NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2016 1 COMPANY PROFILE Flex Foods Limited. was incorporated on 5th February, 1990 with the Registrar of Companies under the provisions of Companies Act 1956, having Corporate Identification Number (CIN) L15133UR1990PLC023970. The Registered office of Company is situated at Lal Tappar Industrial Area, P. O. Resham Majri, Haridwar Road, Dehradun (Uttarakhand). Flex Foods Ltd. is engaged mainly in the business of cultivation and processing of Mushrooms, Herbs, Fruits & Vegetables in Freeze Dried, Air Dried and Individually Quick Frozen form. Flex Foods Limited has been selling its products mainly to the European and US markets. 2 SIGNIFICANT ACCOUNTING POLICIES 2.1 BASIS OF brPARATION The financial statements of the Company have been brpared and brsented in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on accrual basis, and comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The accounting policies adopted by the Company are consistant with those used in brvious year. All Assets and Liabilities have been classified as Current or Non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013. 2.2 CLASSIFICATION OF EXPENDITURE/INCOME Except Otherwise Indicated:- (i) All expenditure and income are accounted for under the natural heads of account. (ii) All expenditure and income are accounted for on accrual basis except when realisation of income is uncertain. 2.3 USE OF ESTIMATES AND JUDGEMENTS The brparation of the financial statements is in conformity with Indian Accounting Standards and requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on a going basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, in the period of the revision and future periods if the revision affects both current and future period. 2.4 VALUATION (i) Fixed Assets a) Tangible Fixed assets are stated at cost and other incidental expenses, less accumulated debrciation and impairment losses. Cost comprises the purchase price and any attributable cost such as duties(Net of Cenvat wherever applicable), freight, borrowing cost, adjustment on account of foreign exchange fluctuations, erection and commissioning expenses incurred in bringing the asset to its working condition for its intended use. b) Intangible Fixed assets are stated at cost and other incidental expenses, less accumulated debrciation and impairment losses. Cost comprises license fees and costs of implementation / system integration services. (ii) Raw Material & Packing Material Raw material and packing material are valued at lower of cost, based on First in First Out (FIFO) method arrived at after including freight inward directly attributable to acquisition or net realizable value. (iii) Finished Goods Finished Goods are valued at lower of cost, based on First in First Out (FIFO) method, arrived after including debrciation on Plant & Machinery, Electrical Installation and Factory Building, Repair & Maintenance on Factory Building, specific Manufacturing expenses including Excise Duty and specific Payments and Benefits to Employees or net realizable value. (iv) Work-in-Progress Work-in-Progress is valued at lower of cost based on First in First Out (FIFO) method, arrived after including debrciation on Plant & Machinery, Electrical Installation and Factory Building, Repair & Maintenance on Factory Building, specific Manufacturing expenses including Excise Duty and specific Payments and Benefits to Employees or net realizable value. (v) Cost of Consumable Stores & Spares Spares & Consumables are valued at lower of cost based on First in First Out (FIFO) method or net realizable value. 2.5 FOREIGN CURRENCY TRANSACTIONS (i) Foreign Currency monetary items remaining unsettled at the year-end, are translated at year-end rates.Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. (ii) Exchange differences on settled/translated monetary items are adjusted as income/expense through the Exchange Fluctuation Account in the year they arise. (iii) Difference between the forward and exchange rate on the date of transactions are adjusted over the period of the contract as an income / expense through the Exchange Fluctuation Account. (iv) Profit or loss on cancellation of forward contracts for transactions is adjusted as income / expense through Exchange Fluctuation Account in the year they arise. 2.6 DEbrCIATION (i) Normal debrciation on all Fixed Assets except Land & Intangible Assets are provided on Straight Line Method as per the Schedule-II of The Companies Act, 2013 and after providing for the residual value with (maximum to the extent of 5%) of the Fixed Assets as determined by the management. (ii) Intangible assets are written off over a period of five years from the date of put to use. (iii) Debrciation/Amortization on addition /deletions to Fixed Assets is provided on pro-rata basis from/to the date of addition/deletions. (iv) Debrciation/Amortization on additions/deletions to the Fixed Assets due to Exchange Rate Fluctuation is provided on pro-rata basis since inception. 2.7 IMPAIRMENTS The carrying amount of assets are periodically assessed by the management, using internal & external sources, to determine whether there is any indication that assets of concerned cash generating unit may be impaired. Impairment loss, if any is provided to the extent the carrying amount of assets of concerned cash generating unit exceeds their recoverable amount. The recoverable amount is higher of net selling price of assets of concerned cash generating unit and their brsent value in use. Value in use is the brsent value of estimated future cash flows expected to arise from the continuing use of assets of concerned cash generating unit and from their disposal at the end of their useful life. 2.8 GOVERNMENT GRANTS (i) Capital Subsidy received from Government as contribution towards Capital Outlay for setting up the fixed assets is treated as Capital Grants which is recognized as Income in the Statement of Profit & Loss over the period and in the proportion in which debrciation is charged. (ii) Revenue Grants are recognized in Statement of Profit & Loss. 2.9 SALES (i) Export Sales are accounted for on C & F / F.O.B basis. (ii) Sales Returns are adjusted from the sales of the year in which the returns take place. 2.10 PURCHASES (i) Purchase returns are adjusted from the purchases of the year in which the returns take place. (ii) Purchases are accounted for "Net of VAT Credit availed on eligible inputs". 2.11 EMPLOYEES BENEFITS (i) Defined long term benefit is recognized at the brsent value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and losses in respect of post employment and other long term benefits are charged to Statement of Profit & Loss. (ii) Defined Contribution Plans are charged to Statement of Profit & Loss based on the contribution made to the specified fund. (iii) Short term employee benefits are charged to Statement of Profit & Loss at the undiscounted amount in the year in which the related service is rendered. 2.12 PROVISION FOR INCOME TAX Income tax expenses are accrued in accordance with Accounting Standard-22 "Accounting for Taxes on Income" as notified by the Companies Accounting Standard (Rules) 2006, which include Current Tax and Deferred Tax. Provision for current tax is made after taking into considerations benefits admissible under the provision of the Income - Tax Act 1961. Profit Computed after adjustment in accordance with the accounting treatment suggested in Income Computation & Disclosure Standards issued by the Central Board of Direct Taxes. Deferred Tax Assets & Liabiities are measured using the current tax rates. Deferred income tax reflects the impact of current year timing difference between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets are recognized only to the extent, there is a reasonable certainty that sufficient future taxable income will be available. Such deferred tax assets & other unrecognized deferred tax assets are re-assessed at each Balance Sheet date and the carrying value of the same are adjusted recognizing the change in the value of each such deferred tax assets. 2.13 CLAIMS BY/AGAINST THE COMPANY Claims by/ against the Company arising on any account is provided in the accounts on receipts/acceptances. 2.14 RESEARCH & DEVELOPMENT EXPENSES (i) All revenue expenditures on Research & Development activities are accounted for under the separate accounting head. (ii) All capital expenditures on Research & Development activities are accounted for under the natural heads of Fixed Assets Account. 2.15 BORROWING COST Borrowing cost attributable to the acquisition or construction of qualifying / eligible assets are capitalized as part of the cost of such assets. A qualifying / eligible asset is an asset that necessarily takes a substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense and are charged to revenue in the year in which they are incurred. 2.16 EARNING PER SHARE In accordance with the Accounting Standard-20 (AS-20) "Earning Per Share" as notified by the Companies Accounting Standard (Rules) 2006, Basic & Diluted Earning Per Share is computed using the weighted average number of Shares outstanding during the period. 2.17 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS In accordance with the Accounting Standard-29 (AS-29) as notified by the Companies Accounting Standard (Rules) 2006 a) Provisions are made for the brsent obligations where amount can be estimated reliably, and b) Contingent liabilities are disclosed for possible obligations arising out of uncertain events not wholly in control of the company. Contingent assets are neither recognized nor disclosed in the financial statements. 3. In the opinion of the board and to the best of their knowledge, value of realisation of assets, other than fixed assets in the ordinary course of the business, would not be less than the amount at which they are stated in the balance sheet. 4 Necessary disclosures under Micro, Small and Medium Enterprises Development Act 2006, can only be considered once the relevant information to identify the suppliers who are covered under the said Act are received from such parties. 5 Figures have been rounded off to the nearest thousands. 6 These financial statements have been brpared in the format brscribed by the Schedule III to the Companies Act 2013. Previous Year figures have been recasted/ restated to confirm to the classification of the Current Period. 7 Due to out break of Fire in the Factory brmises of the Company situated at "Lal Tappar Industrial Area, P.O. Resham Majri, Haridwar Road, Dehradun " on 24th April,2016; Fixed Assets and Stock of the Company estimating to be of Rs. 50 Lacs & Rs. 250 Lacs respectively were destroyed, which is fully covered under the Insurance Policies undertaken by the Company. The Company has already filed the claim with the Insurance Company. 8 The Company is now availing benefits under the EPCG Scheme of the Foreign Trade Policy 2015-20; after exit from the EOU Scheme as per the Final Debonding Letter received on 28th August, 2015. For Jain Singhal & Associates Chartered Accountants Firm Registration No.005839N Bhawna Khanna Partner Membership No.502428 For and on behalf of the Board of Directors Ashok Chaturvedi Chairman DIN -00023452 S.K. Kaushik Whole-Time Director DIN -00027035 A.R. Rao Chief Executive Officer M.M. Varshney Sr. Vice brsident Rajesh Dheer Company Secretary Naval Duseja Chief Financial Officer Place : NOIDA Dated : 26th May, 2016 |