Accounting Policies of Jumbo Bags Ltd. Company

Mar 31, 2015

1.1 Basis of preparation of financial statements

The financial statements have been prepared on accrual basis under the historical cost convention and in accordance with generally accepted accounting principles in India and materially comply with the Mandatory Accounting Standards notified by the Central Government of India under the Companies (Accounting standards) Rules, 2006 and with the relevant provisions of the Companies Act, 2013.

1.2 Use of estimates

The preparation of financial statements in conformity with Indian Generally Accepted Accounting Policies (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure relating to contingent liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

1.3 Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulated depreciation. The cost of fixed assets includes freight, duties, taxes and other incidental expenses relating to acquisition. Duties and taxes where MODVAT and VAT are applicable have been appropriately treated. Where fixed assets have been acquired from a country outside India, the cost of these fixed assets also includes exchange differences (favorable and unfavorable) arising in respect of foreign currency loans on other liabilities incurred specifically for the purpose of their acquisition. Borrowing costs related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or constructions are capitalized. Losses arising from the retirement and the gains or losses arising form disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss.

Depreciation on the fixed assets is provided on a straight line method, over the estimated useful life of the assets. Effective 1st April 2014, the company depreciates its Fixed Assets over the useful life in the manner prescribed in Schedule II of the act, as against the earlier practice of depreciating the rates prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on additions to assets or on sale / disposal of assets, is calculated on pro rata basis from the month of such addition or upto the month of such sale / disposal as the case may be.

1.4 Impairment of assets

In accordance with Accounting Standard 28 (AS 28) on Impairment of assets, where there is an indication of Impairment of the Company's assets, the carrying amount of the Company's assets are reviewed at each balance sheet date to determine whether there is any impairment on the assets based on internal/external factors. Any impairment loss, if any, is recognized in the statement of Profit and Loss, wherever the carrying amount of an asset exceeds its estimated recoverable amount which is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

1.5 Revenue recognition

Revenue from sale of manufactured goods, including scrap, is recognized on transfer of all significant risks and rewards of ownership to the buyer which is generally on dispatch of goods.

Domestic sales inclusive of sales tax, Excise duty, net of sales returns and quantity discounts is on accrual basis.

Export sales are accounted on the basis of dates of invoicing from the factory.

Job work and other service revenues is recognized as and when services are rendered.

Income from Investments/other income is recognized on accrual basis.

Interest on deployment of surplus funds is recognized using the time proportionate method based on underlying interest rates.

1.6 Inventories

Inventories are carried at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item-by-item basis. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition.

The method of determination of cost is as follows:

* Spares and Consumables are valued at cost.

* Raw-Materials & Intermediates are valued at weighted cost - (net of MODVAT).

* Work-in-Process is valued at material cost plus direct Manufacturing Expenses.

* Finished Goods are valued at the lower of cost or net Realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition inclusive of Excise Duty.

* Saleable / disposable stock of scrap is valued at estimated realizable value. Provision for inventory obsolescence is assessed annually and is provided as and when considered necessary.

1.7 Foreign exchange transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profit and loss statement of the year, except that exchange differences related to acquisition of fixed assets from a country outside India are adjusted in the carrying amount of the related fixed assets.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognized in the statement of profit and loss except those related to acquisition of fixed assets from a country outside India which are adjusted in the carrying amount of the related fixed assets. Where an underlying import/ export is covered, it is recognized at the rate at which the exchange is covered. Where the transaction remains uncovered, it is recognized on mark to market basis as on 31st March 2015.

Net exchange fluctuation gain is accounted as other income and loss is accounted as other expenses.

1.8 Provisions and contingent liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.

1.9 Income tax

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year) provided in the books of accounts.

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Mar 31, 2014

1.1 Basis of preparation of financial statements

The fi nancial statements have been prepared on accrual basis under the historical cost convention and in accordance with generally accepted accounting principles in India and materially comply with the Mandatory Accounting Standards notifi ed by the Central Government of India under the Companies (Accounting standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956

1.2 Use of estimates

The preparation of fi nancial statements in conformity with Indian Generally Accepted Accounting Policies (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure relating to contingent liabilities as at the date of the fi nancial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

1.3 Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulated depreciation. The cost of fixed assets includes freight, duties, taxes and other incidental expenses relating to acquisition. Duties and taxes where MODVAT and VAT are applicable have been appropriately treated. Where fi xed assets have been acquired from a country outside India, the cost of these fixed assets also includes exchange differences (favorable and unfavorable) arising in respect of foreign currency loans on other liabilities incurred specifically for the purpose of their acquisition. Borrowing costs related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or constructions are capitalized.

Depreciation is provided on the Straight Line Method from the day in which the asset is put to use. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management''s estimate of the useful life or remaining useful life. Pursuant to this policy, depreciation on assets has been provided at the rates based on the estimated useful lives of fixed assets

Depreciation on fi xed Assets sold or scrapped during the year is provided up to the date in which such assets are sold or scrapped. Depreciation on additions to Fixed Assets is calculated on prorate basis from the date of addition.

Assets individually costing Rs 5,000 or less are depreciated at the rate of 100%.

Depreciation is charged on a proportionate basis for all assets purchased and sold during the year.

1.4 Impairment of assets

In accordance with Accounting Standard 28 (AS 28) on Impairment of assets, where there is an indication of Impairment of the Company''s assets, the carrying amount of the Company''s assets are reviewed at each balance sheet date to determine whether there is any impairment on the assets based on internal/external factors. Any impairment loss, if any, is recognized in the profit & loss statement, wherever the carrying amount of an asset exceeds its estimated recoverable amount which is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash fi ows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

1.5 Revenue recognition

Revenue from sale of manufactured goods, including scrap, is recognized on transfer of all significant risks and rewards of ownership to the buyer which is generally on dispatch of goods.

Domestic sales inclusive of sales tax, Excise duty, net of sales returns and quantity discounts on accrual basis.

Export sales are accounted on the basis of dates of invoicing from the factory.

Job work and other service revenues is recognized as and when services are rendered.

Income from Investments/other income is recognized on accrual basis.

Interest on deployment of surplus funds is recognized using the time proportionate method based on underlying interest rates.

1.6 Inventories

Inventories are carried at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item-by-item basis. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition.

The method of determination of cost is as follows:

Spares and Consumables are valued at cost.

Raw-Materials & Intermediates are valued at weighted cost - (net of MODVAT)

Work-in-Process is valued at material cost plus direct Manufacturing Expenses.

Finished Goods are valued at the lower of cost or net Realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition inclusive of Excise Duty.

Saleable / disposable stock of scrap is valued at estimated realizable value. Provision for inventory obsolescence is assessed annually and is provided as and when considered necessary.

1.7 Foreign exchange transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profit and loss statement of the year, except that exchange differences related to acquisition of fi xed assets from a country outside India are adjusted in the carrying amount of the related fixed assets.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognized in the profit and loss statement except those related to acquisition of fixed assets from a country outside India which are adjusted in the carrying amount of the related fixed assets. Where an underlying import/ export is covered, it is recognized at the rate at which the exchange is covered. Where the transaction remains uncovered, it is recognized on mark to market basis as on 31st March 2014.

Net exchange fl uctuation gain is accounted as other income and loss is accounted as other expenses.

1.8 Provisions and contingent liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outfl ow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outfl ow of resources. Where there is a possible obligation or a present obligation that the likelihood of outfl ow of resources is remote, no provision or disclosure is made.

Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.

1.9 Income taxes

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year) provided in the books of accounts.

3. Earnings per share

The basic and diluted earnings per share are computed by dividing the net profit attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive equity shares outstanding during the year.

4. Investments

Long term Investments are valued at cost less provision for diminution in value other than temporary, if any.

5. Employee Benefits

i Short Term - Short term employee benefits are recognized as an expense as per the Company''s Scheme based on expected obligations.

ii. Post Retirement

Post retirement benefits comprise of provident fund, superannuation and gratuity which are accounted for as follows:

a) Provident fund

This is a defi ned contribution plan. Contributions in respect of staff and workers are remitted to provident fund authorities in accordance with the relevant statute and are charged to profit and loss statement as and when due. The Company has no further obligations for future provident fund benefits in respect of these employees other than its annual contributions.

b) Superannuation

This is a defi ned contribution plan. The Company makes contribution as per the scheme to superannuation Fund administered by Life Insurance Corporation of India. The Company has no further obligation of future superannuation benefits other than its annual contributions and recognizes such contributions as expense as and when due.

c) Gratuity

This is a defined benefit plan. Provision for gratuity is made based on actuarial valuation using projected unit credit method. Actuarial gains and losses, comprising of experience adjustments and the effects of changes in actuarial assumptions, are recognized immediately in the profit and loss statement as income or expense

6. Deferred Tax Liability

Deferred Tax resulting from timing difference between book and Tax profit is accounted for under liability method, at the current rate of tax, to the extent, the timing differences are expected to crystallize. The deferred tax charge or credit is recognized using prevailing enacted or substantively enacted tax rate. Where there is unabsorbed depreciation or carried forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax liabilities/assets are reviewed at each balance sheet date based on the law in force and shown net of assets/liabilities in the books.

7. Leases:

Leases are classified as fi nance or operating leases depending upon the terms of the lease agreements. Assets held under finance leases are recognized as assets of the Company on the date of acquisition and depreciated over their estimated useful life or period of lease. Initial direct costs under the financial lease are included as a part of the amount recognized as asset under the finance lease.

Rentals payable under operating leases are treated as revenue expenses as and when incurred with reference to terms of agreement.

Operating leases

The company is obligated under cancelable operating leases for Jumbo Bag Ltd, Athipedu factory rent which is renewable at the options of both the lessor and the lessee. The expense under the contracted lease amounts to Rs.80.22/-lakhs (previous year Rs.87.45/- lakhs) is recognized in the profit & loss statement

8. Custom duty

Custom duty is accounted as and when paid and on actual.

9. Borrowing Costs

As per the Accounting Standard 16 (AS 16), borrowing costs that are directly attributable to the cost of acquisition, construction, production of a qualifying asset are capitalized as a part of cost of such asset till the asset is installed/ put to use. Cost that are not directly attributable to the qualifying the asset are determined by applying a weighted average rate and are capitalized as a part of the cost of asset of such qualifying asset till the time asset is ready to use/ installed.

10. Dues to Micro, Small and Medium Enterprises:

The management has written to vendors requesting them to inform whether they would fall under the preview of Micro, Small and Medium Enterprises Act, 2001. Based on disclosure received, amount payable to such enterprises as at 31st March 2014 is Nil. The above information has been determined to the extent such parties have been identifi ed on the basis of information available with the Company which has been relied upon by the auditors.

11. Provisions made with regard to Fire Accident:

There was a major fi re accident at our Athipedu unit on 23rd November 2013 and that led to complete shut down of the damaged factory premises for a period of 15 days. The company had to look for alternative locations to fulfi l the orders and strived to keep the production going. However, fire accident has largely impacted the financial performance of the company after the second half of the financial year 2013-14. The company has put determined efforts to resurrect the performance in the last two quarters. The financial performance is expected to considerably improve in the current financial year with increase in business volume and value added customers.

The property damaged and destroyed in the fire includes Factory Building, Plant & Equipment, Electricals, Raw Materials and Stocks. The company had immediately fi led the claim bill for the Fixed Assets and the stocks destroyed in fi re with the Insurance companies'' viz. United India Insurance Limited and New India Assurance Limited respectively. The total claim bill placed with respect to Fixed Assets amounted to Rs.388 Lacs and for stocks amounted to Rs.897 lakhs.

The amount considered in the financials after excess and possible deductions, duties and taxes is Rs.350 Lacs and for Fixed Assets on reinstatement/market value basis and Rs.731 Lacs for stocks. While the insurance company, upon the recommendation of the surveyor has made an interim on account payment of Rs.70 Lacs in the case of Fixed Assets, the claim process with the stock surveyor is still in process and no on account payment has yet been received.

On basis of the prevailing situation and to provide a reasonable and accountable fi nancial statement to the stakeholders, the company has made the provisions/ adjustments in books of accounts under the head Exceptional items - Insurance claim receivable amounting to Rs.841 Lacs. Also, a sum of Rs.110 Lacs is considered as profit, being the difference between the book value and the reinstatement value of the assets proposed for reinstatement. A sum of Rs.1099 Lacs is shown as receivable from Insurance company under the Current Assets.

DISCLOSURE UNDER AS-15 15. Defined Contribution Plans:-

(a) Contribution to Provident Fund /ESI : 33.96 lacs

(b) Contribution to Superannuation Fund : 8.06 lacs

Defined Benefit Plans:-

Gratuity:- 14.18 lacs

The Gratuity liability is covered by a Master Policy taken out with LIC of India under the Cash Accumulation scheme. The company during the year has done actuarial valuation as on 31.03.2014 and the estimated liability amounted to Rs.14.18 Lacs which is debited to P & L Statement.

16. Segmental Reporting

Information given in accordance with the requirement of Accounting Standard 17, on Segment Reporting. Company''s business segments are as under:

Manufacturing:

Manufacture of Flexible intermediate bulk container packaging material used for industrial purposes. Trading:

Trading of Polymers.

Segment Accounting Policies:

a. Segment accounting disclosures are in line with accounting policies of the Company.

b. Segment Revenue includes Sales and other income directly identifi able with / allocable to the segment.

c. Expenses that are directly identifi able with allocable to segments are considered for determining the Segment Result.

d. Major portion of segment liabilities and Assets relates to manufacturing segment

e. The company has no Secondary Reportable Segment.

f. Regrouping done wherever necessary.

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Mar 31, 2013

1.1 Basis of preparation of fi nancial statements.

The fi nancial statements have been prepared on accrual basis under the historical cost convention and in accordance with generally accepted accounting principles in India and materially comply with the Mandatory Accounting Standards notifi ed by the Central Government Of India under the Companies (Accounting standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956

1.2 Use of estimates

The preparation of fi nancial statements in conformity with Indian Generally Accepted Accounting Policies (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure relating to contingent liabilities as at the date of the fi nancial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

1.3 Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulated depreciation. The cost of fi xed assets includes freight, duties, taxes and other incidental expenses relating to acquisition. Duties and taxes where MODVAT and VAT are applicable have been appropriately treated. Where fi xed assets have been acquired from a country outside India, the cost of these fi xed assets also includes exchange differences (favorable and unfavorable) arising in respect of foreign currency loans on other liabilities incurred specifi cally for the purpose of their acquisition. Borrowing costs related to the acquisition or construction of the qualifying fi xed assets for the period up to the completion of their acquisition or constructions are capitalized.

Depreciation is provided on the Straight Line Method from the day in which the asset is put to use. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management''s estimate of the useful life of a fi xed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management''s estimate of the useful life or remaining useful life. Pursuant to this policy, depreciation on assets has been provided at the rates based on the estimated useful lives of fi xed assets.

Depreciation on fi xed Assets sold or scrapped during the year is provided up to the date in which such assets are sold or scrapped. Depreciation on additions to Fixed Assets is calculated on prorata basis from the date of addition.

Assets individually costing Rs 5,000 or less are depreciated at the rate of 100%.

Depreciation is charged on a proportionate basis for all assets purchased and sold during the year.

1.4 Impairment of assets

In accordance with Accounting Standard 28 (AS 28) on Impairment of assets, where there is an indication of Impairment of the Company''s assets, the carrying amount of the Company''s assets are reviewed at each balance sheet date to determine. Whether there is any impairment on the assets based on internal/external factors. Any impairment loss, if any, is recognized In the profi t & loss statement, wherever the carrying amount of an asset exceeds its estimated recoverable amount which is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash fl ows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

1.5 Revenue recognition

Revenue from sale of manufactured goods, including scrap, is recognized on transfer of all signifi cant risks and rewards of ownership to the buyer which is generally on dispatch of goods.

Domestic sales inclusive of sales tax, Excise duty, net of sales returns and quantity discounts on accrual basis.

Export sales are accounted on the basis of dates of invoicing from the factory.

Job work and other service revenues is recognized as when services are rendered.

Income from Investments/other income is recognized on accrual basis.

Interest on deployment of surplus funds is recognized using the time proportionate method based on underlying interest rates.

1.6 Inventories

Inventories are carried at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item-by-item basis. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition.

The method of determination of cost is as follows:

- Spares and Consumables are valued at cost.

- Raw-Materials & Intermediates are valued at weighted cost – (net of MODVAT).

- Work-in-Process is valued at material cost plus direct Manufacturing Expenses.

- Finished Goods are valued at the lower of cost or net Realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition inclusive of Excise Duty.

- Saleable / disposable stock of scrap is valued at estimated realizable value. Provision for inventory obsolescence is assessed annually and is provided as and when considered necessary.

1.7 Foreign exchange transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profi t and loss statement of the year, except that exchange differences related to acquisition of fi xed assets from a country outside India are adjusted in the carrying amount of the related fi xed assets.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognized in the profi t and loss statement except those related to acquisition of fi xed assets from a country outside India which are adjusted in the carrying amount of the related fi xed assets. Where an underlying import/ export is covered, it is recognized at the rate at which the exchange is covered. Where the transaction remains uncovered, it is recognized on mark to market basis as on 31st March 2013.

Net exchange fl uctuation gain is accounted as other income and loss is accounted as other expenses.

1.8 Provisions and contingent liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outfl ow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outfl ow of resources. Where there is a possible obligation or a present obligation that the likelihood of outfl ow of resources is remote, no provision or disclosure is made.

Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefi ts expected to be received under it, are recognized when it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.

1.9 Income taxes

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (refl ecting the tax effects of timing differences between accounting income and taxable income for the year) provided in the books of accounts.

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Mar 31, 2012

1.1 Basis of preparation of financial statements.

The financial statements have been prepared on accrual basis under the historical cost convention and in accordance with generally accepted accounting principles in Indian and materially comply with the Mandatory Accounting Standards notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956.

1.2 Use of estimates

The preparation of financial statements in conformity with Indian Generally Accepted Accounting Policies (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure relating to contingent liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

1.3 Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulated depreciation. The cost of fixed assets includes freight, duties, taxes and other incidental expenses relating to acquisition. Where fixed assets have been acquired from a country outside India, the cost of these fixed assets also includes exchange differences (favorable and unfavorable) arising in respect of foreign currency loans on other liabilities incurred specifically for the purpose of their acquisition. Borrowing costs related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or constructions are capitalized.

Depreciation is provided on the Straight Line Method from the day in which the asset is put to use. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management’s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management’s estimate of the useful life or remaining useful life. Pursuant to this policy, depreciation on assets has been provided at the rates based on the estimated useful lives of fixed assets

Depreciation on fixed Assets sold or scrapped during the year is provided up to the date in which such assets are sold or scrapped. Depreciation on additions to Fixed Assets is calculated on prorate basis from the date of addition.

Assets individually costing Rs. 5,000 or less are depreciated at the rate of 100%.

Depreciation is charged on a proportionate basis for all assets purchased and sold during the year.

1.4 Impairment of assets

In accordance with Accounting Standard 28 ( AS 28) on Impairment of assets, where there is an indication of Impairment of the Company’s assets, the carrying amount of the Company’s assets are reviewed at each balance sheet date to determine. Whether there is any impairment on the assets based on internal/external factors. Any impairment loss, if any, is recognized In the profit & loss statement, wherever the carrying amount of an asset exceeds its estimated recoverable amount which is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash fows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

1.5 Revenue recognition

Revenue from sale of manufactured goods, including scrap, is recognized on transfer of all significant risks and rewards of ownership to the buyer which is generally on dispatch of goods.

Domestic sales inclusive of sales tax, Excise duty, net of sales returns and quantity discounts on accrual basis.

Export sales are accounted on the basis of dates of invoicing from the factory.

Job work and other service revenues is recognized as when services are rendered.

Income from Investments/other income is recognized on accrual basis.

Interest on deployment of surplus funds is recognized using the time proportionate method based on underlying interest rates.

1.6 Inventories

Inventories are carried at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item-by-item basis. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition.

The method of determination of cost is as follows:

- Spares and Consumables are valued at cost.

- Raw-Materials & Intermediates are valued at weighted cost – (net of MODVAT)

- Work-in-Process is valued at material cost plus direct Manufacturing Expenses.

- Finished Goods are valued at the lower of cost or net Realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition inclusive of Excise Duty.

- Saleable / disposable stock of scrap is valued at estimated realizable value. Provision for inventory obsolescence is assessed annually and is provided as and when considered necessary.

1.7 Foreign exchange transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profit and loss statement of the year, except that exchange differences related to acquisition of fixed assets from a country outside India are adjusted in the carrying amount of the related fixed assets.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognized in the profit and loss statement except those related to acquisition of fixed assets from a country outside India which are adjusted in the carrying amount of the related fixed assets.

Net exchange fluctuation gain is accounted as other income and loss is accounted as other expenses.

1.8 Provisions and contingent liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.

1.9 Income taxes

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (refecting the tax effects of timing differences between accounting income and taxable income for the year) provided in the books of accounts.

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Mar 31, 2011

1. Basis of preparation of financial statements.

(a) The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956, to the extent applicable. The financial statements are presented in Indian rupees.

(b) Accounting policies not specifcally referred to otherwise are consistent and in consonance with generally accepted accounting principles.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3 Fixed assets and depreciation

Fixed assets are carried at the cost of acquisition less accumulated depreciation. The cost of fixed assets includes freight, duties, taxes and other incidental expenses relating to acquisition. Where fixed assets have been acquired from a country outside India, the cost of these fixed assets also includes exchange differences (favorable and unfavorable) arising in respect of foreign currency loans on other liabilities incurred specifcally for the purpose of their acquisition. Borrowing costs related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or constructions are capitalized.

Depreciation is provided on the Straight Line Method from the day in which the asset is put to use. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management's estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management's estimate of the useful life or remaining useful life. Pursuant to this policy, depreciation on assets has been provided at the rates based on the estimated useful lives of fixed assets.

Assets individually costing Rs 5,000 or less are depreciated at the rate of 100%.

Depreciation is charged on a proportionate basis for all assets purchased and sold during the year.

4. Revenue recognition

Revenue from sale of Manufactured goods, including scrap, is recognized on transfer of all significant risks and rewards of ownership to the buyer. The amount recognized as sale is inclusive of sales tax, custom duty, trade, Excise duty and quantity discounts on accrual basis. Interest on deployment of surplus funds is recognized using the time proportionate method based on underlying interest rates.

5. Inventories

Inventories are carried at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item-by-item basis. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition.

The method of determination of cost is as follows:

- Spares and Consumables are valued at cost.

- Raw-Materials & Intermediates are valued at weighted cost – (net of MODVAT)

- Work-in-Process is valued at material cost plus Manufacturing Expenses.

- Finished Goods are valued at the lower of cost or net realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition inclusive of Excise Duty.

- Saleable / disposable stock of scrap is valued at estimated realizable value. Provision for inventory obsolescence is assessed annually and is provided as and when considered necessary.

6. Foreign exchange transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profit and loss account of the year, except that exchange differences related to acquisition of fixed assets from a country outside India are adjusted in the carrying amount of the related fixed assets. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognized in the profit and loss account except those related to acquisition of fixed assets from a country outside India which are adjusted in the carrying amount of the related fixed assets.

7. Provisions and contingent liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outfow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outfow of resources. Where there is a possible obligation or a present obligation that the likelihood of outfow of resources is remote, no provision or disclosure is made. Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outfow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.

8. Income taxes

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (refecting the tax effects of timing differences between accounting income and taxable income for the year) provided in the books of accounts.

9. Earnings per share

The basic and diluted earnings per share are computed by dividing the net profit attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive equity shares outstanding during the year.

10. Retirement benefits to employees.

i. Short Term

Short term employee benefits are recognized as an expense as per the company's scheme based on expected obligations.

ii. Post Retirement

Post retirement benefits comprise of provident fund, superannuation and gratuity which are accounted for as follows:

a) Provident fund

This is a defned contribution plan. Contributions in respect of staff and workers are remitted to provident fund authorities in accordance with the relevant statute and are charged to profit and loss account as and when due. The Company has no further obligations for future provident fund benefits in respect of these employees other than its annual contributions.

b) Superannuation

This is a defned contribution plan. The Company makes contribution as per the scheme to Superannuation Fund administered by Life Insurance Corporation of India. The Company has no further obligation of future superannuation benefits other than its annual contributions and recognizes such contributions as expense as and when due.

c) Gratuity

This is a defned beneft plan. Provision for gratuity is made based on actuarial valuation using projected unit credit method. Actuarial gains and losses, comprising of experience adjustments and the effects of changes in actuarial assumptions, are recognized immediately in the profit and loss account as income or expense

11. Deferred Tax Liability

Deferred Tax resulting from timing difference between book and Tax profit is accounted for under liability method, at the current rate of tax, to the extent, the timing differences are expected to crystallize.

12. Intangible Assets

Impairment of Assets:

The company assesses at each balance sheet date whether there is any indication that an asset including goodwill may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is refected at the recoverable amount.

13. Dues to Micro, Small and Medium Enterprises:

The management has written to vendors requesting them to inform whether they would fall under the preview of Micro, Small and Medium Enterprises Act, 2001. Based on disclosure received, amount payable to such enterprises as at 31st March 2011 is Nil.

The computation of profit under section 349 of Companies Act, 1956 is not considered as the managerial remuneration. The remuneration that is paid is minimum remuneration based on effective capital of the Company as prescribed under Schedule XIII of the said Act.

16. Leases

Operating leases

The company is obligated under cancellable operating leases for Jumbo Bag Ltd., Athipedu factory which are renewable at the options of both the lessor and the lessee. The expense under the contracted lease amounts to Rs. 86,08,696/- (previous year Rs.74,79,498/-)

17. Disclosure Under AS-15

Defned Contribution Plans:-

(a) Contribution to Provident Fund : Rs.16,16,528/-

(b) Contribution to Superannuation Fund : Rs. 6,83,510/-

Defned Beneft Plans:- Gratuity:

The Gratuity liability is covered by a Master Policy taken out with LIC of India under the Cash Accumulation scheme. The company during the year has done actuarial valuation as on 31.03.2011 and the estimated liability amounted to Rs. 16.22 Lakhs which is debited to P & L Account.

Retirement benefits:

Disclosure as required by Accounting Standard (AS) – 15 (Revised 2005) "Employee benefits” issued by the Institute of Chartered Accountants of India are given below:

The estimates of future salary increases, considered in actuarial valuation, takes account of infation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

18. Segmental Reporting

Information given in accordance with the requirement of Accounting Standard 17, on Segment Reporting.

Company‘s business segments are as under:

Manufacturing: Manufacture of Flexible intermediate bulk container packaging material used for industrial purposes.

Trading: Trading of Polymers.

Segment Accounting Policies:

a. Segment accounting disclosures are in line with accounting policies of the Company.

b. Segment Revenue includes Sales and other income directly identifable with / allocable to the segment.

c. Expenses that are directly identifable with / allocable to segments are considered for determining the Segment Result.

d. Major portion of segment liabilities and Assets relates to manufacturing segment

e. Previous year fgures have not been furnished since this is the frst year of disclosure in terms of the standard.

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Mar 31, 2010

1. Basis of preparation of financial statements

(a) The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956, to the extent applicable. The financial statements are presented in Indian rupees.

(b) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3. Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulated depreciation. The cost of fixed assets includes freight, duties, taxes and other incidental expenses relating to acquisition. Where fixed assets have been acquired from a country outside India, the cost of these fixed assets also includes exchange differences (favorable and unfavorable) arising in respect of foreign currency loans on other liabilities incurred specifically for the purpose of their acquisition. Borrowing costs related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or constructions are capitalized.

Depreciation is provided on the Straight Line Method from the day in which the asset is put to use. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the managements estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the managements estimate of the useful life or remaining useful life. Pursuant to this policy, depreciation on assets has been provided at the rates based on the estimated useful lives of fixed assets

Assets individually costing Rs 5,000 or less are depreciated at the rate of 100%.

Depreciation is charged on a proportionate basis for all assets purchased and sold during the year.

4. Revenue recognition

Revenue from sale of Manufactured goods, including scrap, is recognized on transfer of all significant risks and rewards of ownership to the buyer. The amount recognized as sale is inclusive of sales tax, custom duty, trade, Excise duty and quantity discounts on accrual basis.

Interest on deployment of surplus funds is recognized using the time proportionate method based on underlying interest rates.

(i) TUF Interest: During the current financial year 2009-10, the company has earned Rs.77.71 Lakhs by way of Interest Subsidy from Technology Upgradation Fund maintained by the Central Government. Out of the said amount Rs.61.19 Lakhs relates to the previous year, and the same was recognized in the current year since the receipt of the same become certain only during the current year.

5. Inventories

Inventories are carried at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item-by-item basis. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition.

The method of determination of cost is as follows:

- Spares and Consumables are valued at cost.

- Raw-Materials & Intermediates are valued at weighted cost - (net of MODVAT)

- Work-in-Process is valued at material cost plus Manufacturing Expenses.

- Finished Goods are valued at the lower of cost or net realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition inclusive of Excise Duty.

- Saleable / disposable stock of scrap is valued at estimated realizable value.

provision for inventory obsolescence is assessed annually and is provided as and when considered necessary.

6. Foreign exchange transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the respective transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profit and loss account of the year, except that exchange differences related to acquisition of fixed assets from a country outside India are adjusted in the carrying amount of the related fixed assets.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognized in the profit and loss account except those related to acquisition of fixed assets from a country outside India which are adjusted in the carrying amount of the related fixed assets.

7. Provisions and contingent liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.

8. Tax on Income

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year) provided in the books of accounts.

9. Earnings per share

The basic and diluted earnings per share are computed by dividing the net profit attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive equity shares outstanding during the year.

10. Retirement Benefits to Employees.

i Short Term

Short term employee benefits are recognized as an expense as per the Companys Scheme based on expected obligations.

ii. Post Retirement

Post retirement benefits comprise of provident fund, superannuation and gratuity which are accounted for as follows:

a) Provident fund

This is a defined contribution plan. Contributions in respect of staff and workers are remitted to provident fund authorities in accordance with the relevant statute and are charged to profit and loss account as and when due. The Company has no further obligations for future provident fund benefits in respect of these employees other than its annual contributions.

b) Superannuation

This is a defined contribution plan. The Company makes contribution as per the scheme to superannuation Fund administered by Life Insurance Corporation of India. The Company has no further obligation of future superannuation benefits other than its annual contributions and recognizes such contributions as expense as and when due.

c) Gratuity

This is a defined benefit plan. Provision for gratuity is made based on actuarial valuation using projected unit credit method. Actuarial gains and losses, comprising of experience adjustments and the effects of changes in actuarial assumptions, are recognized immediately in the profit and loss account as income or expense

11. Deferred Tax Liability

Deferred Tax resulting from timing difference between book and Tax profit is accounted for under liability method, at the current rate of tax, to the extent, the timing differences are expected to crystallize.

12. Intangible Assets

Impairment of Assets:

The company assesses at each balance sheet date whether there is any indication that an asset including goodwill may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

13. Dues to Micro, Small and Medium Enterprises:

The management is currently in the process of identifying enterprises which have provided goods and services to the company which qualify under the definition of micro, small and medium enterprises, as defined in Micro, Small and Medium Enterprises Act 2001. Accordingly, the disclosure is apart of amount payable to such Enterprises as at 31st march 2010 is NIL.

14. Leases

(a) Operating leases

The company is obligated under cancellable operating leases for Jumbo Bag Ltd ,Athipedu factory which are renewable at the options of both the lessor and the lessee. The expense under the contacted lease amounts to Rs.74,79,498/- ( previous year Rs.59,17,768 /-)