Note 1:Corporate Information
Mega Flex Plastics Limited is a limited company incorporated under the provisions of the Companies Act,1956. The CIN of company is L25209WB2003PLC097273. The primary business is manufacturing of Leno bags.
Note 2: Basis of preparation of Financial Statements
The Financial Statement of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared this Financial Statement to comply in all material respects with the accounting standards notified section 133 of the Companies Act, 2013, read with paragraph 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of Companies Act, 2013 (to the extent notified) and pronouncements of ICAI, as applicable. The Financial Statement have been prepared on an accrual basis and under the historical cost convention.
2.1 Summary of Significant Accounting Policies
a. Use of estimates
The preparation of the Financial Statement in the conformity with the 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 Statement. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
b. Property, Plant and Equipments
Fixed assets are stated at cost. Cost is inclusive of freight, duties (Net of cenvat as applicable), taxes and other directly attributable costs incurred to bring the assets to their working condition for intended use. Capital work in progress comprises outstanding advance paid to acquire fixed assets and the cost of fixed assets that are not yet ready for their intended use at the balance sheet date.
c. Intangible Assets:
Intangible Assets are capitalized at cost if: -
i) It is probable that the future economic benefits that are attributable to the asset will flow to the company, &
ii) The company will have control over the assets &
iii) The cost of these assets can be measured reliably & is more than Rs. 10000/-. Intangible assets are amortized over their estimated useful life not exceeding 3 years on straight line pro-rata monthly basis.
d. Depreciation
Depreciation on fixed assets has been provided on WDV method on prorata basis over the useful life prescribed in schedule II to the Companies Act, 2013 after considering salvage value of five percent of original cost. The Company has considered useful life of assets same as prescribed under the Companies Act, 2013.
Depreciation upto 31.03.2014 was provided on WDV method on prorata basis at the rates prescribed in schedule XIV to the Companies Act, 1956.
Due to transition from schedule XIV to schedule II, depreciation on assets existing as on 31.03.2014, has been provided in such a way so that assets should be depreciated after considering salvage value of five percent of original cost of the assets over a useful life of assets as prescribed under schedule II of the companies Act, 2013.
Assets of which useful life has already been expired but depreciation charged till previous financial year was less than 95% of original cost of the assets, difference of 95% of Original Cost and depreciation charged till last year, has been charged to profit and loss account as depreciation.
Assets on which depreciation has already been charged above of 95% of Original Cost of the assets till previous financial year and written down value of the assets is less than 5% of Original Cost, salvage value has been considered remaining WDV as on first day of current financial year.
e. Impairment of assets
The carrying amount of the company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment of assets. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of net selling price and value in use.
f. Borrowing Cost
Borrowing Costs that are directly attributable to the acquisition of qualified assets are capitalised for the period until the assets is ready for its intended use. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use.
Other Borrowing costs are recognised as expenses in the period in which they are incurred.
g. Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
h. Inventories
Inventories are stated at lower of cost or net realizable value. The Cost is determined using FIFO basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale. Provision for obsolescence is made wherever necessary.
i) Raw Material, stores and spares : at cost
ii) Stock-in-Process : at material cost and cost of conversion
iii) Finished Goods : at lower of cost or net realizable value on FIFO basis.
i. Foreign Currency Transaction
Foreign exchange transactions are recorded at the exchange rates prevailing at the date of transaction. Realized gains and losses on foreign exchange transactions during the year are recognized in the Profit and Loss Account. Foreign currency monetary assets and liabilities are translated at year-end rates and resultant gains/losses on foreign exchange translations are recognized in the Profit and Loss Account.
For forward contracts associated with forecasted transactions, gains or losses arising due to change in fair value of the forward contract is recognised in the Profit and Loss Account.
For forward contracts associated with underlying asset/ liability at the Balance Sheet date, the exchange differences are recognised in the Profit and Loss Account in reporting period in which exchange rate change. The premium or discount on such contracts arising at the inception are amortised as income or expense over the life of the contracts equally.
j. Revenue recognition
Revenue from sale of products is recognized when persuasive evidence of an arrangement exists, risk and reward of ownership has been transferred to the customer, the sales price is fixed or determinable and collectability is reasonably assured. Revenue from Services is recognized when respective service is rendered and accepted by the customer. Interest income and rental income are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Revenues are shown net of Goods and service tax and applicable discounts and allowances. The revenue is recognized net of discounts and allowances.
Profit on sale of Investments is recorded on transfer of title from the company and is determined as the difference between the sales price and the then carrying value of the investment. Interest on the deployment of surplus funds is recognized using the time-proportion method, based on interest rates implicit in the transaction. Dividend income, commission, brokerage and rent are recognized when the right to receive the same is established.
k. Employee benefits
Employee benefits include Provident fund, Gratuity fund, Compensated absences, Long Service awards and post-employment medical benefits.
Defined Contribution Plans
The Company's contribution to provident fund is considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.
Defined Benefit Plans
Gratuity liability is defined benefit obligation and is provided for on the basis of calculation done as per statutory norms of the Gratuity Act, 1972. However, provision has not been made based on actuarial valuation.
Short-Term Employee Benefits
Encashable Short term compensated absences are provided for based on estimates. No provision is made for unencashable short term compensated absences.
l. Income Tax
As per the provisions of AS 22 tax expense comprises current & deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act,1961. The tax rate & tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.
m. Earning per share
In accordance with the provisions of the AS 22 basic earnings per share are calculated by dividing the net profit or loss after tax for the period attributable to equity shareholders.
n. Cash and Cash Equivalents:
Cash and cash equivalents comprises of cash at bank and cash in hand. The company considers all highly liquid investments with an original maturity of three months or less from date of purchase, to be cash equivalent.
o. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events. No provision is made for a liability which is contingent in nature but if material, the same is disclosed by way of notes to the accounts.
|