VIKAS ECOTECH Accounting Policy

Background and Nature of Operations


Vikas Ecotech Limited (VEL) (Formally known as Vikas Globalone Limited) is a Delhi based professionally managed Company incorporated on November 30, 1984 under the Companies Act, 1956, having its registered office at Vikas Apartments, 34/1, East Punjabi Bagh, New Delhi-110026 and is actively engaged in the business of Manufacturing and Distribution of Specialty Polymers Compounds and Additives. The Company is listed in National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE).


The Company is engaged in the business of manufacturing and distribution of high end products used in Agricultural Pipes, Auto Parts, Wires and Cables, Artificial Leather, Footwear, Organic Chemicals, Polymers, Pharmaceuticals and Packaging industries while alongside acting as distributor of global conglomerates with niche in specialty chemicals and polymers.


Manufacturing plants of the Company are spread in various geographical locations across India, in the state of J&K and Rajasthan. This has been done keeping in mind the Strategic and Location advantages with regard to availability of raw material, tax incentives, subsidy grants as well as market potential for finished goods. These industrial units have speedy connectivity to Road, Rail and Air transport. The Company has built the plants with the best of the machineries and technical knowhow available from the world''''s leading suppliers. The manufactured products of the Company have been well received in the market and have further scope of greater development with increased production capacities. The products manufactured by the Company are environmental friendly.


Summary of Significant Accounting Policies


The significant accounting policies adopted by the Company, in respect of the financial statements are set out below.


Basis of Presentation: 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 specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 & other relevant provisions of the Companies Act, 2013 & guidelines issued by the SEBI. The accountings policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard require a change in the accounting policy hitherto in use.


Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management''''s best knowledge of current events and actions, actual results could differ from these estimates. Hence, the differences between the actual results and estimates are recognized in the year in which the results are known/materialized.


Inventories:


i) Raw Material/Trading is valued at lower of cost OR net realizable value.


ii) Finished products are valued at lower of cost OR net realizable value. Cost being the weighted average material cost & includes cost of conversion & other cost incurred in bringing the goods to their present location & condition. Closing balance of finished stock are accounted for on the basis of physically verified quantities.


iii) Packing Material, stores & spares parts are valued at lower of moving weighted average cost and net realizable value.


iv) Inventory on construction activities has been valued at cost incurred.


v) Obsolescence: Obsolete, slow moving & defective inventories are identified at the time of physical verification of inventories & wherever necessary provision is made for such inventories.


vi) Shortage/Excess of Packing Material, Stores & spares parts and finish goods arising from physical verification are charged/adjusted to consumption/production.


Prior Period Items: Significant items of Income and Expenditure which relates to prior accounting period are accounted in the statement of profit and loss under the head "prior period expenses/income" other than those occasioned by events occurring during or after the close of the year and which are treated as relatable to the current year.


Fixed Assets, Impairment: Fixed assets are stated at cost of acquisition less accumulated depreciation and impairment of losses if any. The Company capitalizes all direct costs relating to the acquisition and installation of fixed assets. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost of fixed assets not ready to use before such date are disclosed under ''''Capital Advances''''.


Depreciation and Amortization:


- Depreciation on tangible asset is provided on Written Down Value Method (WDV) over the useful lives of assets estimated by the management. Depreciation on asset purchased/sold during the period is proportionately charged. Intangible assets are amortized over their respective individual estimated useful lives on Straight Line Basis, commencing from the date the asset is available to the Company for its use. The management estimates the useful lives for the fixed assets as follow:


- Depreciation and amortization methods, useful lives and residual values are reviewed predictably including at each financial year end.


Impairment:


At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired, based on internal or external factors. If any such indication exists, the Company estimates the recoverable amount of the asset or the cash generating unit. If such recoverable amount of the asset or cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. The reduction is treated as an impairment loss and is recognized in the Profit and Loss Account. If, at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the reassessed recoverable amount. Impairment losses previously recognized are accordingly reversed.


Investments: Investments are classified as long term or current investments. Long term investments are stated at cost and provision for diminution in their value, other than temporary, is recorded in the books of account. Current investments are stated at the lower of cost or fair value. 100% Provision has been made in case the realizable value is uncertain.


Revenue recognition: Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.


- Sale of goods: Revenue from sale of goods is recognized when significant risks and rewards of ownership of goods are transferred to the customers. Sales are net of sales return, free quantities delivered and trade discounts.


- Interest: Interest income from deposits and others is recognized on accrual basis (i.e. time proportion basis).


- Construction Contract: The Company follows complete contract method of accounting in respect of its construction activity. Under this method, the profit on unit sold is recognized only when the work in respect of the relevant unit is completed or substantially completed which is determined on technical estimations and the underlying sale deed is executed.


- Profit on sale of Investment: Profit on sale of investment is recognized on the date of transaction of sale and is computed with reference to the cost of investments.


- Other Revenue Receipts: Other revenue receipts are recognized on accrual basis (i.e. time proportion basis).


Borrowing Costs: Borrowing costs attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of the asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue in the year in which they are incurred.


Earnings Per Share: Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.


For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The Weighted average no of Equity shares outstanding during the year after adjusted for the events of bonus issue element in a right issue to equity shareholders, share split and reserve share split (consolidation of shares).


Operating Leases: Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as an expense on a straight-line basis over the lease term in accordance with Accounting Standard 19 (AS 19) - Leases as notified under the Companies (Accounting Standards) Rules, 2006, as amended.


Cash & Cash Equivalent: Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.


Cash Flow Statement: Cash Flows are reported using indirect method, whereby profit before tax is adjusted for efforts of transactions of non cash nature and any deferral or accruals of any past or future cash receipts or payments. The Cash Flows from regular revenue generating, financing and investing activity of the Company segregated.


Employees'''' Retirement Benefits:


- Short Term Employee Benefits


Short Term Employee Benefits are recognized as Expenditure in the profit and loss accounts of the year in which the related services are rendered.


- Post Employment Benefits


- Defined Contribution Plans


Contribution payable by the Company to the Central Government authorities in respect of Provident fund, Family Pension fund and Employee State Insurance are defined plans. These contributions are recognized as expenses in the statement of Profit and Loss during the period in which the employee renders the related services. The Company does not have any further obligation in this respect beyond such contribution.


- Defined Benefit Plans


The Company provides for gratuity the liability with regard to gratuity plan are determine by Actuarial Valuation, performed by an independent Actuary at each balance sheet date. Gratuity are covered under the Gratuity Policy respectively, of Life Insurance Corporation of India (LIC).The Present Value of the Obligation is determined by using projected unit Credit method. Actuarial Gains and Loss rising on such valuation are recognized immediately in the profit and loss account.


Taxes on Income: Tax expense comprises of current tax and deferred tax.


Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act 1961. Deferred income taxes are recognized for the future tax consequences attributable to timing differences between the financial statement income and taxable income for the year. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.


Deferred Tax Assets are recognized 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 realized. Unrecognized deferred tax assets of earlier periods are re-assessed and recognized to the extent that it has become reasonably certain that future taxable income will be available against which deferred tax assets can be realized.


Provisions, Contingent Liabilities and Contingent Assets: Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. Contingent liability is disclosed for:


i) Possible obligations which will be confirmed only by future events not wholly within the control of the Company or,


ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.


Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.


Foreign Currency Transactions:


i) Initial Recognition: Foreign currency transactions are recorded in the reporting currency, by applying the exchange rate between the reporting currency and the foreign currency at the date of the transaction to the foreign currency amount.


ii) Conversion: Foreign currency monetary items are converted to reporting currency using the closing rate. Non monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or any other similar valuation denominated in a foreign currency is reported using the exchange rates that existed when the values were determined.


iii) Exchange Differences: Exchange differences arising on the settlement of monetary items or on reporting Company''''s monetary items at rates different from those at which they were initially recorded, are recognized as income or expense in the year in which they arise except those arising from investments in non-integral operations.


iv) Forward Exchange Contract: In case of forward Exchange contract, difference between the forward rates and the exchange rate on the date of transaction is recognized as expenses or income over the life of the contract. Exchange difference on such contract is recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or expenses for the year.


Government Grants: Government grants are recognized when there is reasonable assurance that the group will comply with the condition attaching to them and grants will be received. Revenue grants are recognized in the statement of Profit and loss account. Capital grants relating to Specific Fixed Assets are reduced from gross value of respectively fixed assets and other grant are credited to capital reserve account.


Employee Stock Option Scheme: The Company account for Equity Settled Stock Options as per accounting treatment prescribed by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014 and the guidance note on the Employees Share-Based Payments issued by the Institute of Chartered Accountant of India using the intrinsic value method. Earlier scheme was formulated under the guidelines issued by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999.


Right, Preferences and Restriction attached to Shares


Equity Shares


The Company has only one class of Equity having a par value Rs,1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the board of directors is subject to the approval of the shareholders in ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the Equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.


Employee''''s Stock Option Scheme


The Company formulated an Employee''''s Stock Option Scheme as per Note No. 45 during the financial year 2012-13. The Scheme provides that Employees are granted options to acquire the Equity Shares of the Company that vests in graded manner. The options may be exercised within a Specified Period. The options are granted at Rs,1 (i.e. Par Value of Share). The final trench Employee Stock Options granted by the Company pursuant to its ESOP Scheme, 2011, lapsed on December 1, 2015, no employee opted for ESOP during the year under consideration, therefore there is no allotment of share on account of ESOP during the current financial year.


*The Company Vikas Polymer Land was merged with company Moonlite Technochem Pvt Ltd in Financial Year 2015-16 with effect from April 1, 2014, by virtue of this merger, all assets and liabilities of Vikas Polymer Land Pvt Ltd was transferred to Moonlite Technochem Pvt Ltd and now Moonlite Technochem Pvt Ltd become the shareholder of the company Vikas Ecotech Ltd.


HDFC - Vehicle Loan (Agreement No 24353585) was taken during 2013 year and carries interest @15.65% per annum. The Loan is repayable in 36 installments of Rs,22,837 each along with interest from the date of Loan. The loan is secured by hypothecation of car of the Company.


HDFC - Vehicle Loan (Agreement No 25941597) was taken during 2013 year and carries interest @15.65% per annum. The Loan is repayable in 36 installments of Rs,17,941 each along with interest from the date of Loan. The loan is secured by hypothecation of car of the Company. The said loan is squared off during the financial year.


ICICI Loan No - LADEL00026826516 was taken during 2013 year and carries interest @10.74% per annum. The Loan is repayable in 36 installments of Rs,10,086 each along with interest from the date of Loan. The loan is secured by hypothecation of car of the Company. The said loan is squared off during the financial year.


ICICI Loan No - LADEL00026874591 was taken during 2013 year and carries interest @9.09% per annum. The Loan is repayable in 36 installments of Rs,1,11,450 each along with interest from the date of Loan. The loan is secured by hypothecation of car of the Company.


Term Loan-III (Oriental Bank of Commerce) Closing balance limits Rs,98.32 Lacs. The Term Loan is secured on the Plant and Machinery and Land and Building located at G-24-29 & 30, RIICO Industrial Area, Vigyan Nagar, Shahjahanpur, Dist. Alwar, Rajasthan owned by Vikas GlobalOne Limited. The loan was sanctioned on reviewed on December 31, 2014 on the existing term and conditions. The Loan will be repayable in Equal Installments of Rs,5.12 lacs per month. The rate of interest shall be BR 2% .5%. The Period of Maturity from the Balance Sheet date is 17 months.


Term Loan-IV (Oriental Bank of Commerce) Closing balance limits Rs,227.32 Lacs. The Term Loan is secured on the 1st exclusive charge by way of hypothecation on plant & machinery financed by OBC. The loan was reviewed on December 31, 2014 on the existing term and conditions. The Loan will be repayable in Equal Installments of Rs,7.39 lacs per month. The rate of interest shall be BR 2% .5%. The Period of Maturity from the Balance Sheet date is 48 months.


Term Loan-V (Oriental Bank of Commerce) Closing balance limits Rs,451.00 Lacs. The Term Loan is secured on the 1st exclusive charge by way of hypothecation on plant & machinery and construction of Building financed by OBC. The loan was granted on December 31, 2014 on the existing term and conditions. The Loan will be repayable in Equal Installments of Rs,8.20 lacs per month. The rate of interest shall be BR 2% .5%. The Period of Maturity from the Balance Sheet date is 54 months.


ICICI Bank Loan No. LADEL00002038205: By virtue of acquisition of remaining share in sigma plastic industries, the Loan (Firm has taken term loan from ICICI Bank of Rs,500 Lacs repayable in 120 EMI of Rs,717355 each on November 12, 2013, this is secured against house


No.10, Road No.4 East Punjabi Bagh New Delhi, the property in the name of the directors of the Company) become the part of capital structure of the Company and The Loan is in the process of transferring the name of the borrower from Sigma Plastic Industries to Vikas Globalone Limited and has not been transferred in the name of Company as on Balance Sheet Date.


Company is availing working capital limits under consortium of Oriental Bank of Commerce and Bank of Baroda with Oriental Bank of commerce as lead banker in consortium and Bank of Baroda is member bank.


The Company is availing a cash credit (Hypo) limit of Rs,4,440 Lacs which include PCFC Limit of Rs,1,900 Lacs from Oriental Bank of Commerce against Hypothecation of stock, receivable, advance to suppliers and other current assets on pari passu basis with Bank of Baroda. No DP against stock and Book debts exceeding 180 days. Margin is 20% & The rate of interest is Bank Base Rate 2% which at present is 11.65% p.a. Further the Company is also availing LC (Import) DA/DP basis non Fund Based Limit of Rs,2,220 Lacs (which includes both side inter changeability LC to CC for Rs,500 Lacs) procurement of Raw Material and spares. Cash Margin is 15% in the shape of FDR. The proposal of renewal cum enhancement is under process with Oriental Bank of Commerce as on Balance Sheet Date.


The Company is also availing Cash Credit limit of Rs,2,960 Lacs from Bank of Baroda with a sub limit of PC/PCFC/FBP/FBD of Rs,1,100 Lacs under the same Cash Credit limit. The limit is secured by way of hypothecation of stock, receivables & other current assets on pari passu basis on the Oriental Bank of Commerce. DP shall be permitted against receivable upto 180 days. Margin is 20% & Rate of interest is BR 2% which is present 11.65%. Further the Company is availing Non Fund Based LC (Import/Inland/DP/DA/BG), Buyers Credit of Rs,1,480 Lacs for procurement of raw material and spares. Cash Margin is 15% in the shape of FDR.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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