Accounting Policies of TCM Ltd. Company

Mar 31, 2016

I. Significant Accounting Policies

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting policies and principles in India and Accounting Standards prescribed U/s 133 of the Companies Act, 2013, r. w. r The Companies (Indian Accounting Standard) Rules 2015, till the standards of accounting and any addendum thereto as prescribed by Central Government in consultation and recommendation of National Financial Reporting Authority and the existing standards shall continue to apply.

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

The following are the other disclosures regarding applicable accounting standards and accounting policies followed by the company,

1) AS — 1-Basis of Preparation and Presentation of Financial Statements

As per AS-1 the financial statements of the Company shall present true and fair views on the financial position, financial performance and cash flows of the entity. The company has not offset any of the assets and liabilities and income and expenses unless otherwise required by the AS. The management concluded that the company has complied with all the provisions of AS -1 like assessment of going concern concept, even though there are no production activities in the factories of the company and no income from revenue operations. The company is in negotiation with interested parties for revamping the facilities of the company for new project. The management further confirmed that the company abides by the provisions of AS — 1 like recognition of assets, liabilities, income and expenses based on accrual concept of accounting, and materiality concept.

2) Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known or materialized.

3) AS - 10 Fixed Assets

Fixed assets are stated at cost. The cost of fixed assets comprises purchase price and any attributable cost bringing the fixed assets to its working condition for its intended use. The company has accounted the fixed assets as per the provisions contained in Accounting Standard 10”Accounting for Fixed Assets”. The fixed asset shown in the financial statements of the company is net of depreciation as per Schedule II of the Companies Act, 2013. As per the Schedule II of the Companies Act, 2013 the assets whose useful life was totally expired should be adjusted in Retained earnings of the company after retaining 5% of the original cost and after setting of the corresponding accumulated depreciation.

4) AS — 6 Depreciation Accounting

Depreciation is charged as per the Schedule II of The Companies Act, 2013. There is a change in method of computing depreciation as compared to last year, because of introduction of Companies Act, 2013. The rate applicable for each asset cease to exist and the concept of useful life of asset comes in the place of rate of depreciation. As per the Schedule II the assets of the company depreciates over the useful life as mentioned in the schedule. As the initial year of application of Schedule II, the depreciable amount is the opening WDV less its residual value, which is 5% of the original cost, the depreciable amount is depreciated over remaining useful life of the asset. The depreciation of the assets purchased during the year is calculated on pro-rata basis.

5) AS-2 Inventories

Inventories includes raw materials, packing materials and finished goods, which are valued at lower of cost or realizable value as per Accounting Standard — 2 of Institute of Chartered Accountants of India. The costs of inventories comprise of all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. For assigning cost to each inventory item First In First Out method is used. Due allowance is estimated and made for defective and obsolete items based on past experience. Even though the production activities of the company were suspended for last two years the management confirmed that there exist inventories as shown in the balance sheet and are in saleable condition.

6) Contingent Liabilities

These are disclosed by way of notes in the Balance sheet. Provision is made in the accounts in respect of those contingencies which are likely to materialize in to liabilities after the year end, till the finalization of accounts and have material effect position stated in the Balance sheet.

7) Deferred Tax

The difference aroused between the taxable income and accounting income is permanent in nature which was due to difference depreciation as per Companies Act and Income Tax Rules and it will result in deferred tax asset, since there is no virtual certainty of taxable income in the near future of the Company, the Company has not provided in the books of account the effect of deferred tax as per the norms and provisions of Accounting Standard — 22 “ Taxes on Income” issued by the Institute of Chartered Accountants of India.

8) Investments

Investments are readily realizable and are held for not more than one year from the date on which such investments are made are classified as current investments. All other investments are classified as non -current investments. Current investments are carried at cost or fair value whichever is lower. Long term investments are carried at cost.

9) Impairment of Assets

The carrying amounts of assets are reviewed at Balance sheet date if there is any indication of impairment based on internal/ external factors. As per AS-28 Impairment of assets, an asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount. In the absent of realizable value of assets of the company, the decrease or increase in value of assets has not been quantified. Hence the impairment of assets has not been quantified and the impairment of assets could not be ascertained

10) Employee Benefits

The current service costs of employees are charged to statement of profit/ loss. The contribution of the company to the defined contribution schemes like EPF and ESIC are charged to statement of profit/loss. Since the production activity was suspended and all the employees in the roll are agreed for wages up to November 2011, no provision is made during the year under audit for wages.

11) Earnings Per Share

Earnings per share are calculated by dividing the net profit or loss for the period attributable to equity share holders by the number of equity shares outstanding during the period end. Since the company has only one category of shares the basic and diluted earnings per share is same.

12) Government Grants

The company follows the policy of treating the grants/subsidies received from various government agencies as “Capital Reserves” in the Financial Statements. The amount which was received in the earlier years comes to Rs.77, 67,508/- as subsidies of various assets. Since the introduction of Companies Act 2013, the useful life of the assets which stood against the subsidy received was totally expired and the company adjusted the value in accumulated profits after retaining 5% of the original cost of the assets as per the Schedule II of the Companies Act, 2013. Therefore the subsidy in the financial statement effectively does not representing any of the fixed asset from the financial year 2014-15.

13) Related Party Transactions

During the year under audit the company had taken an interest free temporary loan from a related party who holds substantial shareholding in the Company. The followings are the details of related party transactions as defined in AS 18 Related Party Disclosures.

II. Regarding the Assessment Year 2004-05 the appeal filed by the Company before the Income Tax Appellate Tribunal has been partly allowed, but the order giving effect to this order has not yet been passed by the department. The Company intends to take up the matter before the Honorable High Court of Kerala.

III. Out of the total extent of land measuring 99.92 acres purchased at Ulundurpet, 54 acres of land come under Urban Land Ceiling Act. The application for exemption from Land ceiling is pending before the Government the clearance for the land admeasuring 99.92 Acres has not been granted by Pollution Control Board because of the stretch of land falling within one kilometer from the banks of the river. In the light of the land ceiling act, the possibilities for disposal of lands possess difficult. In absence of reasonable marketable value, the increase or decrease in the value of the land is not ascertainable.

IV. The company filed application to BIFR as a sick industrial Company and stands registered as case No.101/2005 dt.28.03.2005.BIFR has appointed Bank of Baroda, as the Operating Agency. The Company has submitted a revival proposal to the Bank Baroda.

V Company does not possess full information as to, which of its suppliers are small scales industrial undertakings holding permanent registration certificate issued by the relevant authorities. Therefore the company did not categorize its suppliers as regulations under MSMED Act.

VI. The operations of the company relate only to one segment viz., manufacture and sale of chemicals. But the operations of the company were suspended since last two years. So there is no revenue from this segment.

VII. The balance under deposits made by the company with different authorities and various other parties were not confirmed as on 31st March 2016. The following are the details.

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

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Mar 31, 2015

Not available

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Mar 31, 2014

I. Fixed Assets are stated at their original cost including taxes, duties, freight and other incidental expenses related to acquisition, as reduced by Cenvat Credit.

II. Depreciation has been provided on Plant and Machinery on a straight line method on historical book cost and in respect of other fixed assets on Written Down Value method, as per schedule XIV of the Companies Act 1956

III. Valuation of Inventories as per AS-2 of ICAI:-

Raw Materials, Stores & spares are valued at cost, finished goods at cost or net realizable value whichever is less including excise duty'' payable and work —in-process at cost.

IV. Investments are valued at cost except those where permanent diminution has arisen for which due provision has been made. Dividends are accounted as and when declared and received.

V. Leave payments to employees are accounted as and when claimed and paid.

VI. The company had been following the system where Retirement Benefits were provided in the books of accounts and payments were made to Life Insurance Corporation of India on the basis of actuarial principles. However no provision has been made during the current year

VII. Excise Duty on the closing stock of finished goods at the factory is included in the valuation of stock-in-trade. This will have no effect on the working results of the company.

VIII. Foreign Exchange transactions (monetary items) remaining unsettled at the end of the period are converted at the rates prevailing on the last day of the period.

IX. The Subsidies of capital nature received or receivable are accounted as capital reserves.

The subsidies of revenue nature, if any, are taken as income.

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Mar 31, 2012

I. Fixed Assets are stated at their original cost including taxes, duties, freight and other incidental expenses related to acquisition, as reduced by Cenvat Credit.

II. Depreciation has been provided on Plant and Machinery on a straight line method on historical book cost and in respect of other fixed assets on Written Down Value method, as per schedule XIV of the Companies Act 1956

III. Valuation of Inventories as per AS-2 of ICAI:-

Raw Materials, Stores & spares are valued at cost, finished goods at cost or net realizable value whichever is less including excise duty payable and work -in- process at cost.

IV. Investments are valued at cost except those where permanent diminution has arisen for which due provision has been made. Dividends are accounted as and when declared and received.

V. Leave payments to employees are accounted as and when claimed and paid.

VI. The company had been following the system where Retirement Benefits were provided in the books of accounts and payments were made to Life Insurance Corporation of India on the basis of actuarial principles. However no provision has been made during the current year

VII. Excise Duty on the closing stock of finished goods at the factory is included in the valuation of stock-in-trade. This will have no effect on the working results of the company.

VIII. Foreign Exchange transactions (monetary items) remaining unsettled at the end of the period are converted at the rates prevailing on the last day of the period.

iX. The Subsidies of capital nature received or receivable are accounted as capital reserves. The subsidies of revenue nature, if any, are taken as income.

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Mar 31, 2010

I. Fixed Assets are stated at their original cost including taxes, duties, freight and other incidental expenses related to acquisition, as reduced by Cenvat Credit.

II. Depreciation has normally been provided on Plant and Machinery on a straight line method on historical book cost and in respect of other fixed assets on Written Down Value method, as per schedule XIV of the Companies Act 1956

III. Valuation of Inventories as per AS-2 of ICAI:-

Raw Materials, Stores & spares are valued at cost, finished goods at cost or net realizable v:,ue whichever is less including excise duty payable and work -in- process at cost.

IV. Investments are valued at cost except those where permanent diminution has arisen for which due provision has been made. Dividends are accounted as and when declared and received.

V Leave payments to employees are accounted as and when claimed and paid.

VI. The company had been following the system where Retirement Benefits were provided in the books of accounts and payments were made to Life Insurance Corporation of India on the basis of actuarial principles. However no provision has been made during the current year

VII. Excise Duty on the closing stock of finished goods at the factory is included in the valuation of stock-in-trade. This will have no effect on the working results of the company.

VIII. Foreign Exchange transactions (monetary items) remaining unsettled at the end of the period are converted at the rates prevailing on the last day of the period.

IX. The Subsidies of capital nature received or receivable are accounted as capital reserves. The subsidies of revenue nature, if any, are taken as income.