Rs.11,69,915, 1st April, 2016 : Rs.10,75,681). The cash and cash equivalents are held with banks.
B Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time, or at a reasonable price.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Company''s short, medium and long term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities , by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
Exposure to liquidity risk
The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows as at the Balance Sheet date:
Guarantees issued by the Company on behalf of subsidiary are with respect to borrowings raised by the respective entity. These amounts will be payable on default by the concerned entity. As of the reporting date, the subsidiary has not defaulted and hence, the Company does not have any present obligation to third parties in relation to such guarantees.
C Market risk
"Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Companyâs income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return."
The Company operates internationally and portion of the business is transacted in several currencies. Consequently the Company is exposed to foreign exchange risk through its sales and services in overseas and purchases from overseas suppliers in various foreign currencies. Exports of the company are significantly lower in comparison to its imports.
The Company holds derivative financial instruments such as foreign exchange forward contract to mitigate the risk of changes in exchange rates on foreign currency exposure. The exchange rate between rupee and foreign currency has changed substantially in recent years and may fluctuate substantially in future. Consequently, the results of the Company''s operation are adversely affected as the rupee appreciates/ depreciates against these currencies.
The carrying amounts of the Companyâs foreign currency dominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
Foreign currency sensitivity analysis
The Company is mainly exposed to the currency : USD, EUR
The following table details the Companyâs sensitivity to a 5% increase and decrease in the Rupee against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents managementâs assessment of the reasonably possible change in foreign exchange rates. This is mainly attributable to the net exposure outstanding on receivables or payables in the Company at the end of the reporting period. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% charge in foreign currency rate. A positive number below indicates an increase in the profit or equity where the Rupee strengthens 5% against the relevant currency. For a 5% weakening of the Rupee against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be negative.
The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign exchange rate variations. The counter party is generally a bank. These contracts are for a period between one day and one year. The above sensitivity does not include the impact of foreign currency forward contracts which largely mitigate the risk.
D Interest rate risk
There is no material interest risk relating to the Companyâs financial liabilities which are detailed in note 11 and 14.1 E Commodity Risk
Principal Raw Material for Companyâs products is variety of plastic polymers which are Derivatives of Crude Oil. Company sources its raw material requirement primarily from US and Europe. Domestic market prices are also generally remains in sync with international market price scenario.
Volatility in Crude Oil prices, Currency fluctuation of Rupee vis-a-vis other prominent currencies coupled with demand-supply scenario in the world market affect the effective price and availability of polymers for the Company. Company effectively manages with availability of material as well as price volatility through:
1. Widening its sourcing base
2. Appropriate contracts and commitments
3. Well planned procurement & inventory strategy
30 Employee Benefits
[A] Defined contribution plans:
The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs.33,67,842 (As at 31st March, 2017: Rs.31,72,950 ; As at 1st April, 2016: Rs.29,37,815) for Provident Fund contributions and Rs.24,10,166 (As at 31st March, 2017: Rs. 22,57,061; As at 1st April, 2016: Rs.20,24,683) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
[B] Defined benefit plan:
The Employees'' gratuity fund scheme managed by LIC of India . is a defined benefit plan. The present value of obligation for gratuity and leave encashment is determined on the basis of Actuarial Valuation Report made at the year end.
i) On normal retirement / early retirement / withdrawal / resignation: As per the provisions of Payment of Gratuity Act, 1972 with vesting period of 5 years of service.
ii) On death in service: As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.
These plans typically expose the Company to acturial risks such as : investment risk , interest risk , longevity risk and salary risk.
Investment risk:
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. If the return on plan asset is below this rate, it will create plan deficit.
Interest risk:
A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the plan assets.
Longevity risk:
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.
Salary risk:
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
The following table sets out the status of the gratuity plan and the amounts recognized in the Company''s financial statements as at 31st March, 2018.
Assumption:
1. Analysis of Defined Benefit Obligation
The number of members under the scheme have increased by 4.95%. Similarly the total salary increased by 7.69% during the accounting period. The resultant liability at the end of the period over the beginning of the period has decreased by 34.86%.
2. Expected rate of return basis
The scheme funds are invested with Trustee of the Company which is based on rate of return declared by fund managers.
3. Description of Plan Assets
100 % of the Plan Asset is entrusted to trustees of the Company under their Group Gratuity Scheme.
j) Sensitivity analysis
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognized in the Companyâs financial statements as at balance sheet date:
k) General Assumptions
(i) Leave Policy:
Leave balance as at the valuation date and each subsequent year following the valuation date to the extent not availed by the employee accumulated up to 31 March 2018 is available for encashment on separation from the company upto a maximum of 90 days
(ii) The assumption of future salary increases, considered in actuarial valuations, takes account of inflation, seniority, promotion, supply and demand and other relevant factors.
(iii) Liability on account of long term absences has been actuarially valued as per Projected Unit Credit Method.
(iv) Short term compensated absences have been provided on actual basis.
5. Related Party Transactions
Disclosure of transactions with Related Parties, as required by Ind AS 24 "Relate Party Disclosures" is given below :
*As the liabilities for defined benefit plans are provided on actuarial basis for the Group as a whole, the amounts pertaining to Key Management Personnel are not included.
Footnotes:
(i) All Related party transactions entered during the year were on ordinary course of business and are on arm''s length basis.
(ii) Key Managerial Personnel are entitled to post-employment benefits and other long term employee benefits recognized as per Ind AS 19 - âEmployee Benefitsâ in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is not included above.
6. Segment information :
The Company''s sole business segment is Plastic Films and all activities are incidental to this sole business segment. Given this fact and that the Company services its domestic and export markets from India only, the financial statements reflect the information required by Ind AS 108 âOperating Segmentsâ for the sole business segment of Plastic Films. The whole of the business assets are situated in India.
7. Disclosure As per Regulation 34(3) and 53(f) of the SEBI (Listing obligation and Disclosure requirements) Regulations,2015 Name of Subsidiary Company : Synergy Films Private Limited
8.The Company has imported Plant and Machineries under Export Promotion Capital Goods Scheme (EPCG) without payment of Custom Duty. In the event of non-fulfillment of export obligations as specified, Company may be held liable to pay custom duty of Rs.32.21 lacs (Previous year Rs.65.65 lacs) in terms of the said Scheme. As on 31st March 2018 Company is not in any default under the Scheme.
9. The Company prior to it being listed had issued Bonus shares on 29th June, 1994 for Rs. 10 Million (10,00,000 equity shares of Rs. 10/- each) by capitalizing part of its revaluation reserve. Accordingly, the paid up equity share capital of the company stands increased by Rs. 10 Million and the revaluation reserve stands reduced by that amount. The issue of bonus shares as aforesaid is contrary to the circular issued by the Department of Company Affairs issued in September, 1994 and the recommendations of the Institute of Chartered Accountants of India issued in November, 1994. However, the Hon''ble Supreme Court in the recent decision in the case of Bhagwati Developers Vs Peerless General Finance & Investment Co. & others (2005) Comp LJ 377 (SC) has held that there is no specific bar under the Companies Act for issue of Bonus Shares out of Revaluation Reserve and that the Department''s Communiqué was advisory in nature, without any mandatory effect. The Management is therefore of the opinion that both according to the accounting principles and provisions of Company Law, the Company was justified in capitalizing its Revaluation Reserve.
10. Leases Operating lease:
The Company procures go down on lease under operating leases. These rentals recognized in the Statement of Profit and Loss Account for the year is Rs.32,000 (31st March, 2017: Rs. Nil). The future minimum lease payments and payment profile of non-cancellable operating leases are as under:
11. Event occurring after Balance Sheet date:
The Board of Directors, at their meeting held on May 28, 2018, have proposed a dividend of Rs. 1.50 Per equity share for the financial year ended March 31, 2018. The proposal is subject to the approval of shareholders at the ensuing Annual General Meeting , and if approved, would result in a cash outflow of approximately Rs. 54,16,094/-, including Dividend Distribution Tax. ( Previous Year Rs.1.20 pre Equity Share resulting in to total Outgo of Rs. 43,32,874/- Including Dividend Distribution Tax)
12. Authorization of Financial Statements:
The Financial Statements were authorized for issue in accordance with a resolution of the Board of Directors in its meeting held on 28th May, 2018.
Mar 31, 2015
1. Corporate Information
Ecoplast Limited is Public Company domiciled in India and incorporated
under the provisions of the Companies Act, 1956. Its shares are listed
on Bombay Stock Exchange in India. The Company is engaged in the
business of manufacturing, processing and selling of Co-extruded
Plastic Film for packaging and industrial applications. The principal
place of business of the company is at Abrama-Valsad. The Company
caters to both domestic and international markets. It has various
certifications like ISO 9001, ISO 14001 and ISO 22000 registration for
products thereby complying with globally accepted quality standards.
NOTE NO. 2 : DISCLOSURE IN ACCOUNTANCY WITH REVISED AS-13 ON
"ACCOUNTING FOR INVESTMENTS"
In respect of Investment of Rs. 153.72 Lacs (Previous Year : Rs. 153.72
Lacs) made in Subsidiary Company Synergy Films Pvt. Ltd. the
accumulated losses as per audited accounts as at 31st March, 2015
amounts to Rs. 316.92 Lacs (Previous Year : Rs. 326.41 Lacs)
representing the erosion of the entire net worth of the Subsidiary
company due to operational losses. The company has, at the close of the
year, assessed the carrying value of its investments and based on such
assessment, the company has not made any provision during the year
(Previous Year - NIL) for permanent diminution in the value of its
investments in Synergy Films Pvt. Ltd.
NOTE NO. 3 DISCLOSURES UNDER ACCOUTING STANDARD AS15
Particulars
Employee benefit plans
Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to defined contribution plans for qualifying employees. Under the
Schemes, the Company is required to contribute a specified percentage
of the payroll costs to fund the benefits. The Company recognised Rs.
24,20,399 (Year ended 31 March, 2014 Rs. 20,50,348) for Provident Fund
contributions and Rs. 18,10,660 (Year ended 31 March, 2014 Rs.
15,86,066) for Superannuation Fund contributions in the Statement of
Profit and Loss. The contributions payable to these plans by the
Company are at rates specified in the rules of the schemes.
NOTE NO. 4 DISCLOSURES UNDER ACCOUNTING STANDARD AS 17
Segment Reporting :
The Company's sole business segment is Plastic Films and all activities
are incidental to this sole business segment. Given this fact and that
the Company services its domestic and export markets from India only,
the financial statements reflect the information required by AS - 17
for the sole business segment of Plastic Films. The whole of the
business assets are situated in India.
NOTE NO. 5 IMPAIRMENT OF ASSETS - AS 28
As at March 31, 2015, the Company has reviewed the future earnings of
all its cash generating assets in accordance with the Accounting
Standard 28 "Impairment of Assets". As the carrying amount of assets
does not exceed the future recoverable amount, consequently, no
adjustment to carrying amount of assets is considered necessary by the
management.
NOTE NO. 6 CONTINGENT LIABILITIES AND COMMITMENTS
31.3.2015 31.3.2014
Rs. Rs.
(I) Contingent Liabilities
In respect of claims against the Company
not acknowledged as debts(Net) - 224,273
Customs duty on raw materials imported
under advance authorisation, against which - 1,148,834
export obligation is to be fulfilled
(ii) Commitments
The Company has given irrevocable and
unconditional Corporate 60,600,000 41,000,000
Guarantee/ Collateral Securities to North
Eastern Development
Finance Corporation Ltd. (NEDFi), Assam/
Bank of Baroda - Valsad on behalf of Synergy
Films Pvt. Ltd., a Subsidiary company in
which the company is holding 100 % of the
equity shares as on 31/03/2015 as a
collateral security for Working capital Term
Loan availed by subsidiary company.
(iii) On account of Capital Commitments
(Net of advances) - 6,150,175
(iv) On account of Income Tax and Service
Tax demand under contest 904,795 -
The Company has imported Plant and Machineries for production of new
Speciality Film under Export Promotion Capital Goods Scheme (EPCG)
without payment of Custom Duty. In the event of non-fulfilment of
export obligations as specified, Company may be held liable to pay
custom duty of Rs. 33.45 lacs (Previous year Rs. 33.45 lacs) in terms
of the said Scheme. As on 31st March 2015 Company is not in any default
under the Scheme.
NOTE NO. 7
The Company prior to it being listed had issued Bonus shares on 29th
June, 1994 for Rs. 10 Million (10,00,000 equity shares of Rs. 10/-
each) by capitalising part of its revaluation reserve. Accordingly, the
paid up equity share capital of the company stands increased by Rs. 10
Million and the revaluation reserve stands reduced by that amount. The
issue of bonus shares as aforesaid is contrary to the circular issued
by the Department of Company Affairs issued in September, 1994 and the
recommendations of the Institute of Chartered Accountants of India
issued in November, 1994. However, the Hon'ble Supreme Court in the
recent decision in the case of Bhagwati Developers Vs Peerless General
Finance & Investment Co. & others (2005) Comp LJ 377 (SC) has held that
there is no specific bar under the Companies Act for issue of Bonus
Shares out of Revaluation Reserve and that the Department's Communique
was advisory in nature, without any mandatory effect. The Management is
therefore of the opinion that both according to the accounting
principles and provisions of Company Law, the Company was justified in
capitalizing its Revaluation Reserve.
Mar 31, 2014
1. Corporate Information
Ecoplast Limited is Public Company domiciled in India and incorporated
under the provisions of the Companies Act, 1956. Its shares are listed
on Bombay Stock Exchange in India. The Company is engaged in the
business of manufacturing, processing and selling of Co-extruded
Plastic Film for Packaging, Industrial and Consumer applications. The
principal place of business of the company is at Abrama-Valsad. The
Company caters to both domestic and international markets. It has
various certifications like ISO 9001, ISO 14001 and ISO 22000
registration for products thereby complying with globally accepted
quality standards.
NOTE NO. 2 : DISCLOSURE IN ACCOUNTANCE WITH REVISED AS-13 ON
"ACCOUNTING FOR INVESTMENTS"
In respect of Investment of Rs.153.72 Lacs ( Previous Year : Rs. 133.25
Lacs) made in Subsidiary Company Synergy Films Pvt. Ltd. the
accumulated losses as per audited accounts as at 31st March, 2014
amounts to Rs.326.41 Lacs (Prvious Year : Rs. 329.11 Lacs) representing
the erosion of the entire net worth of the Subsidiary company due to
operational losses. The company has, at the close of the year, assessed
the carrying value of its investments and based on such assessment, the
company has made not made any provision during the year (Previous Year
Rs. 71.96 Lacs) for permanent diminution in the value of its
investments in Synergy Films Pvt. Ltd.
NOTE NO. 3 DISCLOSURES UNDER ACCOUTING STANDARD AS15
Particulars Employee benefit plans
Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to defined contribution plans for qualifying employees. Under the
Schemes, the Company is required to contribute a specified percentage
of the payroll costs to fund the benefits. The Company recognised Rs.
20,50,348 (Year ended 31 March, 2013 Rs. 16,64,745) for Provident Fund
contributions and Rs. 15,86,066 (Year ended 31 March, 2013 Rs.
12,15,378) for Superannuation Fund contributions in the Statement of
Profit and Loss. The contributions payable to these plans by the
Company are at rates specified in the rules of the schemes.
Defined benefit plans
The Company offers the following employee benefit schemes to its
employees :
NOTE NO. 4 DISCLOSURES UNDER ACCOUNTING STANDARD AS 17 Segment
Reporting :
The Company''s sole business segment is Plastic Films and all activities
are incidental to this sole business segment. Given this fact and that
the Company services its domestic and export markets from India only,
the financial statements reflect the information required by AS - 17
for the sole business segment of Plastic Films. The whole of the
business assets are situated in India.
NOTE NO. 5 DISCLOSURES UNDER ACCOUNTING STANDARD AS 18
Particulars
Related party transactions
Details of related parties :
Description of relationship Names of related parties
Subsidiaries Synergy Films Pvt. Ltd.
Key Management Personnel (KMP) Mr. J. B. Desai
Relatives of KMP -
Company in which KMP / Relatives of KMP can Propack Industries ( Prop.
Kunal Plastics Pvt. Ltd.) exercise significant influence
Note: Related parties have been identified by the Management.
NOTE NO. 6 CONTINGENT LIABILITIES AND COMMITMENTS
31.3.2014 31.3.2013
Rs. Rs.
(I) Contingent Liabilities
In respect of claims against
the Company not acknowledged
as debts(Net) 224,273 224,273
Customs duty on raw materials
imported under advance
authorisation, 1,148,834 2,528,785
against which export
obligation is to be fulfilled
(ii) Commitments
The Company has given
irrevocable and unconditional
Corporate 41,000,000 41,000,000
Guarantee/ Collateral
Securities to
North Eastern Development
Finance Corporation Ltd.
(NEDFC), Assam/ Bank of
Baroda - Valsad on behalf of
Synergy Films Pvt. Ltd.,
a Subsidiary company in which
the company is holding 100 %
of the equity shares as on
31/03/2014 as a collateral
security for Working capital
Term Loan availed by
subsidiary company.
(iii) On account of Capital
Commitments ( Net of
advances) 6,150,175 -
NOTE NO. 7
The Company has imported Plant and Machineries for production of new
Speciality Film under Export Promotion Capital Goods Scheme (EPCG)
without payment of Custom Duty. In the event of non-fulfilment of
export obligations as specified, Company may be held liable to pay
custom duty of Rs.33.45 lacs (Previous year Rs.33.45 lacs) in terms of
the said Scheme. As on 31st March 2014 Company is not in any default
under the Scheme.
NOTE NO. 8
The Company prior to it being listed had issued Bonus shares on 29th
June, 1994 for Rs. 10 Million (10,00,000 equity shares of Rs. 10/-
each) by capitalising part of its revaluation reserve. Accordingly, the
paid up equity share capital of the company stands increased by Rs. 10
Million and the revaluation reserve stands reduced by that amount. The
issue of bonus shares as aforesaid is contrary to the circular issued
by the Department of Company Affairs issued in September, 1994 and the
recommendations of the Institute of Chartered Accountants of India
issued in November, 1994. However, the Hon''ble Supreme Court in the
recent decision in the case of Bhagwati Developers Vs Peerless General
Finance & Investment Co. & others (2005) Comp LJ 377 (SC) has held that
there is no specific bar under the Companies Act for issue of Bonus
Shares out of Revaluation Reserve and that the Department''s Communique
was advisory in nature, without any mandatory effect. The Management is
therefore of the opinion that both according to the accounting
principles and provisions of Company Law, the Company was justified in
capitalizing its Revaluation Reserve.
Mar 31, 2013
1. Corporate Information
Ecoplast Limited is Public Company domiciled in India and incorporated
under the provisions of the Companies Act, 1956. Its shares are listed
on Bombay Stock Exchange in India. The Company is engaged in the
business of manufacturing, processing and marketing of Co-extruded
Plastic Film for Packaging, Industrial and Consumer applications. The
principal place of business of the company is at Abrama-Valsad. The
Company caters to both domestic and international markets. It has
various certifications like ISO 9001, ISO 14001 and ISO 22000
registration for products thereby complying with globally accepted
quality standards.
NOTE NO. 2 : DISCLOSURE IN ACCOUNTANCE WITH REVISED AS-13 ON
"ACCOUNTING FOR INVESTMENTS"
In respect of Investment of Rs.133.25 Lacs ( Previous Y ear : Rs.
133.25 Lacs) made in Subsidiary Company Synergy Films Pvt. Ltd. the
accumulated losses as per audited accounts as at 31st March, 2013
amounts to Rs.329.11 Lacs (Previous Year : Rs. 247.47 Lacs)
representing the erosion of the entire net worth of the Subsidiary
company due to operational losses. The company has, at the close of the
year, assessed the carrying value of its investments and based on such
assessment, the company has made a provision of Rs. 71.96 Lacs for
permanent diminution in the value of its investments in Synergy Films
Pvt. Ltd.
NOTE NO. 3 : DISCLOSURES UNDER ACCOUNT STANDARD AS15
Particulars Employee benefit plans
Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to defined contribution plans for qualifying employees. Under the
Schemes, the Company is required to contribute a specified percentage
of the payroll costs to fund the benefits. The Company recognised Rs.
16,64,745 (Year ended 31 March, 2012 Rs. 14,14,054) for Provident Fund
contributions and Rs. 12,15,378 (Year ended 31 March, 2012 Rs.
9,92,205) for Superannuation Fund contributions in the Statement of
Profit and Loss. The contributions payable to these plans by the
Company are at rates specified in the rules of the schemes.
NOTE NO. 4 DISCLOSURES UNDER ACCOUNTING STANDARD AS 17
Segment Reporting :
The Company''s sole business segment is Plastic Films and all activities
are incidental to this sole business segment. Given this fact and that
the Company services its domestic and export markets from India only,
the financial statements reflect the information required by AS - 17
for the sole business segment of Plastic Films. The whole of the
business assets are situated in India.
NOTE NO. 5 IMPAIRMENT OF ASSETS - AS 28
As at March 31, 2013, the Company has reviewed the future earnings of
all its cash generating assets in accordance with the Accounting
Standard 28 ÂImpairment of AssetsÂ. On reviewing it was found that one
of the Company''s Plant L2K1 has out lived its economic life requiring a
provision for impairment loss of Rs. 1,436,267 based on valuation
report obtained from an independent Valuer. Accordingly impairment loss
has been recognised in the Statement of Profit & Loss for the year.
31.3.2013 31.3.2012
NOTE NO. 6 CONTINGENT LIABILITIES Rs. Rs.
(i) Contingent Liabilities
In respect of claims against the Company
not acknowledged 224,273 224,273
as debts (Net)
Customs duty on raw materials imported
under advance authorisation, 2,528,785 2,000,164
against which export obligation is to
be fulfilled
(ii) Commitments
The Company has given irrevocable and
unconditional Corporate 41,000,000 40,000,000
Guarantee/ Collateral Securities to North Eastern Development Finance
Corporation Ltd.(NEDFC), Assam/ Bank of Baroda - Valsad on behalf of
Synergy Films Pvt. Ltd., a Subsidiary company in which the company is
holding 75 % of the equity shares as a collateral security for Term
Loan availed by subsidiary company.
NOTE NO. 7
The Company has imported Plant and Machineries for production of new
Speciality Film under Export Promotion Capital Goods Scheme (EPCG)
without payment of Custom Duty. In the event of non-fulfilment of
export obligations as specified, Company may be held liable to pay
custom duty of Rs.33.45 lacs (Previous year Rs.33.45 lacs) in terms of
the said Scheme. As on 31st March 2012 Company is not in any default
under the Scheme.
NOTE NO. 8
The Company prior to it being listed had issued Bonus shares on 29th
June, 1994 for Rs. 10 Million (10,00,000 equity shares of Rs. 10/-
each) by capitalising part of its revaluation reserve. Accordingly, the
paid up equity share capital of the company stands increased by Rs. 10
Million and the revaluation reserve stands reduced by that amount. The
issue of bonus shares as aforesaid is contrary to the circular issued
by the Department of Company Affairs issued in September, 1994 and the
recommendations of the Institute of Chartered Accountants of India
issued in November, 1994. However, the Hon''ble Supreme Court in the
recent decision in the case of Bhagwati Developers Vs Peerless General
Finance & Investment Co. & others (2005) Comp LJ 377 (SC) has held that
there is no specific bar under the Companies Act for issue of Bonus
Shares out of Revaluation Reserve and that the Department''s Communique
was advisory in nature, without any mandatory effect. The Management is
therefore of the opinion that both according to the accounting
principles and provisions of Company Law, the Company was justified in
capitalizing its Revaluation Reserve.
Mar 31, 2012
1 Corporate Information
Ecoplast Limited is Public Company domiciled in India and incorporated
under the provisions of the Companies Act, 1956. Its shares are listed
on Bombay Stock Exchange in India. The Company is engaged in the
business of manufacturing, processing and marketing of Co-extruded
Plastic Film for Packaging, Industrial and Consumer applications. The
Company caters to both domestic and international markets. It has
various certifications like ISO 9001, ISO 14001 and ISO 22000
registration for products thereby complying with globally accepted
quality standards
NOTE NO. 2 DISCLOSURE IN ACCOUNTANCE WITH REVISED AS-13 ON
"ACCOUNTING FOR INVESTMENTS"
In respect of Investment of Rs.133.25 Lacs made in Subsidiary Company
Synergy Films Pvt. Ltd. the accumulated losses as per audited accounts
as at 31st March, 2012 amounts to Rs.247.47 Lacs representing the
erosion of the entire net worth of the Subsidiary company. However
having regard to the continued long term strategic involvement,
management is of the view that no provision is necessary for any
diminution in the value of Investments.
Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to defined contribution plans for qualifying employees. Under the
Schemes, the Company is required to contribute a specified percentage
of the payroll costs to fund the benefits. The Company recognised '
14,14,054 (Year ended 31 March, 2011 ' 12,43,262) for Provident Fund
contributions and ' 9,92,205 (Year ended 31 March, 2011 ' 8,87,328)
for Superannuation Fund contributions in the Statement of Profit and
Loss. The contributions payable to these plans by the Company are at
rates specified in the rules of the schemes. Defined benefit plans
The Company offers the following employee benefit schemes to its
employees:
Gratuity
The following table sets out the funded status of the defined benefit
schemes and the amount recognised in the financial statements:
NOTE NO. 3 DISCLOSURES UNDER ACCOUNTING STANDARD AS 17 Segment
Reporting :
The Company's sole business segment is Plastic Films and all activities
are incidental to this sole business segment. Given this fact and that
the Company services its domestic and export markets from India only,
the financial statements reflect the information required by AS - 17
for the sole business segment of Plastic Films. The whole of the
business assets are situated in India.
NOTE NO. 4 IMPAIRMENT OF ASSETS - AS 28
As at March 31, 2012, the Company has reviewed the future earnings of
all its cash generating assets in accordance with the Accounting
Standard 28 "Impairment of Assets". As the carrying amount of
assets does not exceed the future recoverable amount, consequently, no
adjustment to carrying amount of assets is considered necessary by the
management.
31.3.2012 31.3.2011
NOTE NO. 5 CONTINGENT LIABILITIES Rs. Rs.
On account of capital commitments (net of
advances) - 5,594,500
Customs duty on raw materials imported
under advance 2,000,164 904,978
licensing, against which export obligation
is to be fulfilled
The Company has given irrevocable and
unconditional 40,000,000 40,000,000
Corporate Guarantee to North Eastern
Development Finance Corporation
Ltd. (NEDFC), Assam on behalf of Synergy
Films Pvt. Ltd., a Subsidiary company in
which the company is holding 75 % of the
equity shares as a collateral security
for Term Loan availed by subsidiary
company.
In respect of claims against the Company
not acknowledged 224,273 224,273
as debts(Net)
NOTE NO. 6
The Company has imported Plant and Machineries for production of new
Speciality Film under Export Promotion Capital Goods Scheme (EPCG)
without payment of Custom Duty. In the event of non-fulfilment of
export obligations as specified, Company may be held liable to pay
custom duty of Rs.33.45 lacs (Previous year Rs.33.45 lacs) in terms of
the said Scheme. As on 31st March 2012 Company is not in any default
under the Scheme.
NOTE NO. 7
The Company prior to it being listed had issued Bonus shares on 29th
June, 1994 for Rs. 10 Million (10,00,000 equity shares of Rs. 10/-
each) by capitalising part of its revaluation reserve. Accordingly, the
paid up equity share capital of the company stands increased by Rs. 10
Million and the revaluation reserve stands reduced by that amount. The
issue of bonus shares as aforesaid is contrary to the circular issued
by the Department of Company Affairs issued in September, 1994 and the
recommendations of the Institute of Chartered Accountants of India
issued in November, 1994. However, the Hon'ble Supreme Court in the
recent decision in the case of Bhagwati Developers Vs Peerless General
Finance & Investment Co. & others (2005) Comp LJ 377 (SC) has held
that there is no specific bar under the Companies Act for issue of
Bonus Shares out of Revaluation Reserve and that the Department's
Communique was advisory in nature, without any mandatory effect. The
Management is therefore of the opinion that both according to the
accounting principles and provisions of Company Law, the Company was
justified in capitalizing its Revaluation Reserve.
NOTE NO. 8
The financial statements for the year ended 31st March, 2011 had been
prepared as per the then applicable, pre- revised Schedule VI to the
Companies Act,1956. Consequent to the notification under the Companies
Act,1956, the financial statements for the year ended 31st March, 2012
are prepared under revised Schedule VI. Accordingly, the previous year
figures have also been reclassified to conform to this year's
classification.
Mar 31, 2011
31.3.2011 31.3.2010
Rs. Rs.
1 Contingent Liabilities
a. On account of capital commitments
(net of advances) 5,594,500 14,630,000
b. Customs duty on raw materials
imported under advance licensing,
against 904,978 697,074
which export obligation is
to be fulfilled
c. The Company has given irrevocable
and unconditional Corporate
Guarantee 40,000,000 40,000,000
to North Eastern Development Finance
Corporation Ltd. (NEDFC). Assam
on behalf of Synergy Films Pvt. Ltd.,
a joint venture company in which
the company is holding 25% of the
equity shares as a collateral
security for Term Loan and Working
Capital Term Loan availed by joint
venture Company.
d. In respect of claims against the
Company not acknowledged as debts.
(Net) 224,273 224,273
2 a) Dues to Small Scale Industrial Undertakings for more than 30 days
include amounts payable to - (as identified by Management)
NIL
3 Disclosures In Accordance with Revised AS-13 On "Accounting for
Investments"
In respect of Investment of Rs. 35.75 lacs made in Joint Venture
Company (JVC) Synergy Films Pvt. Ltd the accumulated losses as per
provisional accounts as at 31st March, 2011 amounts to Rs. 158.63 lacs
representing the erosion of the entire net worth of the JVC. However
having regard to the continued long term strategic involvement,
management is of the view that no provision is necessary for any
diminution in the value of investments
4 Disclosures In Accordance with Revised AS-15 On " Employees
Benefits"
a) The Accounting Standard -15 (Revised 2005) on Employees Benefits
issued by the Institute of Chartered Accountants of India has been
adopted by the Company effective from April 1, 2007
c) Defined Benefit Plans :
vi) The overall expected rate of return on assets is based on the
expectation of the average long term rate of return expected on
investments of the fund during the estimated term of the obligations.
ix) The estimates of future salary increases considered in actuarial
valuation takes into account inflation, seniority, promotion and other
relevant factors. The above information is extracted from the report
obtained from the independent actuary and Auditors have placed reliance
on underlying assumptions.
x) Para 132 of AS 15 (revised 2005) does not require any specific
disclosures except where expense resulting from compensated absence is
of such size, nature of incidence that its disclosure is relevant under
Accounting Standard 5 or Accounting Standard 18. In the opinion of the
Management the expense resulting from compensated absence is not
significant and hence no disclosures are prepared under various
paragraphs of AS 15 (revised 2005)
5 Segment Reporting:
The companys sole business segment is Plastic Films and all activities
are incidental to this sole business segment. Given this fact and that
the company services its domestic and export markets from India only,
the financial statements reflect the information required by AS -17 for
the sole business segment of Plastic Films. The whole of the business
assets are situated in India.
6 Related Party Transaction :
(1) Relationships:
(a) Where control exists :
Synergy Films Pvt. Ltd.
(b) Key Management Personnel :
Mr. P. P. Kharas (Chairman)
Mr. J. B. Desai (Managing Director)
(c) Relatives of key management personnel and their enterprises, where
transactions have taken place.
Mrs. Naheed R. Divecha
(d) Other Related Parties :
Propack Industries (Prop. Kunal Plastics Pvt. Ltd.)
Note : Related party relationship on the basis of the requirements of
Accounting Standard 18 (AS-18) as in 1 (a) to (d) above is identified
and certified by the Management and relied upon by the Auditors.
7 Disclosure as required by Accounting Standard 19 (AS-19) "Leases"
issued by the Institute of Chartered Accountants of India is as given
below. The Company has taken residential and godown premises under
leave and license arrangements on a short term basis, renewable on
terms to be mutually agreed.
8 Deferred Tax :
Deferred Tax has been provided in accordance with Accounting Standard
22 (AS-22) - Accounting for Taxes on Income issued by the Institute of
Chartered Accountants of India.
9 As per the requirements of Accounting Standard (AS-27) "Financial
Reporting of Interest in Joint Ventures", the Companys interest in the
Joint Venture Companies is as follows :
Name of Company: Synergy Films Pvt. Ltd.
Nature: Jointly Controlled Entity
Country of Incorporation: India
(%) of Holding as on March 31, 2011: 25
10 As at March 31, 2011, the Company has reviewed the future earnings
of all its cash generating units in accordance with the Accounting
Standard 28 "Impairment of Assets". As the carrying amount of assets
does not exceed the future recoverable amount, consequently, no
adjustment to carrying amount of assets is considered necessary by the
management.
11 The Company has imported Plant and Machineries for production of new
Speciality Film under Export Promotion Capital Goods Scheme (EPCG)
without payment of Custom Duty. In event of non-fulfilment of export
obligations as specified. Company may be held liable to pay custom duty
of Rs. 33.45 lacs (Previous year Rs. 33.45 lacs) in terms of the said
Scheme. As on 31st March 2011 Company is not in any default under the
Scheme.
12 The Company prior to it being listed had issued Bonus shares on 29th
June, 1994 for Rs. 10 Million (10,00,000 equity shares of Rs. 10/-
each) by capitalising part of its revaluation reserve. Accordingly, the
paid up equity share capital of the company stands increased by Rs. 10
Million and the revaluation reserve stands reduced by that amount. The
issue of bonus shares as aforesaid is contrary to the circular issued
by the Department of Company Affairs issued in September, 1994 and the
recommendations of the Institiute of Chartered Accountants of India
issued in November, 1994. However, the Honble Supreme Court in the
recent decision in the case of Bhagwati Developers Vs Peerless General
Finance & Investment Co, & others (2005) Comp LJ 377 (SC) has held that
there is no specific bar under the Companies Act for issue of Bonus
Shares out of Revaluation Reserve and that the Departments Communique
was advisory in nature, without any mandatory effect. The Management is
therefore of the opinion that both according to the acccounting
principles and provisions of Company Law, the Company was justitied in
capitalizing its Revaluation Reserve.
13 Previous years figures have been regrouped wherever necessary to
conform with to years classification.
14 Additional information pursuant to the provisions of paragraph (3)
and (4) of Part II of Schedule VI of the Companies Act, 1956.
15 Cash Flow Statement for the year ended 31st March, 2011 is disclosed
in the statement annexed to these Accounts as Annexure I.
Mar 31, 2010
1 Contingent Liabilities 31.3.2010 31.3.2009
a. On account of capital
commitments (net of advances) 14,630,000 -
b. Customs duty on raw materials
imported under advance 697,074 1,281,579
licensing, against which export
obligation is to be fulfilled
c. The Company has given
irrevocable and unconditional
Corporate Guarantee 40,000,000 40,000,000
to North Eastern Development
Finance Corporation Ltd.
(NEDFC). Assam on behalf of
Synergy Films Pvt. Ltd., a
joint venture company in which
the company is holding 25% of
the equity shares as a collateral
security for Term Loan and
Working Capital Terms Loan
availed by joint venture company.
d. In respect of claims against the
Company not acknowledged as debts.
(Net) 224,273 224,273
2 Segment Reporting:
The companys sole business segment is Plastic Films and all activities
are incidental to this sole business segment. Given this fact and that
the company services its domestic and export markets from India only,
the financial statements reflect the information required by AS - 17
for the sole business segment of Plastic Films. The whole of the
business assets are situated in India.
3 Related Party Transaction :
(1) Relationships
(a) Where control exists
Synergy Films Pvt. Ltd.
(b) Key Management Personnel
Mr. P. P. Kharas (Chairman)
Mr. J. B. Desai (Managing Director)
(c) Relatives of key management personnel and their enterprises, where
transactions have taken place. Mrs. Naheed R. Divecha
(d) Other Related Parties :
Propack Industries (Prop. Kunal Plastics Pvt. Ltd.)
4 As per the requirements of Accounting Standard (AS-27) "Financial
Reporting of Interest in Joint Ventures". the Companys interest in
the Joint Venture Companies is as follows :
Name of Company : Synergy Films Pvt. Ltd.
Nature : Jointly Controlled Entity
Country of Incorporation : India
(%) of Holding as on
March 31, 2010: 25
5 As at March 31, 2010, the Company has reviewed the future earnings
of all its cash generating units in accordance with the Accounting
Standard 28 "Impairment of Assets". On reviewing it was found that one
of the Companys Plant "Line-87" has out lived its economic life
requiring a provision for impairment loss of Rs. 13,56,076/- based on
valuation report obtained from an independent Valuer. Accordingly
impairment loss has been recognised in the Profit & Loss Account for
the year
6 The Company has imported Plant and Machineries for production of new
Speciality Film under Export Promotion Capital Goods Scheme (EPCG)
without payment of Custom Duty. In event of non-fulfilment of export
obligations as specified. Company may be held liable to pay custom duty
of Rs. 33.45 lacs (Previous year Rs. 33.45 lacs) in terms of the said
Scheme. As on 31st March 2010 Company is not in any default under the
Scheme.
7 The Company prior to it being listed had issued Bonus shares on 29th
June, 1994 for Rs. 10 Million (10,00,000 . equity shares of Rs. 10/-
each) by capitalising part of its revaluation reserve. Accordingly, (he
paid up equity share capital of the company stands increased by Rs. 10
Million and the revaluation reserve stands reduced by that amount. The
issue of bonus shares as aforesaid is contrary to the circular issued
by the Department of Company Affairs issued in September, 1994 and the
recommendations of the Institiute of Chartered Accountants of India
issued in November, 1994. However, the Honble Supreme Court in the
recent decision in the case of Bhagwati Developers Vs Peerless General
Finance & Investment Co, & others (2005) Comp LJ 377 (SC) has held that
there is no specific bar under the Companies Act for issue of Bonus
Shares out of Revaluation Reserve and that the Departments Communique
was advisory in nature, without any mandatory effect. The Management is
therefore of the opinion that both according to the acccounting
principles and provisions of Company Law,the Company was justified in
capitalizing its Revaluation Reserve.
8 Previous years figures have been regrouped wherever necessary to
conform with this years classification.
9 Additional information pursuant to the provisions of paragraph (3)
and (4) of Part II of Schedule VI of the Companies Act, 1956.
10 Cash Flow Statement for the year ended 31st March, 2010 is disclosed
in the statement annexed to these Accounts as Annexure I.
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