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AksharChem (India)

BSE: 524598|NSE: AKSHARCHEM|ISIN: INE542B01011|SECTOR: Dyes & Pigments
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Mar 16
Accounting Policy Year : Mar '17

CORPORATE INFORMATION

AksharChem (India) Limited (The Company) is a public limited company incorporated in India under the Companies Act, 1956. The Company is engaged in the business of manufacturing and export of Dyes and Pigments. The company''s equity shares are listed at BSE Limited (BSE), National Stock Exchange of India Limited (NSE) and Ahmadabad Stock Exchange Ltd. (ASE).

1 SIGNIFICANT ACCOUNTING POLICIES 1.11 Disclosure of Accounting Policies

a. Basic Preparation of Financial Statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (''Indian GAAP'') to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 and guidelines issued by the Securities Exchange Board of India (SEBI). The financial statements have been prepared on an accrual basis and under the historical cost convention, except for certain financial instruments which are measured at fair value.

b. Use of Estimates

The preparation of financial statements in conformity with the Indian GAAP requires management to make Judgment, estimates and assumptions to be made that affect the reported amounts of assets and liabilities, disclosure of contingent 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 results are known / materialized.

c. Current and non-current classification

All assets and liabilities are classified as current and non-current as per the Company''s operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013. Based on the nature of the activities, the Company has determined it''s operating cycle as 12 Months for the purpose current and non-current classification of assets and liabilities.

1.2 Accounting for Investments

Investments which are readily realizable and intended to be held for more than one year from the date on which such investments are made, are classified as Current Investments. All other Investments are classified as Long-term Investments.

Current investments are carried at lower cost or fair market value. Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is permanent in the opinion of the management.

1.3 Valuation of Inventories

a. Stock of Raw material, are valued at lower of the cost on FIFO basis including incidental expenses to bring the inventories to their present location and condition and estimated net realizable value after providing for cost of obsolescence and other anticipated losses, wherever considered necessary.

b. Packing Materials and Stores & Spares are valued at cost on FIFO basis.

c. Stock of Finished goods and work in process include cost, cost of conversion and other cost incurred in bringing the inventories to their present location and condition; and market realizable value whichever is lower. Trading goods are valued at cost on FIFO basis or market value whichever is lower. By products are valued at net realizable value.

d. The Company is mainly engaged in the export business, the closing stock at the year end is generally exported in the next year. Exports are being exempted from excise duty, Hence no provision for excise duty has been made in Statement of Profit

& Loss and Finished goods are valued without adding therein excise duty. However they said liability if accounted would have no effect on the profit for the year.

1.4 Cash Flow Statements

Cash Flow Statement are reported using the Indirect method The cash flow from operating, investing and financing activities of the Company are segregated based on the available information.

Cash and Cash Equivalents for the purpose of cash flow comprises of Cash at Bank, Cash in Hand, Demand Deposits with Banks and other Short Term Highly Liquid Investments / Deposits with an original maturity of three months or less and Current and other accounts held with Banks.

1.5 Contingencies and Event Occurring after the Balance Sheet Date

a. Disclosure of contingencies as required by the accounting standards are furnished to the Notes on Financial Statements.

b. Assets and Liabilities are adjusted for events occurring after the balance sheet date that provide additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date.

c. Dividends, which are proposed/declared by the Company after the Balance Sheet date but before the approval of the financial statements are adjusted.

1.6 Net Profit or Loss for the period, Prior Period items and Changes in Accounting Policies

Items of Income and Expenditure pertaining to prior period as well as extra ordinary items, where material, are disclosed separately.

1.7 Revenue Recognition

a. Revenue from sale of goods are recognized when goods are supplied and are recorded net of trade discounts, rebates and VAT but include, wherever applicable, excise duties, export incentives such as Duty Drawbacks and premiums on sale of Import Licenses.

b. Export benefits / incentives are accounted on accrual basis. Accordingly, estimated export benefits against exports affected during the year are taken into account as estimated incentives accrued till the end of the year. In case of License not revalidated after the date of expiry, the proportionate export benefit / incentive taken credit in earlier year(s) is written off in the year of expiry of License and /or changes made by the Central Government during the year in the rate of tariff of Import Duty.

c. Revenue from services rendered are booked based on agreements/ arrangements with the concerned parties.

d. Income from investments are booked on accrual basis inclusive of tax deducted at source.

e. Dividend income is recognized when the payment is established .

f. Interest income is recognized on a time proportion basis taking into consideration the current outstanding and the applicable interest rate.

1.8 Provisions, Contingent Liabilities and Contingent Assets

a. The provisions are recognized and measured by using a substantial degree of estimation.

b. Disputed liabilities and claims against the Company including claims raised by the authorities (e.g. Commercial Tax, Value Added Tax, Income Tax, Excise etc.) pending in appeal / Court for which no reliable estimate can be made of the amount of the obligation or which are remotely poised for crystallization are not provided for in accounts but disclosed in Notes forming part of Financial Statements.

c. Contingent Assets are neither accounted nor disclosed by way of Notes to financial statements.

1.9 Accounting of Tangible and Intangible Assets

a. Fixed assets are stated at cost of acquisition or construction /erection, less accumulated depreciation / amortization. Cost of acquisition or construction is inclusive of purchase price, freight, and other incidental expenses related to acquisition and installation and exclusive of VAT, Excise Duty etc. credit availed as per prevailing rules thereof and any directly attributable cost of bringing the asset to its working condition for the intended use. Interest incurred during the period of erection of Tangible Assets on Borrowing Finance for such fixed assets is capitalized.

b. Tangible Assets which are not ready for their intended use on reporting date are carried as capital work-in progress at cost, comprising direct cost and other incidental expenses. Depreciation is not provided on such work-in -progress.

c. Assets are capitalized when they are ready to use / put to use.

1.10 Depreciation

a. Depreciation on tangible and intangible assets has been provided on Straight Line basis, over the useful lives of the assets as prescribed in Schedule - II of the Companies Act. 2013.

b. Depreciation on additions / deductions in respect of fixed assets are charged on pro-rata from / up to date in which asset is available for use.

c. Depreciation in respect of Individual asset costing less than Rs. 5,000/- full depreciation has been provided in the year of addition.

d. Assets identified and evaluated technically as obsolete and held for disposal are stated at their estimated net realizable values.

1.11 Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exits, 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 impairment loss and is recognized in the Statement of Profit and Loss.

1.12 Intangible Assets

Intangible assets are stated at cost less accumulated amortization and impairment losses, if any.

1.13 The Effects of Changes in Foreign Exchange Rates

a. Foreign Currency loans in respect of tangible assets are reported at the exchange rate prevalent on the last day of accounting year. Any loss or gain arising due to foreign exchange fluctuation of the foreign currency loan of tangible assets outstanding on the last day of the year is charged to Statement of Profit & Loss for the same year.

b. Current assets and liabilities in foreign currency outstanding at the last day of the accounting year are valued at exchange rate prevalent at the last day of the accounting year. The loss or gain due to fluctuation of exchange rates is charged to Statement of Profit & Loss. Treatment of Forward Contract Transactions are dealt with as per AS - 11.

1.14 Accounting for Government Grants

Government grants are recognized when there is reasonable assurance that the same will be received. Government grants relating to revenue are recognized on accrual and are shown under other income. Capital grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets and other Capital grants are treated as Capital Reserve.

1.15 Employee Benefits

a. Defined Contribution Plan

The contribution remitted to Government administered Provident and Pension Fund and Employee State Insurance Scheme on behalf of its employees in accordance with the relevant statute are charged to Statement of Profit and Loss of the year when the contributions to the respective funds are due.

b. Defined Benefit Plan

The gratuity liability, actuarially valued, is funded through the scheme administered by SBI Life Insurance Company Ltd. and the amounts paid/provided under the scheme are charged to the Statement of Profit and Loss.

1.16 Borrowing Costs

Borrowing cost that is attributable to the acquisition or construction of qualifying assets are capitalized for the period until the asset is ready for its intended use. All other borrowing costs are charged to revenue.

1.17 Segment Reporting

Segments are identified as the business segment based on the nature of products, risks, returns and the internal business reporting system as per the Accounting Standard -17.

1.18 Related Party Disclosures

Transactions with Key Managerial Personnel and Related Parties as defined under Accounting Standard, other than Independent Non- Executive Directors is disclosed as Related Party Transactions in the Notes to Financial Statements.

1.19 Accounting for Leases

a. All leases are classified into operating and finance lease at the inception of the lease. Leases that transfer substantially all risks and rewards from leaser to lessees are classified as finance lease and others being classified as operating lease.

b. There is no any finance or operating lease transactions entered into by the company.

1.20 Earning Per Share

The Basic and Diluted Earnings Per Share (EPS) is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.

1.21 Accounting for Taxes on Income

Tax expenses comprises of current tax and deferred tax

a. Current tax is determined as the amount of tax payable to the taxation authorities in respect of taxable income for the period.

b. Deferred tax is recognized, subject to the consideration of prudence, on timing difference being differences between taxable income and accounting income, that originate in one period and are capable of reversal in one or more subsequent periods.

c. MAT credit entitlements are treated as advance payment of tax.

1.22 Discontinuing Operations

The Company has not discontinued any operations during the year.

1.23 Accounting of Derivative Financial Instruments

Presently, the Company is not engaged in Derivative Financial Instruments. However, for derivative contracts, premium paid and gains/losses on settlement will be charged to Statement of Profit and Loss. Losses arising on the restatement of the outstanding derivative contracts as at the yearend by marking them to market will be charged to the Statement of Profit and Loss.

1.24 Expenses for Corporate Social Responsibility

In case of Corporate Social Responsibility CSR activities undertaken by the Company, if any expenditure of the revenue nature is incurred on any of the activities mentioned in Schedule VII of the Companies Act, 2013, the same is charged to Statement of Profit and Loss. In case, the expenditure incurred by the Company is of such a nature which gives rise to an asset, such an asset is recognized where the company retains the control of the asset and any future economic benefit occurs to it. A liability incurred by entering into a contractual obligation is recognized to the extent to which CSR activity is completed during the year.

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