1. SIGNIFICANT ACCOUNTING POLICIES A. Basis of brsentation of Financial Statements The financial statements are brpared under the historical cost convention modified by revaluation of fixed assets and in accordance with notified Accounting Standards by Companies (Accounting Standard) Rules, 2006 and relevant brsentation requirements of the Companies Act, 2013. The company generally follows the mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis. B. Use Estimates The brparation 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 revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized. C. Fixed Assets and Debrciation / Amortization Fixed Assets are stated at cost net of MODVAT / CENVAT and includes amounts added on revaluation, less accumulated debrciation. Cost comprises of the purchase price and any directly attributable cost of bringing the assets to working condition for its intended use including interest and other incidental and trial run expenses up to the date of commercial production. Surplus on revaluation of assets is credited to Capital / Revaluation Reserve. Debrciation / Amortization: i) Tangible Assets: Debrciation on Fixed Assets is provided as per useful life specified in Part C of Schedule II of the Companies Act, 2013. No write-off is being made in respect of leasehold land. ii) Intangible Assets: Computer software @ 20% p.a. D. Impairment of Assets Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Recoverable amount is higher of an asset's net selling price and its value in use. Value in use is the brsent value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. E. Investments Investments are considered as non-current investments and are stated at cost of acquisition. Market value of Quoted Investments at the date of the Balance Sheet is disclosed. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the Management. F. Inventories i) Raw Materials and Packing Materials are valued at the lower of cost and net realizable value. Cost is determined on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties & taxes, which are subsequently recoverable from the taxing authorities. ii) Stores and Spares are valued at cost computed on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable from the taxing authorities. iii) Semi-finished goods including those held for captive consumption is valued at factory cost including debrciation. iv) Finished goods are valued at the lower of cost and net realizable value. Cost includes direct material & labour cost and a proportion of manufacturing overheads. v) Purchases of finished goods are valued at the lower of cost and net realizable value. G. Foreign Currency Transactions i) Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction or that approximates the actual rate at the date of the transaction. ii) Monetary items denominated in foreign currencies at the year-end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year-end rate and rate on the date of the contract is recognized as exchange difference and the brmium paid on forward contracts is recognized over the life of the contract. iii) Non-monetary foreign currency items are carried at cost. iv) In respect of branch, which is integral foreign operations, all transactions are translated at rates brvailing on the date of transactions or that approximates the actual rate at the date of transactions. Branch monetary assets and liabilities are restated at the year-end rates. v) The company has opted for accounting exchange rate differences arising on reporting of long term Foreign Currency Monetary Items in line with Companies (Accounting Standard) Amendment Rules, 2009 on Accounting Standard - 11 (AS-11) notified by Govt. of India on March 31, 2009. Accordingly, the effect of exchange differences on Foreign Currency Loans of the company is accounted by addition or deduction to the cost of assets so far it relates to debrciable capital assets and in other cases by charging to statement of profit and loss as gain or loss on account of exchange difference. vi) Investments in shares of foreign subsidiary company are exbrssed in Indian Currency at the rate of exchange brvailing at the time when the original investments were made. H. Duties Excise duty on finished goods and custom duty on imported materials has been accounted on the basis of payments made in respect of goods cleared as also provision made for goods lying in Bonded Warehouse. I. Employee Benefits i) Short Term Employee Benefits: All benefits paid / payable wholly within 12 months of rendering the service are classified as short term. Benefits such as salaries, wages, short-term compensated absences, etc. and the expected cost of bonus, ex-gratia, medical, LTA are recognized undiscounted during the period in which the employee renders the related service and charged to statement of Profit and Loss. ii) Defined Contribution Plans: Company contributes Provident Fund in accordance with EPF Act, 1952 and ESIC Schemes in accordance with ESIC Act, 1948 under Government administered schemes, however certain employees are covered under the contributory plans with the trust "Garware Polyester Limited Office Staff & Officers Provident Fund". Contributions are accounted on accrual / paid basis and charged to statement of Profit & Loss. iii) Defined Benefit Plans: a. Liability towards Superannuation and Gratuity are covered by appropriate schemes with Life Insurance Corporation of India on accrual basis. Gratuity plans are determined by actuarial valuation by using the Projected Unit Credit method. b. Leave encashment benefits are accounted on actuarial valuation basis. J. Lease Rentals Lease Rentals are accounted on accrual basis over the Lease Term as per the relevant Lease Agreements. K. Research & Development Revenue expenditure on Research and Development is charged out in the accounting year in which it is incurred. Expenditure, which results in creation of assets, is included in Fixed Assets and debrciation is provided on such assets as applicable. L. Revenue Recognition: i) Sale of Products Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured are accounted for inclusive of Excise Duty and VAT / Sales Tax (wherever not charged separately), and are net of discounts and returns. ii) Export Benefits Export entitlements under the Duty Draw Back Scheme / Other Schemes are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds. iii) Others Revenue from services is recognised on rendering of services. Dividend income is recognised when the right to receive payment is established. Interest income is recognised on the time proportion basis. M. Taxation a) Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. b) Current tax is determined as the amount of tax payable in respect of taxable income for the period. The credit is taken as per entitlement for the tax liability provided under MAT based on taxable income as per the provisions of Income Tax Act, 1961. N. Borrowing Cost Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account. O. Measurement of EBITDA The company has elected to brsent Earnings before Interest (Finance cost), Tax, Debrciation and Amortization (EBITDA) as a separate line item on the face of the Statement of Profit and Loss for the year. The company measures EBITDA on the basis of Profit / (Loss) from continuing operations. P. Provisions, Contingent Liabilities & Contingent Assets Provisions involving substantial degree of estimation in measurement are recognised when there is a brsent obligation as a result of past events and it is probable that there will be an 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. Q. Earnings Per Share Earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting brference dividend and attributable taxes) by the weighted average number of equity shares outstanding during the year. 1. The Previous Year's figure have been re-grouped / reclassified to conform to this year's classification. For and on behalf of the Board of Directors S. B. GARWARE Chairman & Managing Director M. S. ADSUL Director (Technical) B. MORADIAN Director GOKUL D. NAIK Chief Financial Officer NIMESH S. SHAH Company Secretary & Vice-President (Legal PLACE : Mumbai, DATE : 29th May, 2015 |