Accounting Policies of Kanchi Karpooram Ltd. Company

Mar 31, 2018

Note 28: Capital management

The Company’s objective of capital management is to maximize the return to its shareholders through optimal mix of debt and equity.

The Company determines the amount of capital required on the basis of annual and long-term operating plans. The funding requirements are met through equity and long term/short term borrowings. The Company monitors the capital structure on the basis of Net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

The following table summarizes the capital of the Company:

Note 29: Fair values

1 Fair value measurement hierarchy is as follows:

a) Level 1 item of fair valuation is based on market price quotation at each reporting date

b) Level 2 item of fair valuation is based on significant observable input like PV of future cash flows, MTM valuation, etc.

c) Level 3 item of fair valuation is based upon significant unobservable inputs where valuation is done by independent valuer.

2 The carrying amounts of trade receivables, trade payables, cash and cash equivalents and other current financial assets and are considered to be the same as their fair values, due to their short-term nature.

3 For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values. The fair value of the financial assets and financial liabilities is the amount at which the instrument could be exchanged in a current transaction between willing parties , other than in a forced or liquidation sale.

Method and assumption

The following methods and assumption were used to estimate the fair value at the reporting date:

Loans to employees and security deposit paid are valued using discounted cash flow using rates currently available for items on similar terms, credit risk and maturities

Note 30: Financial instruments and Risk factors Financial Risk factors

The Company’s financial liabilities comprise of short term and long term borrowings, trade payables, employees dues and unpaid dividend. The main purpose of financial liabilities is to support the Company’s financial operations. The Company’s financial assets includes security deposit, investments, trade receivable, staff advance, cash and cash equivalents, Bank balance etc that derive directly from the operations.

To ensure alignment of risk management system with the corporate and operational objective and to improve upon the existing procedure, the Company oversees various risk factors for managing of these risks.

Interest rate risk

The Company is exposed to interest rate risk from the possibility that the inflow in the interest rate will affect future cash flows of a financial instruments.

The Company’s interest rate mix management includes to maintain a mix between fixed or floating rate based on liquidity.

Credit risk

Customer credit risk is managed according to the Company’s policy, procedure and control relating to customers’ credit risk management. Outstanding receivables are monitored regularly.

Liquidity risk

"The Company monitors its risk of shortage of funds using detailed cash flow projections which is monitored closely on a daily basis. The Company has been sanctioned credit facilities for meeting its working capital equipment of the Company."

Note 31: Transition to Ind AS

"These are the Company’s first financial statements prepared in accordance with Ind AS, notified under Section 133 of the Companies Act, 2013 read with the Rules made thereunder. The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31st March 2018, the comparative information presented in these financial statements for the year ended 31st March 2017 and in the preparation of opening Ind AS balance sheet as at 1st April 2016 (the Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the Accounting Standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP)."

An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position and financial performance is set out below:

Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

Ind AS optional exemptions:

1. Deemed cost - Property, Plant and Equipment and Intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for decommissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at previous GAAP carrying value, except freehold land which is measured at its market value as at the transition date.

2. Designation of previously recognized financial instruments

Ind AS 101 allows an entity to designate investment in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS.

The Company has elected to apply this exemption and accordingly, opted to:

a. Designate financial assets at FVTPL as per Ind as 109 based on fact and circumstances at the transition date.

Ind AS mandatory exceptions:

1. Estimates

An entity’s 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), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1st April 2016 are consistent with estimates as at the same date made in conformity with previous GAAP.

2. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of facts and circumstances that exist at the date of transition to Ind AS.

Financial assets such as loans to employees and security deposit paid have been classified and measured at amortized cost on the basis of facts and circumstances at the date of transition to Ind AS.

Note 32: Contingent liabilities

(a) Contingent Liability- Performance Guarantee issued by Bank of India to TNPCB for Rs.Nil (2016-17: Rs.2 lakh)

(b) Estimated amount of contracts remaining to be executed on capital accounts not provided for - Rs._lakh (201617: Rs.16.04 lakh)

Note 33: Related Party disclosures

I) Key Managerial Personnel (KMP)

a Shri. Suresh V Shah Managing Director

b Shri. Arun V Shah Director

c Shri. Dipesh S. Jain Whole Time Director

d Shri. KC.Radhakrishnan CFO

II) Director

Smt. Pushpa S Jain Director

III) Other Related Parties

a M/s. Suresh Industries Firm in which directors have significant influence

b M/s. Ambika Industries Firm in which directors have significant influence

c Shri. Mukesh Goal Relative of Director

Note 35: Segment reporting

The Board of Directors of the Company has been identified as the Chief Operating Decision Maker ("CODM"). The Directors evaluate the Company performance and allocate resources based on the analysis of various performance indicators of the Company as a single unit. Therefore there is no reportable segment for the Company.

The entire revenue from operations is derived from India.

All non-current assets are situated within India.

Note:*The amount excludes contribution to Gratuity fund and provision for leave encashment liability Note 38:

Previous years’ figures have been regrouped and rearranged, wherever necessary, to conform to current year classification and rounded off to the nearest lakh of rupee.

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Mar 31, 2015

1 BASIS OF PREPARATION

The financial statement are prepared under the historical cost convention method in accordance with the Generally Accepted Accounting Principles (GAAP) and the provisions of the Companies Act 2013 and Mandatory Accounting Standards as prescribed under section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.

2 USE OF ESTIMATES

The preparation of financial statements requires management of the company to make certain estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of financials and reported amounts of income and expenses during the year. Example of such estimate include provision for doubtful receivables, employee benefits, provision for income taxes, accounting for contract costs expected to be incurred, the useful lives of depreciable fixed assets and provision for impairment.

The Management believes that these estimates and assumptions are reasonable and prudent. However actual results could differ from these estimates. Differences between actual results and estimates are recognized in the period in which they materialize.

3 INCOME RECOGNITION

Revenue from sale of goods is recognized upon dispatch of goods. Sales are accounted net of Excise Duty, returns, sales tax and freight.

Interest income is recognized using time proportion method.

4 FIXED ASSETS AND DEPRECIATION

a) Fixed Assets are carried at cost less Accumulated depreciation and impairment loss if any. Cost includes all expenses incurred to bring the assets to its present location and condition and allocated preoperative expenditure during construction period. Income earned out of Trial operations is netted against the cost of the Project.

b) Fixed assets are depreciated as per Schedule II of the Companies Act, 2013 based on the useful life of the Assets.

c) Impairment loss, if any, is provided to the extent the carrying amount of assets exceeds their recoverable amount.

d) Borrowing Costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

5 INVENTORIES

a) Raw materials and Stores and spares are valued at cost under First-In-First-Out (FIFO) method.

b) Finished goods are valued at cost (including applicable overheads and excise duty) or net realizable values whichever is lower

c) Work-in-progress value is derived from the value of finished goods less estimated cost of work still to be completed.

d) Modvat / Cenvat / Service Tax credits on materials / capital items are availed on purchases / installation of assets respectively and utilized for payment of excise duty on goods manufactured and the unutilized credit is carried forward in the books.

6 FOREIGN CURRENCY TRANSLATIONS

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translations of monetary assets and liabilities denominated in foreign currencies at theyearend are recognized in the profit and loss account.

7 EMPLOYEE BENEFITS

a. Short term employee benefits are charged off at the undiscounted amount in the year in which related service is rendered.

b. The company has a defined benefit gratuity plan funded with Life Insurance Corporation of India, covering eligible employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or in termination of employment. Liability for unavailed leave is actuarially valued and is funded with Life Insurance Corporation of India.

8 TAXES ON INCOME

Taxes expense comprises of current tax and Deferred Tax. Current income taxis provided on the taxable income for the period as per the provisions of Income Tax Act, 1961. Deferred Tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

9 EARNINGS PER SHARE

The earnings considered in ascertaining earnings per share comprises of the net profit after tax before exceptional items. The number of shares used in computing earnings per share is the weighted average number of shares outstanding during the year. Diluted earnings per share comprises of weighted average number of share considered for deriving basic earnings per share as well as dilutive potential equity shares.

10 LEASES

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rental payments made under operating leases are charged to the statement of Profit and Loss.

11 SEGMENT REPORTING

The Company's primary segment is identified as Business segment based on nature of product, risks, returns and the internal business reporting system and the secondary segment is identified based on Geographical location of the customers as per Accounting Standard -17. The Company is principally engaged in a single business segment Viz, manufacture and sale of Camphor and allied products.

12 PROVISIONS, CONTINGENT LIABIUTIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources.

Contingent Liabilities are not recognized, but are disclosed in the notes.

Contingent assets are neither recognized nor disclosed in the financial statements.

13 IMPAIRMENT OF ASSETS

Thecompany determines whether there is any indication of impairment of the carrying amount of its assets. The recoverable amount of such assets is estimated and if any indication of impairment exists, impairment loss is recognized where the carrying amount of the assets exceeds its recoverable amount.

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Mar 31, 2014

1. SYSTEM OF ACCOUNTING

A. The Company follows mercantile system of accounting and recognizes income and expenditure on accrual basis, unless and otherwise specified.

The financial statements have been prepared in all material respects in compliance of Accounting Standards as notified by the Companies (Accounting Standards) Rules, 2006.

B. Financial statements are prepared under historical cost convention and on "going concern” basis.

2. USE OF ESTIMATES

The preparation of financial statements requires management of the company to make certain estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of financials and reported amounts of income and expenses during the year. Example of such estimate include provision for doubtful receivables, employee benefits, provision for income taxes, accounting for contract costs expected to be incurred, the useful lives of depreciable fixed assets and provision forimpairment.

The Management believes that these estimates and assumptions are reasonable and prudent. However actual results could differ from these estimates. Differences between actual results and estimates are recognized in the period in which they materialize.

3. INCOME RECOGNITION:

Revenue from sale of goods is recognized upon dispatch of goods. Sales are accounted net of Excise Duty, returns, sales tax and freight.

Interest income is recognized using time proportion method.

4. FIXED ASSETS & DEPRECIATION:

1) Fixed Assets are carried at cost less Accumulated depreciation and impairment loss if any. Cost includes all expenses incurred to bring the assets to its present location and condition and allocated preoperative expenditure during construction period. Income earned out of Trial operations is netted against the cost of the Project.

2) Depreciation on assets is provided using Straight Line Method based on rates specified in Schedule XIV of the Companies Act, 1956 or on estimated useful lives of assets estimated by the management, whichever is higher. Individual assets costing less then Rs.10,000/-are fully depreciated in the yearof purchase.

3) Impairment loss, if any, is provided to the extent the carrying amount of assets exceeds their recoverable amount.

4) Borrowing Costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

5. INVENTORIES:

1) Raw materials and Stores and spares are valued at cost under First - In - First - Out (FIFO) method.

2) Finished goods are valued at cost (including applicable overheads and excise duty) or net realizable values whichever is lower.

3) Work-in-progress value is derived from the value of finished goods less estimated cost of work still to be completed.

4) Modvat / Cenvat / Service Tax credits on materials / capital items are availed on purchases / installation of assets respectively and utilized for payment of excise duty on goods manufactured and the unutilized credit is carried forward in the books.

6. FOREIGN CURRENCY TRANSLATIONS:

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translations of monetary assets and liabilities denominated in foreign currencies at the yearend are recognized in the profit and loss account.

7. EMPLOYEE BENEFITS:

a. Short term employee benefits are charged off at the undiscounted amount in the year in which related service is rendered.

b. The company has a defined benefit gratuity plan funded with Life Insurance Corporation of India, covering eligible employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or in termination of employment. Liability for unavailed leave is actuarially valued and is funded with Life Insurance Corporation of India.

8. TAXES ON INCOME:

Taxes expense comprises of current tax and Deferred Tax. Current income tax is provided on the taxable income for the period as per the provisions of Income Tax Act, 1961. Deferred Tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

9. EARNINGS PER SHARE:

The earnings considered in ascertaining earnings per share comprises of the net profit after tax before exceptional items. The number of shares used in computing earnings per share is the weighted average number of shares outstanding during the year. Diluted earnings per share comprises of weighted average number of share considered for deriving basic earnings per share as well as dilutive potential equity shares.

10. LEASES:

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rental payments made under operating leases are charged to the statement of Profit and Loss.

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Mar 31, 2013

A. ACCOUNTING CONCEPTS:

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with Accounting principles generally accepted in India and in compliance with the accounting standards notified by the Central Government of India, under the Companies (Accounting Standards) rules 2006 and relevant provisions of the Companies Act, 1956.

b. REVENUE RECOGNITION:

Sale of Finished Goods is recognized upon despatch of goods. Sales are accounted net of Excise Duty, returns, Sales Tax and freight.

Interest income is recognized using time proportion method.

c. FIXED ASSETS:

Fixed Assets are stated at cost less depreciation. The assets are depreciated under straight line method. Depreciation is provided in accordance with Schedule XIV of the Companies Act, 1956.

d. INVENTORIES:

Inventories are valued at lower of cost and net realisable value. Cost includes all costs of purchase, conversion cost and other costs incurred in bringing the inventories to their present location and condition. The inventories are valued at First-in-First-out (FIFO) method.

e. EMPLOYEE RETIREMENT BENEFITS:

Contribution payable by the Company under defined contribution scheme towards Retirement Benefits in the form of Provident Fund for the year are charged to Profit & Loss account.

Gratuity Liability is funded and the appropriate accrual of Liability for the year is Charged to Profit and Loss based on actuarial valuation.

Provision towards Leave encashment is made based on actuarial valuation and is funded with Life Insurance Corporation of India.

The actuarial valuation is done as per projected unit credit method.

Actuarial gains / losses are immediately taken to Profit and Loss Account.

f. FOREIGN CURRENCY TRANSACTIONS :

Foreign Currency transactions are accounted on the basis of exchange rates prevailing on the transaction date and gain or loss on settlement is recognised in the Profit and Loss Account.

Foreign Currency Assets and Liabilities outstanding at the end of the year are being converted at the closing rates. The exchange gain / loss is adjusted to Revenue.

g. TAXATION :

Income tax expense comprises current tax and deferred tax charge or credit. The deferred tax asset and deferred tax liability are calculated by applying tax rate applicable and tax laws that have been enacted or subsequently enacted by the Balance Sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of its realisations, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to reassure realisation.