Suprajit Engineering Limited (''''the Company'''') is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company is engaged interlaid in the business of manufacturing of auto components consisting mainly control cables, Speedo cables and other components for automobiles.
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of preparation of Financial Statements
The financial statements have been prepared and presented under the historical cost convention and in accordance with the provisions of the Companies Act, 2013 (''''the Act'''') and the Accounting Standards specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts Rules) 2014.
1.2 Use of Estimates
The preparation of the financial statements is in conformity with Indian GAAP, which requires that the management make estimates and assumptions that affect the reported amounts of assets and liabilities disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Although such estimates are made on a reasonable and prudent basis taking into account all available information, actual results could differ from these estimates and such differences are recognized in the period in which the results are ascertained.
1.3 Cash Flow Statement
Cash flow statement is prepared in accordance with AS-3 specified under the Companies Act, 2013 using the indirect method to determine cash flows from operating activities. The cash flows of the Company are segregated into operating, investing and financing activities. Cash and cash equivalents for the purpose of Cash flows statement comprise of cash on hand, demand deposit placed with banks and term deposits with banks (with an original maturity of three months or less).
1.4 Revenue Recognition
Sale of goods as well as revenue from processing of goods (services) is recognized at the time of transfer of property in goods, results in or coincides with the transfer of significant risks and rewards to the customers which is generally at the point of dispatch of goods to the customers. Gross sales are inclusive of applicable excise duty and exclusive of sales tax and are net of returns. Revenue from scrap is recognized on sale. Export incentives are recognized when there is reasonable certainty as to realization and when they are quantifiable with a high degree of accuracy.
Dividend is recognized when declared and interest income is recognized on time proportion basis taking into account the amount outstanding and the applicable rate.
1.5 Tangible/ Intangible Assets
Tangible Assets are stated at cost less accumulated depreciation and impairment losses, if any. The cost of an asset comprises of its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Until the fixed assets are ready for its intended use these costs are aggregated and classified and carried forward as ''''Capital Work In-Progress'''' Borrowing costs taken for the acquisition of qualifying assets up to the date of commissioning of assets is added to the cost of assets.
Intangible assets are carried at cost less amortization where it is probable that future economic benefits expected from it is not less than the carrying value.
Pursuant to Companies Act, 2013 with effect from 1st April, 2014 the Company has estimated useful life of the fixed assets and adopted the estimated useful life as prescribed under Part C of Schedule II of the Companies Act, 2013 for the purpose of computation of depreciation on such assets except in case of the fixed assets listed below in respect of which the estimated useful life has been ascertained which is different from the estimated useful life prescribed under Part C of Schedule II of the Companies Act, 2013 based on the independent technical evaluation carried out by the external valuers.
Plant and machinery 360 months
(Identified specific machinery)
Other Plant & machineries 270 months
Electrical Installations 252 months
Furniture & Fixtures 180 months
Office Equipments 120 months
Assets taken over by the Company has been depreciated over the remaining useful life based on the independent technical evaluation carried out by the external valuers.
The Company provides additional depreciation @ 50% of the normal depreciation on all the plant & machinery for the period for which such plant & machinery was used for double shifts.
Business rights acquired and Patents are amortized over a period of 5 years, based on the assessment of future economic benefits that will flow to the Company.
Leasehold land is amortized over the period of lease.
1.7 Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at appropriate rate. After impairment, depreciation is provided on revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.
Investments that are readily realizable and intended to be held for not more than 12 months are classified as current investments. All other investments are classified as long-term investments. Long term investments are stated at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. Current investments are carried at lower of cost or fair value.
Inventories are valued at lower of cost or net realizable value. Cost is ascertained on weighted average method. Conversion and other costs incurred for bringing the inventories to their present location and condition are allocated to the extent applicable.
1.10 Foreign Currency Transactions
The foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction.
At the balance sheet date, monetary assets and liabilities including integral foreign operations, denominated in foreign currency are restated at the applicable exchange rates prevailing as at the Balance Sheet date. All non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using exchange rate at the date of transaction. All non-monetary items which are carried at fair value or other similar valuation denominated in foreign currency are reported using the exchange rate that existed when values are determined. Gain/ loss arising from such restatement as also on settlement of the transactions are adjusted in the Profit and Loss Statement.
Premium or discount on forward exchange contracts which are not intended for trading or speculation purpose and is to establish the amount of reporting currency required on the settlement dates is recognized in the Profit and Loss Statement over the period of the contracts. The exchange differences on the contracts are recognized in the year in which the exchange rates change.
The Company enters into foreign currency forward exchange contracts to hedge its risks associated with foreign currency fluctuations in respect of highly probable forecast transactions. At the end of the reporting period these contracts are marked to market and the resultant loss, if any is recognized in the Profit and Loss Statement.
1.11 Employee Benefits
Short term employee benefits:
The amounts paid/payable on account of short term employee benefits, comprising largely of salaries & wages, short term compensated absences and annual bonus is valued on an undiscounted basis and charged to the Profit and Loss Statement for the year.
Defined contribution plans:
The Company has defined contribution plans for its employees comprising of Provident Fund and Employee''''s State Insurance. The contributions paid/ payable to these plans during the year are charged to the Profit and Loss Statement for the year. The Company has no other obligation in this regard.
Defined benefit plans:
The Company''''s Gratuity scheme is administered through the Employee''''s Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India. The net present value of the obligation for gratuity benefits as determined on actuarial valuation, conducted annually using the projected unit credit method, as adjusted for unrecognized past services cost, if any and as reduced by the fair value of plan assets, is recognized in the accounts. Actuarial gains and losses are recognized in full in the Profit and Loss Statement for the period in which they occur.
b. Compensated Absences
The Company has a scheme for compensated absences for employees, the liability other than for short term compensated absences is determined on the basis of an actuarial valuation carried out at the end of the year, using projected unit credit method. Actuarial gains and losses are recognized in full in the Profit and Loss statement for the period in which they occur.
1.12 Borrowing Costs
Borrowing costs other than those attributable to qualifying assets are expensed as and when incurred. Borrowing costs attributable to qualifying assets are capitalized along with the cost of respective asset.
1.13 Leases Operating Lease:
Leases where the significant risks and rewards of ownership is with the lessor are classified as operating leases and payment under such leases are recognized as an expense in the Profit and Loss Statement on a systematic basis.
Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. The assets acquired on finance lease are capitalized as part of fixed assets and corresponding liability is recognized as term loans.
Tax Expense comprising current tax and deferred tax are recognized in the Profit and Loss Statement for the year. Current tax is the amount of income tax determined to be payable in respect of taxable income as computed under the tax laws.
Certain items of income and expenditure are not reported in tax returns and financial statements in the same period for the purpose of determining the current tax. The net tax effect calculated at the current enacted tax rates of this timing difference is reported as deferred income tax asset/liability. The effect on deferred tax assets and liabilities due to change in such assets/liabilities as at the end of previous accounting period and due to a change in tax rates are recognized in the income statement of the period.
1.15 Government Grants and Subsidies
Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants/ subsidies will be received. Government grants and subsidies where no repayment is ordinarily expected in respect thereof in the nature of promoter''''s contribution are credited to capital reserve and treated as a part of shareholders'''' funds.
1.16 Research and Development Expenditure
Expenditure incurred during the research phase is charged off to the Profit and Loss Statement.
1.17 Provisions and Contingencies
Provision for losses and contingencies arising as a result of past event where management considers it probable that a liability may be incurred are made on the basis of reliable estimates of the expenditure required to settle the present obligation on the Balance Sheet date and are not discounted to its present value. Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Other contingent liabilities to the extent management is aware is disclosed by way of notes on financial statements.
2.1.5 There are no shares that have been issued, subscribed and not fully paid up.
2.1.6 There are no forfeited shares.
2.1.7 There are no shares reserved for issue under options and contracts/commitments for the sale of shares/ disinvestment.
2.1.8 The Company has not issued any securities convertible into equity/ preference shares.
2.1.9 Each holder of equity shares is entitled to one vote per share and there are no preferences or restrictions attaching to shares mentioned above. The Company declares and pays dividend in Indian Rupees. The dividend proposed/ declared by the Board of Directors is subject to approval/regularization of the shareholders in the ensuing Annual General Meeting.
2.1.10 In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after payment of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.
2.1.11 During the last five years ending on 31st March, 2016:
(i) No shares were allotted as fully paid up pursuant to contract(s) without payment being received in cash
(ii) No bonus shares were allotted
(iii) No shares were bought back.