(A) General Company Profile
GRP Limited ( The ''Company'') is engaged mainely in Reclaim Rubber and
also in Windmill business. The Company has manufacturing plants in
India and sales in Domestic as well as International Market. The
Company is a public limited company and is listed on the Stock
Exchange, Mumbai (BSE).
The name of the Company has been changed from Gujarat Reclaim & Rubber
Products Limited to GRP Limited w.e.f. 21st June, 2012.
(B) Basis of accounting :
The financial statements have been prepared under the historical cost
convention on the accrual basis of accounting and in accordance with
the Accounting Standards prescribed in the Companies (Accounting
Standards) Rules, 2006 and relevant provisions of the Companies Act,
1956. The accounting policies have been consistently applied by the
company and are consistent with those used in the previous year.
All the 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 Schedule VI to the Companies Act, 1956. Based on
the nature of products and the time between the acquisition of assets
for processing and the realisation in cash and cash equivalent, the
company has ascertained its operating cycle less than 12 months.
(C) Change in accounting policy :
During the year ended 31 March 2012, the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the company, for
preparation and presentation of its financial statements. Except
accounting for dividend on investments in subsidiary companies (see
below), the adoption of revised Schedule VI does not impact recognition
and measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
(D ) Dividend on investment in subsidiary companies:
The company recognizes dividend as income only when the right to
receive the same is established by the reporting date.
(E) Accounting Estimates :
The preparation of financial statements in conformity with the
generally accepted accounting principles (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities on
the date of the financial statements. Actual results could differ from
those estimates. Any difference between the actual result and estimates
are recognized in the period in which the results are known /
materialised. Any revision to accounting estimates is recognized
prospectively in current and future periods.
(F) Fixed assets & Depreciation :
(i) Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. The cost comprises purchase
price, borrowing costs if capitalization criteria are met and directly
attributable to cost of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
From accounting periods commencing on or after 7th December 2006, the
company adjusts exchange differences arising on translation/settlement
of long-term foreign currency monetary items pertaining to the
acquisition of a depreciable asset to the cost of the asset and
depreciates the same over the remaining life of the asset.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(ii) Depreciation and Amortisation
Depreciation on fixed assets is provided on straight line method for
the period for which the assets have been used as under:
(1) In respect of assets acquired prior to 02-04-1987, at the rates
prevailing at that time.
(2) In respect of assets acquired subsequent to 02-04-1987, at the rate
prescribed in schedule XIV of the Companies Act,1956. (Also refer to
policy on Impairment of Assets and Foreign Currency Transactions).
(3) The rate of Depreciation on certain temporary structures (Building)
has been provided @100%.
(4) Certain Plant & machinery have been considered as continuous
process plant on the basis of technical assessment and depreciation on
the same is provided for accordingly.
(5) Leasehold land is amortised over the period of lease.
(iii) Intangible Assets and Amortisation
Intangible Assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any. Intangible
assets are amortised on a straight line basis over their estimated
useful lives. The amortisation period and the amortisation method are
reviewed at least at each financial year end. If the expected useful
life of the asset is significantly different from previous estimates,
the amortisation period is changed accordingly. Gain or losses arising
from the retirement or disposal of an intangible asset are determined
as the difference between the net disposal proceeds and the carrying
amount of the asset and recognized as income or expense in the
Statement of Profit and Loss. The amortisation rates used are :
Asset Period of amortisation
Computer Software 6 years
(G) Impairment of Assets :
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the Profit and
Loss Account in the year in which an asset is identified as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
(H) Borrowing Costs :
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. The borrowing cost eligible
for capitalization is being netted off against any income arising on
temporary investment of those borrowing. All other borrowing costs are
recognized as an expense in the period in which they are incurred.
(I) Govertment Grants and Subsidy :
Special capital incentive and subsidy received from the government for
setting up or expansion of an industrial undertaking in undeveloped
area of state, is credited to Special capital incentive and subsidy
account under Capital Reserve Account.
(J) Investments :
Investments, which are readily realizable and intended to be 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 long-term investments.
Long term investments are carried at cost. However provision for
diminution is made to recognize a decline, other than temporary, in the
value of the investments, such reduction being determined and made for
each investment individually. Current investments are valued at cost
or market value whichever is lower.
(K) Taxes :
Provision for tax is made for both current and deferred taxes.
Provisions for current income tax (including Wealth tax) is made at
current tax rates based on assessable income/wealth. The Company
provides for deferred tax based on the tax effect of timing difference
resulting from the recognition of items in the financial statement and
in estimating its current tax provision. Deferred tax assets are
recognized if there is a reasonable certainty of realisation. The
effect on deferred taxes of a change in tax rates is recognized in the
Profit & Loss Account in the period in which it has been enacted.
(L) Inventories :
Items of inventories are measured at lower of cost or net realisable
value after providing for obsolesence , if any. Cost of Inventories
comprises of cost of purchase , cost of conversion and other costs
incurred in bringing them to their respective present location and
condition . Cost of raw materials, stores & spares, packing materials
are determined on weighted average basis.
Work in - progress and finished goods are valued at lower of cost and
net realisable value. Cost of work in progress and finished goods is
determined on absorption costing method which include cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. Excise duty is included in the
value of finished goods.
(M) Income Recognition :
(i) Domestic Sales are recognized at despatch of goods from factory and
export Sales on the basis of date of bill of lading. Sales are
recorded net of sales tax, excise duty and sales return.
(ii) Income from Power generation is accounted on the basis of
certification of Gujarat Electricity Development Authority.
(iii) Commission on sales (other than consignment sales) is accounted
on realisation of sales proceeds and commission on consignment sales is
accounted on receipt of statement of consignment sale.
(iv) Rentals and all other expenses in respect of leased assets are
treated as revenue expenditure.
(v) Export Incentives are accounted on wherever there is certainty of
receipt of the same.
(vi) Interest income is recognized on a time proportion basis taking
into account the amount outstanding and the rate applicable.
(vii) Dividend income is recognized when the right to receive dividend
(N) Foreign currency transactions :
(i) Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of the transaction. Transaction
not covered by forward contracts and outstanding at year end are
translated at exchange rates prevailing at the year end and the profit
/ loss so determined, is recognized in the Profit and Loss account.
(ii) Monetary items denominated in foreign currencies at the year end
are restated at the year end rates. In case of items covered by forward
exchange contracts, the difference between the year end rate and rate
on the date of the contracts recognized as exchange difference and the
premium/discount on forward contract is recognized over the life of the
(iii) Any income or expense on account of exchange difference either on
settlement or on translation is recognized in the profit and loss
account except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets in line with notification dated 31.03.2009
issued by Ministry of Corporate Affairs.
(O) Employees Benefits :
1 Long Term Employee Benefits:
(a) Defined Contribution Plans:
The company makes contribution to statutory provident fund in
accordance with the Employees Provident Fund & Miscellaneous Provisions
Act, 1952, which is a defined contribution plan & contribution paid or
payable is recognized as an expense in the period in which services are
rendered by the employee.
(b) Defined Benefit Plans:
The company has a defined benefit employee retirement scheme in the
form of gratuity trust. The Trustees of the scheme have entrusted the
administration of the related fund to the Life Insurance Corporation of
India (LIC). Charge for the year is determined on the basis of
actuarial valuation made as at the balance sheet date on projected unit
credit method of the company''s year-end obligation in this regard and
the value of year-end assets of the scheme. Actuarial gains and losses
for the year are recognized in the statement of profit and loss account
as income or expense. Contributions were deposited with the LIC based
on intimation received by the company.
(ii) Leave Encashment
Provision for leave encashment , which is a defined benefit , is made
based on actuarial valuation done by an independent agency of notified
Liability towards Superannuation is funded in accordance with the
scheme with LIC.
2 Short Term Benefits :
Expense in respect of other short term benefits is recognized on the
basis of the amount paid or payable for the period during which
services are rendered by the employee.
(P) Provisions, Contingent Liabilities and Contingent Assets
Provisions involved 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 an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
(Q) Earning per Share
The company reports basic and diluted earning per share (EPS) in
accordance with the Accounting Standard 20 as specified in the
Companies (Accounting Standard) Rules-2006. The Basic EPS has been
computed by dividing the income available to equity shareholders by the
weighted average number of equity shares outstanding during the
accounting year. The diluted EPS has been computed using the weighted
average number of equity shares and dilutive potential equity shares
outstanding at the end of the year.
(R) Segment reporting
Identification of segments
The company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items include gerenal corporate income and expense items
which are not allocated to any business segment. Segment accounting
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
(S) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash-flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.