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Kokuyo Camlin

BSE: 523207|NSE: KOKUYOCMLN|ISIN: INE760A01029|SECTOR: Diversified
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Mar 15
Accounting Policy Year : Mar '16

1. STATEMENT OF ACCOUNTING POLICIES AND PRACTICES

A. Basis of Preparation of Financial Statements:

The financial statements have been prepared under the historical cost convention on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India to comply with the accounting standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and the relevant provisions of the Companies Act, 2013 (the Act)(Indian GAAP).

The accounting policies adopted in the preparation of the financial statements are consistent with those of the previous year.

All 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 the Schedule III of the Companies Act, 2013. Based on the nature of services and their realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent classification of assets and liabilities.

B. Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities (including contingent liabilities) on the date of financial statements and the reported amount of revenues and expenses, during the reported period. Actual results could differ from those estimates.

C. Fixed Assets :

i. Fixed Assets are recorded at cost of acquisition or construction and they are stated at historical cost (net of Convert and Vat). Interest on project loans and all direct expenses attributable to acquisition of Fixed Assets are capitalized, up to the date of installation. Capitalized hardware/ software costs of Enterprise Resource Planning (ERP) System include cost of designing software, which provides significant future economic benefits over an extended period. The cost comprises of license fee, cost of system integration and initial customization. The costs are capitalized in the year in which the relevant system is ready for intended use. The up gradation/enhancements are also capitalized and assimilated with the initial capitalization cost.

ii. In compliance with Accounting Standard (AS-28)- Impairment of Assets issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognized wherever carrying amount exceeds the recoverable amount.

iii. The depreciation on all assets of the company excluding freehold land & leasehold land has been charged to write off the cost less residual value using the straight-line basis over the expected/estimated useful life in the manner as specified in Schedule II of the Companies Act 2013.Residual values have been reviewed and considered by the management. The normal expected/estimated useful lives of major categories of Fixed Assets are as follows:

D. Investments :

Long-term investments are stated at cost and provision is made when there is decline, other than temporary, in the value thereof. Current investments are stated at cost or fair value whichever is lower.

E. Valuation of Inventories :

A. Raw Materials and Packing : At moving weighted average cost, written down to Materials realizable value if the costs of related finished goods exceed net realizable value.

B. Work in process : At lower of moving weighted average cost or net realizable value.

C. Finished Goods : At lower of moving weighted average cost or net realizable value.

F. Excise Duty :

Excise duty on finished goods manufactured is accounted on clearance of goods from factory premises and also in respect of year end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant input. Input credit not recoverable is charged to the Statement of Profit and Loss.

G. Foreign Currency Transactions :

i. Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Foreign currency assets and liabilities are translated at year end exchange rates.

Exchange difference arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise.

ii. In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of contract is recognized as income or expense over the period of the contract.

iii. Gains or losses on cancellation/settlement of forward exchange contracts are recognized as income or expense.

H. Research and Development :

Revenue expenditure incurred on Research and Development is charged to Statement of Profit and Loss for the year. Capital expenditure on Research and Development is accounted as Fixed Assets.

I. Employee Benefits :

i. Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

ii. Post-employment and other long-term employee''s benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered the service. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to the Statement of Profit and Loss for the year.

J. Revenue / Expense Recognition :

i. Revenue from sale of goods is accounted for on the basis of dispatch of goods. Sales are inclusive of excise duty and net of sales returns / Trade Discount.

ii. Revenue in respect of overdue interest, insurance claim, etc is recognized to the extent the Company is reasonably certain of its ultimate realization.

iii. Remission from Excise Duty paid in respect of clearance from Jammu Plant is recognized as revenue based on legal advice obtained by the Company [Refer Note No.16].

iv. Expenses are accounted for on accrual basis.

v. Provisions are recognized when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease Rentals in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on straight line basis over the lease term.

K. Government Grants :

i. Where the grants are of the nature of promoters'' contribution with reference to total investment in the undertaking or total capital outlay, they are treated as capital reserve.

ii. Grants related to specific fixed assets are deducted from the book value of the related asset.

iii. Grants related to revenue are credited to the Statement of Profit and Loss and presented as income from operations.

L. Borrowing Cost:

Borrowing cost attributable to acquisition of qualifying fixed assets which takes substantial period of time to get ready for its intended use is capitalized as part of the cost of such fixed assets. All other borrowing costs are charged to revenue.

M. Share Issue Expenses

Expenses incurred in connection with fresh issue of share capital are adjusted against Securities premium reserve in the year in which they are incurred.

N. Contingent Liabilities :

Liabilities are disclosed by way of Notes appended to the Balance Sheet in case there is an obligation that probably may not require cash outflow.

O. Accounting for Taxes on Income :

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax 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 is accounted for using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses are recognized only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. Other deferred tax assets are recognized only when there is a reasonable certainty of their realization.

P. Earnings per share:

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS-20) on Earning per share issued by the Institute of Chartered Accountants of India (ICAI). Basic earnings per equity share is computed by dividing net income by weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.

i) Terms/rights attached to equity shares

The Company has only one class of equity shares with a par value of Re. 1/- per share. Each holder of equity share is entitled to one vote per share.

The Company declares and pays dividends in Indian Rupees. The dividend proposed by The Board of Directors is subject to the approval of the shareholders in the Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive any of the remaining assets of the company after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to number of equity shares held by the shareholders.

ii) Shares held by the Holding/ultimate Holding Company and/or their Subsidiaries/Associates. Out of the equity shares issued by the Company, shares held by its Holding Company are as under

iii) Details of shareholders holding more than 5% shares in the Company

Other than Kokuyo Co. Ltd, there are no shareholders holding more than 5% shares in the Company.

a. Long term borrowing comprise

i. a) External Commercial borrowing (ECB) from Bank of Tokyo-Mitsubishi UFJ,Ltd. Singapore The terms of the loan are as follows:

1. Rate of Interest is based on LIBOR plus agreed spread.

2. Repayable in 8 equal half yearly installments starting from April 22, 2014 with last installment payable on October 18, 2017

i. b) External Commercial borrowing (ECB) from Sumitomo Mitsiu Banking Corporation

The terms of the loan are as follows:

1. Rate of Interest is based on a LIBOR plus agreed spread.

2. Repayable in 8 equal half yearly installments starting from September 2, 2017 with last installment payable on March 2, 2021.

ii) The secured loan from bank is a vehicle loan

The terms of the loan are as follows:

1 Rate of Interest is 10.25 %

2. Repayable in monthly installments starting from December 2014 with last installment payable on November 7, 2019.

3. Secured against hypothecation of vehicle.

Consequent to the enactment of the Companies Act, 2013, the Company has charged depreciation on its fixed assets as per the useful life mentioned in Schedule II to the Act. Useful life is assessed by the management (Refer accounting policies note 1.C.iii). Consequently, depreciation charged for the year is increased by Rs, 101.52 lacs. Further, total depreciation and amortization of Rs, 1165.86 lacs(aggregating Rs, 1133.95 lacs and Rs, 31.91 lacs) includes additional depreciation of Rs, 69.02 lacs on the fixed assets in respect of which useful life is fully exhausted as at April 1, 2014, which along with related deferred tax (See Note no 2.b. iii) is adjusted against the opening balance of General Reserve. The balance depreciation and amortization of Rs, 1096.84 lacs has been charged to the Statement of Profit & Loss for the year ended 31st March, 2015.

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