A. Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211 (3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and other relevant provisions of
the Companies Act, 1956.The financial statements are presented in
Indian Rupees in Lakhs.
This is the first year of application of the revised Schedule VI to the
Companies Act, 1956 for the preparation of financial statements of the
company. The revised schedule VI introduces some significant conceptual
changes as well as new disclosures. These include classification of
all assets and liabilities into current and non-current. The previous
year figures have also undergone a major reclassification to comply
with the requirements of the revised Schedule VI.
Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires manage- ment to make
judgements, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of the financial statements. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in current and future periods.
B. Fixed assets and depreciation:
Tangible fixed assets
i) Tangible fixed assets are stated at cost less accumulated
depreciation / impairement. Cost comprises of cost of acquisition, cost
of improvements and any attributable cost of bringing the asset to the
condition for its intended use. Interest on loans taken for procurement
of specific qualifying assets accrued up to the date of
acquisition/installation of the said assets is capitalised.
ii) Depreciation for the year has been provided on all the tangible
fixed assets (except in the case of leasehold land which is being
amortised over the period of the lease) on the Straight Line Method at
the rates specified as per Schedule XIV to the Companies Act, 1956.
Tangible fixed assets under construction are disclosed as capital
i) Long term Investments are stated at cost, less other than temporary
diminution in value, if any.
ii) Current Investments are stated at cost or market value, whichever
iii) Income on investment:
Dividend income is accounted when the right to receive is established.
Inventories are valued at the lower of cost and net realisable value,
which are determined as follows:
i) Raw Materials (including stock lying at terminals), Packing
Materials and Stores and Spares are valued at moving weighted average
cost after taking credit for CENVAT, wherever applicable and
Goods-in-transit at cost.
ii) The cost of Work-in-progress and Finished Goods comprises of raw
materials, direct labour, other direct costs and related production
overheads and Excise duty as applicable. Net realizable value is the
estimate of the selling price in the ordinary course of business as
iii) Customs Duty as applicable is included in the cost of Raw
Materials lying in stock.
E. Revenue recognition:
The Company recognises sales at the point of transfer of significant
risks and rewards of ownership to the customers. Sales are net of Sales
Tax and returns.
Revenue in respect of Duty Draw back, Insurance and other claims is
recognised only when these claims are accepted. Interest income is
recognised in the time proportion basis taking into accounts the amount
invested and rate of interest.
F. Research and development:
Capital expenditure on Research and Development is treated in the same
manner as Fixed Assets. The revenue expenditure on Research and
Development is charged off as an expense in the year in which it is
G. Foreign currency transactions:
The transactions in foreign currencies are accounted at the exchange
rate prevailing on the date of transactions. Gain or loss resulting
from the settlement of such transaction and from the year end
translation at the exhange rate prevailing on the balance sheet date of
monetary assets and liabilities denominated in foreign currency are
recognised in the Statement of Profit and Loss.
Premium or discount in respect of forward contracts obtained for
underlying transaction is accounted over the period of contracts. The
exchange difference measured by the change in rate between date of
inception of forward contract and date of balance sheet is applied on
foreign currency amount of the forward contract and is recognised in
the Statement of Profit and Loss.
H. Current and deferred tax:
Tax expense for the period, comprising current tax and deferred tax,
are included in the determination of the net profit or loss for the
Provision for current tax is based on the results for the year ended 31
December 2012, in accordance with the provisions of the Income Tax Act,
1961. The final tax liability will be determined on the basis of the
operations for the year 1 April 2012 to 31 March 2013, being the tax
year of the Company.
Deferred tax is recognised for all the timing differences, subject to
the consideration of prudence in respect of deferred tax assets.
Deferred tax assets are recognised and carried forward only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. Deferred tax assets and liabilities are measured using
the tax rates and tax laws that have been enacted or substantively
enacted by the Balance Sheet date. At each Balance Sheet date, the
Company reassesses unrecognised deferred tax assets, if any.
I. Employee benefits:
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The Company makes
specified monthly contributions towards employee provident fund and
employee state insurance contribution to Government administered fund
scheme which are defined contribu- tion plans. The Company makes
specified annual contribution towards superannuation fund to Life
Insurance Corporation of India. The Company''s contribution is
recognised as an expense in the Statement of Profit and Loss during the
period in which the employee renders the related service.
Defined benefit plans
Gratuity: The Company provides for gratuity, a defined benefit plan
(the Gratuity Plan) covering eligible employees in accor- dance with
the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump
sum payment to vested employees at retire- ment, death, incapacitation
or termination of employment, of an amount based on the respective
employee''s salary and the tenure of employment. The Company''s liability
is actuarially determined (using the Projected Unit Credit method) by
an indepen- dent actuary at the end of each year. Actuarial losses/
gains are recognised in the Statement of Profit and Loss in the year in
which they arise.
Compensated Absences: Accumulated compensated absences, which are
expected to be availed or encashed within 12 months from the end of the
year end are treated as short term employee benefits. The obligation
towards the same is measured at the expected cost of accumulating
Accumulated compensated absences, which are expected to be availed
beyond 12 months from the end of the year end are treated as other long
term employee benefits. The Company''s liability is actuarially
determined (using the Projected Unit Credit method) by an independent
actuary at the end of each year. Actuarial losses/ gains are recognised
in the Statement of Profit and Loss in the year in which they arise.
J. Provision and Contingent Liabilities
The Company recognises a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for contingent liability is made when there is
possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect current best estimates.
K. Impairment of asset
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of asset or the recoverable amount of 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 an impairment loss and is recognised in the
Statement of Profit and Loss. If at the balance sheet date there is an
indication that if a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount.
L. Operating lease
Lease rentals in respect of assets acquired under operating lease are
recognised as an expense in the statement of profit and loss on a
straight line basis.
Consequent upon the formation of 50:50 Global joint venture between
INEOS and BASF, bringing together key Styrenics business of the two
joint venture partners worldwide effective October 1, 2011, M/s.
Styrolution (Jersey) Limited (formerly known as INEOS ABS (Jersey)
Limited), the acquirer, along with persons acting in concert has in
terms of SEBI (SAST) Regulations 1997, made a public offer to the
shareholders of the Company, vide Offer document dated January 5, 2012.
The cash offer price is Rs. 606.81 (Rupees six hundred six and Paise
eighty one only) for one fully paid up equity share of Rs. 10 each to
acquire maximum of 2,931,920 equity shares representing balance 16.67%
of the capital of the Company. M/s. Styrolution (Jersey) Limited has
acquired 703,075 shares representing 4% of the capital of the Company
from the public. As a result the total shareholding of M/s.
Styrolution (Jersey) Limited is now 87.33% of the capital of the
Company. The Board of Directors has since been reconstituted.
The Company''s name has been changed to Styrolution ABS (India) Limited
after receiving approval from Registrar of Companies, effective May