SIGNIFICANT ACCOUNTING POLICIES & NOTES TO THE ACCOUNTS_

Company Overview

Rasoya Proteins Limited (the Company) is mainly engaged in the business of soya seed solvent extraction and has two oil refinery units. The company is also has a power generation plant which provides captive power and electricity to the solvent unit of the company. Over the years the company has become a leading processor of Soya seed in Maharashtra. The main products of the company are De-oiled cake (DOC), crude oil, refined edible soya oil and other various other consumer products.

The company is having following subsidiaries:

i) RPL International Trade - FZE situated in Sharjah, Dubai is fully owned subsidiary company mainly engaged in trading of edible oils.

ii) RPL (HK) Foods & Feeds Corporation Ltd, situated in Honking is a fully owned subsidiary company has not started its business operations.

1. SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.

The financial statements have been prepared on accrual basis under the historical cost convention.

1.2 Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires judgments, estimates and assumptions to be made that affect the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The estimates used in preparation of the financial statements are prudent and reasonable. The differences between the actual results and the estimates are recognized in the periods in which the results are known / materialized.

1.3 Fixed Assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation and impairment loss. All advances of capital nature have been directly capitalized to respective heads. Fixed Assets are capitalized on the day the assets are ready for their intended use.

Borrowing Cost directly attributable to acquisition / construction of fixed assets which necessarily take a substantial time to get ready for their intended use are capitalized along with the cost of the asset.

1.4 Intangible Assets

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs directly attributable to acquisition to the intangible assets are capitalized along with the cost of the asset.

1.5 Depreciation and Amortization

Depreciation has been provided on a straight-line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

i) Depreciation on machinery spares of the nature of capital / insurance spares and having irregular use is provided prospectively over a period, not exceeding the useful life of the fixed assets to which they relate.

ii) Depreciation on addition to the fixed assets or on sale / discernment of assets, is calculated on pro-rata basis.

iii) Cost of Software & ERP Package is amortized over a period of five years. Net block of opening software taken as gross block for the year.

iv) Expenditure incurred on power plant, after the plant is ready for commercial production up to 31st March, 2010 are being carried forward as Deferred Revenue Expenditure and will be written off in five years from the date of commercial production.

v) The useful life of the fixed assets has to be determined in accordance with the schedule II of the companies Act 2013 effective from April 1, 2014. the company has provided the depreciation as per the schedule XIV of the companies Act 1956 for all the assets except Plant & Machinery. The depreciation on Plant & Machinery has been considered on the basis of useful life estimated as per the report obtained from chartered engineer.

vi) In case of assets whose useful life is over as per Companies Act, 2013, the depreciation for earlier years has been duly adjusted by debiting reserve account.

1.6 Investments

Investments are classified as current or long-term in accordance with Accounting Standard 13 on “Accounting for Investments”. Current investments are stated at cost or fair value whichever is less. Long term investments are stated at cost.

1.7 Revenue Recognition

Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection.

Sales of goods

Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers.

Sale of Power is accounted for, based on the provisions of Energy Purchase Agreement entered into with Maharashtra State Electricity Distribution Co. Ltd. Captive consumption of steam and power are accounted for, at annual average cost plus a particular margin of the said cost or prevailing MSEDCL billing rates whichever is lower.

1.8 Other income

Interest income is accounted on accrual basis. Other income includes contract settlement income which are balances of sundry debtors and sundry creditors for goods and capital items identified by the management which are not receivable or payable in future.

1.9 Inventories

a) Raw Materials, process chemicals, stores and spares, packing materials and other products are valued at weighted average cost. Cost comprises all cost of purchases, direct expenses and other expenses incurred in bringing the inventories to the present location and condition.

b) Finished Goods are valued at cost or net realizable value, whichever is lower (including excise duty at the rates applicable). Cost of finished goods all direct costs and appropriate proportion of overheads as applicable.

c) By-products/Scrap materials are valued at net realizable value (including excise duty at the rates applicable).

1 .10 Government grants, subsidies and export incentives

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 / subsidy will be received.

Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same. Government grants and subsidies received or receivable are reduced from the related expenses for which they are intended to compensate.

1.11 Sundry Debtors, Loans and Advances

Sundry Debtors and Loans and Advances are stated after making adequate provision for doubtful debts. The debts written off are debited to the Profit and Loss Account and are stated Net of Debit/Credit Balances written off, wherever applicable. Irrecoverable amounts, if any, that may arise due to unadjusted and unsettled claims in respect of various items like rebate, discounts, short receipts defective supplies etc. are accounted and/or provided only upon final settlement of account with the parties as per the management’s judgment of the potential outcome.

1.12Retirement Benefits

a) Defined contribution plan

Provident fund and Employee' State Insurance Corporation (ESIC) are the defined contribution schemes offered by the Company. The contributions to these schemes are charged to the profit and loss account of the year in which contribution to such schemes becomes due.

b) Defined benefit plan and Long term Employee benefits

Gratuity liability is provided on the basis of an actuarial valuation made at the end of each financial year as per Projected Unit Credit method. Actuarial gains or losses arising from such valuation are charged to revenue in the year in which they arise.

Provision for Leave Encashment is made on accrual basis on the basis of accumulated leave to the credit of the employee as at the year end, based on arithmetical calculations.

1.13Foreign currency transactions and translations

i) Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction.

ii) At each balance sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

iii) Exchange differences that arise on settlement of monetary items or on reporting at each balance sheet date of the Company’s monetary items at the closing rate are recognized as income or expense in the period in which they arise.

iv) The premium or the discount on forward exchange contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculation purpose is amortized as expense or income over the life of the contract.

1.14 Borrowing Cost

Borrowing cost directly attributable to the acquisition or construction of qualifying assets as defined in Accounting Standard 16 on “Borrowing Costs” are capitalized as part of the cost of such assets up to the date when the asset is ready for its intended use. Other borrowing cost are charged to the profit and loss account in the year in which the same is incurred.

1.15Taxes on Income

Provision for current tax is made on the basis of estimated taxable income for the current accounting year computed in accordance with the Income Tax Act, 1961.

Deferred tax resulting from timing differences between the book profits and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in the future.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

1.16lmpairment of Fixed Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Company’s fixed assets. If any indications exists, an asset’s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceed its recoverable amount. The recoverable amount would be greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

1.17Earnings Per Share

The Company reports basic and diluted Earnings per share (EPS) in accordance with Accounting Standard 20 on “Earnings per Share”. Basic EPS is computed 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. Diluted EPS is computed 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 as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.

1.18Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under “unallocated revenue / expenses / assets / liabilities”.

1.19Cash Flow Statement

The Cash Flow Statement is prepared by the “indirect method” set out in Accounting Standard 3 on “Cash Flow Statements” and presents the cash flows by operating, investing and financing activities of the Company. Cash and Cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered, highly liquid bank balances.

1.20Financial Derivatives and Hedging transactions

In respect of derivative contracts, premium paid, gains / losses on settlement and losses on restatement are recognized in the Profit and Loss account except in case where they relate to the acquisition or construction of fixed assets, in which case, they are adjusted to the carrying cost of such assets.

1.21 Provisions, Contingent liabilities and Contingent Assets

Contingent liabilities as defined in Accounting Standard 29 on “Provisions, Contingent Liabilities and Contingent Assets” are disclosed by way of notes to the accounts. Disclosure is not made if the possibility of an outflow of future economic benefits is remote. Provision is made if it is probable that an outflow of future economic benefits will be required to settle the obligation.

1.22 Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

a) The Term Loans are secured by first pari-passu charge among the term lenders on the Fixed Assets of the company both present and future and second pair passé charge on the current assets. Further these Term Loans are secured by personal guarantee of Managing Director of the Company.

b) The Karur Vysya Bank has transferred it's entire fund based facility outstanding as on 28/03/2016 which comprise of the entire Project Term Loan, Working Capital Term Loan (WCTL), Funded Interest Term Loan (FITL) and other loans to M/s J. M. Financial Assets Reconstruction Company Pvt. Ltd., Mumbai.

c) The status of all the Term Loan & Other Facilities included in (a) above is remain to be classified as Non Performing Assets (NPA).

d) The Vehicle loans are secured by the hypothecation of Vehicles._

c) The status of all Working Capital Loans, which were secured by the first pari-passu charge on the current assets of the company both present and future and second pari-passu charge on entire fixed assets of the company and secured by the personal guarantee of the Managing Director of the company, and collaterally secured by personal property and shares of Managing Director of the company, is remain to be classified as Non Performing Assets (NPA).

b) The Karur Vysya Bank has transferred it's entire fund based facility outstanding as on 28/03/2016 which comprise of the entire Project Term Loan, Working Capital Term Loan (WCTL), Funded Interest Term Loan (FITL) and other loans to M/s J. M. Financial Assets Reconstruction Company Pvt. Ltd., Mumbai.

c) IDBI Bank Working Capital Demand Loan (WCDL) is secured by way of collateral security of shares of Rasoya Proteins Limited owned by promoter group.

d) Peerless Financial Services Ltd. loan is secured by way of pleaded of shares of Rasoya Proteins Ltd owned by promoter

a) 1 (one) Equity share of RPL international Trade FZE (subsidiary) of Rs. 1852500 fully paid up.

b) 10000 (Ten thousand) Equity Shares of RPL (HK) Foods & Feeds Corporation Ltd.of Rs. 79968 fully paid up.

b) The above National saving certificates are lodged with various government agencies for various licenses._

29. Fixed Deposit u/s 58A

The Company has accepted deposits from public during the year within the meaning of the provisions of Sections 58A, 58AA of the Companies Act, 2013 and the Companies (Acceptance of Deposit) Rules, 1975 to the tune of Rs. 3,30,35,000/-. The total outstanding of such Public deposits as on the Balance Sheet Date including interest stands at Rs. 1,93,09,782/-.

30. Basis of preparation of accounts

The company has been incurring heavy losses for the past two year. Also, the company has incurred cash losses in the previous year and the year under review. Due to non sustainability in business due to various outside factors which are beyond the control of the company, heavy cost of debt, non recoverability of dues the company has incurred these losses. Owing to such a scenario the major manufacturing facilities of the company has been stalled.

During the year the company has identified certain stock unfit for undertaking production activities to the tune of Rs. 92.82 crores. Subsequently such stock was written off and negligible scrap value was recovered. Also, trade receivables to the extent of Rs. 197.91 crores has been marked as bad and written off. These factors have a substantial affect on the net worth of the company and it has been completely eroded.

Notwithstanding the above facts the accounts of the company have been prepared on the assumption of going concern. This is because the management is positive with regards to settlement of bank dues and infusion of fresh funds into the company to meet the future obligations and once again start the manufacturing facilities.

31. Provisions, Contingent Liabilities & Contingent assets

In accordance with Accounting Standard-29 (Provisions, Contingent Liabilities & Contingent assets), issued by the Institute of Chartered Accountants of India, provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company.

b. Contingent Liabilities in respect of Sales Tax and Income Tax assessment dues not accounted for are as follows:

Apart from the above, there are certain Food & Drug Administration and General Legal cases against the Company in respect of which the outcome cannot be ascertained at this stage.

32. Securities And Exchange Board of India (SEBI) order

The company has preferred an appeal before the Securities Appellate Tribunal (SAT), Mumbai against the order of Securities and Exchange Board of India (SEBI) passed on March 23, 2015. The matter is still pending with Securities Appellate Tribunal (SAT), Mumbai.

33. Non - Performing Bank Accounts

The company has defaulted in payments of dues to bank and financial institutions, due to which the related accounts have become NPAs (Non performing assets). The interest post becoming non-performing on the various loans availed have not been provisioned by the company. The details of NPA accounts are as under:

34. Fire at Malkapur Unit and subsequent insurance claim

A fire has occurred on 27.04.2015 at the unit situated at Malkapur in which the soya bean seed stored in one of the Silos was damaged and destroyed. The total estimated loss as per the primary assessment is Rs. 34 crores. The necessary steps have been taken and a surveyor has been appointed by the insurance company. The assessment and survey proceedings are under process and not yet completed. As on date the surveyor report has not been received by the company. The company has lodged a claim for Rs. 31.38 crores.

35. Income Tax Assessment

The company has preferred an appeal against the order passed by the Deputy Comm. Of Income Tax,(Circle-2), Nagpur in respect of block assessment for the financial year from 200607 to 2012-13. The said appeal is pending before the commissioner of Income Tax Appeals-III, Nagpur.

36. Subsidiary Companies

There are no business transactions in both the foreign subsidiaries of the company. Due to the non engagement in any business there; the financial statements of the subsidiary are not being audited. In view of this, no interest on loan given to subsidiary has been booked for the current year.

37. Regulatory and Legal Compliance

Filing of the company’s Income Tax Return u/s 139(1) of the Income Tax Act, 1961, Tax Audit Report u/s 44AB for the Assessment Year 2014-15 is pending. Also, report on transfer pricing audit under the Income Tax Act, 1961 and cost audit under the Companies (Cost Accounting Records) Rules, 2015 as per the Companies Act, 2013 for the F.Y. 2014-15 and F.Y. 2015-16 is pending. The company has not appointed any cost auditor for the F.Y. 2015-16. The company has also not appointed internal auditor as required by the Companies Act, 2013.

38. Corporate Social Responsibility (CSR)

The company as per the prevalent rules and provisions of the Companies Act, 2013 has earlier provided for Rs. 55 lacs for undertaking CSR activities. However, the same is yet to be spent on such activities. Also, in view of the recent losses in the previous and current year no provision for current year has been made.

39. Government grants

The Company’s Plant at Kund (Buj) Tal: Malkapur , (Dist. . Buldhana -Maharashtra State) being located in Low Human Development Index District, is entitled for benefits and incentives by way of Industrial Promotion Subsidy (IPS) equivalent to 100 % of the eligible investments made under the "Package Scheme of Incentives- 2007" declared by the Govt, of Maharashtra. The MOU to that effect has been signed between the company and the Government of Maharashtraon 31st day of May, 2010.

During the year the company has accounted for said IPS for Rs. 1.09 crores towards the taxes paid and contribution made to Provided Fund to the Government of Maharashtra.

40. Capital Work in Progress and capital commitment

Capital Work in Progress includes advances for capital expenditure in respect of Capital Stores and Spares for Rs. 37.88 Lacs.

Capital commitment: NIL

a) The installed capacities are annual capacities based on three shift working and maximum utilization of Plant and Machinery.

b) Installed capacity is as per certificate given by the management on which the auditors have relied, being a technical matter.

c) Installed capacity for soya plant is based on 300 working days and installed capacity for Power plant is based on 330 working days.

43. Earnings in Foreign Currency:

46. Segment Reporting

The company is primarily engaged in the business of soya processing through soya solvent extraction plant and oil refinery along with lecithin plant. The company is also engaged in the business of generation of Power having production capacity of 10 MW. The company has identified two primary business segments, namely Soya extraction and Power which in the context of Accounting Standard 17 on “Segment Reporting” constitute reportable segments.

Note: Inter segment transfer from power segment to solvent for captive consumption of steam and power is measured at annual average cost plus 15% of the said cost or prevailing MSEDCL Billing rates whichever is lower.

47. Related Party Disclosures:

Disclosures as required by the Accounting Standard - 18 , “Related Party Disclosures” are given below:

a) List of related parties Associate Companies:

(i) Ivory Exports Private Limited

(ii) Rasoya Foods & Drinks Private Limited

(iii) Eiravat Trade links Private Limited (earlier Eiravat Leasing & Finance Private Limited) Subsidiary Company:

(i) RPL International Trade (FZE)

(ii) RPL (HK) Foods & Feeds Corporation Ltd.

Key Management personnel and relatives:

Key Management Personnel

(i) Mr. Anil N. Lonkar - Chairman & Managing Director

b) Transactions with related parties:

Transactions with Key Management Personnel

The Company had entered into an Agreement with the Managing Director, and pursuant to the agreement he is entitled to receive Rs. 18.00 Lacs per annum

50. Payments to Micro, Small & Medium Enterprises

The company does not have any details of amounts overdue for payments to any of the suppliers of the Company to whom the provisions of The Micro, Small & Medium Enterprises Development Act, 2006 applies. The company has also not received any claim for interest.

51. Capital Reserve represents subsidy received from government. An amount of Rs. 1,79,588.92 is being credited to other income representing amortization ofthe said grant.

53. Export debtors for Rs.28.22 Lacs has been identified as non recoverable and is in the process of intimating the same to Reserve Bank of India (RBI).

54. Balances on account of advances, debtors and creditors are subject to confirmation and reconciliation, if any.

55. Previous years’ figures have regrouped and rearranged wherever necessary.