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Accounting Policies of Action Construction Equipment Ltd. Company

Mar 31, 2015

1. System of Accounting:

The Financial Statement has been prepared to comply with the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 2013.The financial statements are prepared on going concern assumptions and under the historical cost convention on accrual basis except in case of assets for which revaluation is carried out. The accounting policies have been consistently applied bythe company unless otherwise stated.

2. Fixed Assets:

All Fixed Assets are valued at historical costs less accumulated depreciation. Cost of assets comprise of purchase price and any attributable cost of bringing the asset to its working condition except in case of assets for which revaluation is carried out.

3. Depreciation:

Depreciation is systematically allocated overthe useful life of an asset as specified in part Co f schedule II o f Companies Act, 2013.

4. 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. Current investments are carried at lower of cost or fair value determined on an individual investment basis.

Long-term investments are carried at cost. However, provision made for diminution in the value of the investments is made to recognise a decline other than temporary.

5. Inventories:

(a) Raw Material - Lower of cost or net realisable value. However, materials and other items held for use in the production of finished goods are not written down below cost, if finished product in which they will be incorporated are expected to be sold at ora bove cost. Cost is determined on weighted average basis.

(b) Work in Progress and Finished Goods - Lower of cost or net realisable value. Cost includes direct materials, labour and proportion of manufacturing overheads based on normal operating capacity. Cost is determined on a weighted average basis. Net Realisable value is the estimated selling price in ordinary course of business, less estimated costs necessary to makethesale.

6. Revenue Recognition:

Revenue is recognised to the extent it is probable that the economic benefits will flow to the company and revenue can be reliably measured.

(a) Sale of Goods: Revenue in respect of sale of products is recognised at the time of dispatch of the goods, when significant risks and rewards of ownership of the goods is passed to the buyers.

(b) Rendering of Services: Revenue from service is recognised when the service is performed, as per the terms of contract, and the performance of service is regarding as achieved when no significant uncertainty exists regarding the amount of consideration that will be derived from rendering the services.

(c) Interest: Revenue is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

(d) Insurance Claims : Receivable on account of insurance are accounted for to the extent the company is reasonably certain of their uItimate collection.

(e) Export Benefits: Export benefits under Duty Drawback Scheme are accounted for in the year of Export of Goods.

7. Foreign Currency Transactions:

a) Initial recognition: Foreign currency transactions are recorded in the reporting currency, by applying the foreign currency amount the exchange rate prevailing atthe date of transaction.

b) Conversion : Foreign currency monetary items are reported using the closing rate, 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 the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in foreign currency are reported using the exchange rates that existed when the value is determined.

c) Exchange Differences: Exchange differences arising on reporting monetary items of company at the rate different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arises. However, exchange difference arising on reporting of "Long Term Foreign Currency Monetary Item (LTFCMI)" in so far as they relate to acquisition of capital assets are added to that assets and in other cases, such difference are accumulated in "Foreign Currency Monetary Item Translation Difference Account (FCMITDA)."

8. Benefits to Employees:

a) Shortterm Employee Benefit:

All employees benefits payable with in twelve month of rendering of the service are classified as short-term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia etc. and are recognised in the period in which the employee renders the related service.

b) Post Employment benefits:

(i) Defined Contribution Plans:

The Company's State government Provident Fund Scheme and Employee State Insurance Scheme are defined contribution plans. The contribution paid/ payable under the scheme is recognised during the period in which the employee renders the related service.

(ii) Defined Benefits Plans:

The employee's gratuity fund scheme, long term compensated absences are Company's defined benefit plans. The present value of the obligation under such defined benefit plans are determined based on the actuarial valuation on the date of the balance sheet. Gratuity Liability is funded through a Group Gratuity Scheme with Life Insurance Corporation of India wherein contributions are madeand charged to revenue on annual basis.

9. AccountingforTaxeson Income:

Tax expense comprises of current and deferred tax. Current 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: tax reflects theimpact of current year timing differences between taxable income and accounting income f or t hey ear and reversal of timing differences of earlier y ears and has been accounted as per p rovisions of the Accounting St andard-22 issued by The Institute of Chartered Accountants of India. In accordance with t he guidance n ote issued by ICAI, the c ompany will review the outstanding MAT c red it entitlements at each balance sheet date and write down the carrying amount of MAT Credit entitlement to the extent there is no Ionger convincing evidence t o t he effect that Company will pay normal Income Tax during t he sp ecified p eriod.

10. 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 recognised, wherever carrying amount of an asset exceeds its recoverable value. The recoverable value is greater of the asset's net selling price or value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at weighted average cost of capital.

After impairment, depreciation is provided on the revised c arrying amount of the assets over its remaining us eful life.

11. Borrowing Costs:

Borrowing costs that are attributable to the acquisition and construction of an assets that necessarily takes substantial period of time to get ready for its intended use are capitalised as part of cost of respective assets. All other borrowing costs are recognised as an expenses in the year in which they are incurred. Borrowing Cost consists of interest and other costs that an entity incurs in connection with the borrowing of funds.

12. Expenditure during Construction Period:

In case of new projects/substantial expansions of existing factories, expenditure incurred, including trial production expenses net of revenue earned and attributable interest and financing costs prior to commencement of commercial production are capitalized.

13. Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) theCompany has a present obligation as a result of a past event;

b) a probable outflow of resources is expected to settle the obligation and;

c) the amount of obligation can be reliably estimated;

Reimbursements expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent Liability is disclosed in case of

a) a present obligation arising from the past event, when it is not probable that an outflow of resources will be required to settlethe obligation;

b) a possible obligation, of which the probability of outflow of resources is remote.

Contingent Assets are neither recognised nor disclosed.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each B alanceS heet date.


Mar 31, 2013

1. System of Accounting:

The Financial Statement has been prepared to comply with the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.The financial statement has been prepared under the historical cost convention onaccrual basis except in case of assets for which revaluation is carried out. The accounting policies have been consistently appliedby the company unless otherwise stated.

2. Fixed Assets:

All Fixed Assets are valued at historical costs less accumulated depreciation. Cost of assets comprise of purchase price and any attributable cost of bringing the asset to its working condition except in case of assets for which revaluation is carried out.

3. Depreciation:

Depreciation has been provided using Written Down Value method as per rates prescribed by Schedule XIV of the Companies Act, 1956.

4. 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. Current investments are carried at lower of costorfair value determinedon anindividual investment basis.

Long-term investments are carried at cost. However, provision made for diminution in the value of investments is made to recognisea decline other than temporary.

5 Inventories:

a) Rawmaterial- Lower of cost or net realisable value. However, materials and other items held for use in the production of finished goods are not written down below cost, if finished product in which they will be incorporated are expected to be sold at or above cost. Cost is determinedon weighted averagebasis.

b) Work in Progress and Finished Goods - Lower of cost or net realisable value. Cost includes direct materials, labour and proportion of manufacturing overheads based on normal operating capacity. Cost is determined on a weighted average basis. Net Realisable value is the estimated selling price in ordinary course of business, less estimated costs necessarytomake the sale.

6 RevenueRecognition:

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

a) Sale of Goods : Revenue in respect of sale of products is recognised at the time of dispatch of the goods, when significant risks and rewards of ownership of the goods is passed to the buyers.

b) Rendering of Services : Revenue from service is recoginsed when the service is performed, as per the terms of contract, and the performanceofserviceis regarding as achieved whenno significant uncertainty exists regarding the amountof consideration that will be derived from rendering the services.

c) Interest : Revenue is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

d) Insurance Claims : Receivable on account of insurance are accounted for to the extent the Company is reasonably certain of their ultimate collection.

e) Export Benefits: Export benefits under Duty Drawback Scheme are accounted for inthe year of Exportof Goods.

7 Foreign CurrencyTransactions:

a) Initial recognition : Foreign currency transactions are recorded in the reporting currency, by applying the foreign currency amount the exchange rate prevailing at the date of transaction.

b) Conversion : Foreign currency monetary items are reported using the closing rate. 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 the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in foreign currency are reported using the exchange rates that existed when the valueis determined.

c) Exchange differences : Exchange differences arising on reporting monetary items of company at the rate different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arises. However, exchange difference arising on reporting of "Long Term Foreign Currency Monetary Item (LTFCMI)" in so far as they relate to acquisition of capital assets are added to that assets and in other cases, such differences are accumulated in "Foreign Currency Monetary Item Translation Difference Account (FCMITDA)."

8 Benefits to Employees:

a) Short term Employee Benefit:

All employees benefits payable with in twelve month of rendering of the service are classified as short-term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia etc. and are recognised in the periodinwhich the employee renders the related service.

b) Post Employment benefits:

(i) Defined Contribution Plans:

The Company''s State government Provident Fund Scheme and Employee State Insurance Scheme are defined contribution plans. The contribution paid/ payable under the scheme is recognised during the period in which the employee renders the related service.

(ii) Defined Benefits Plans:

The employee''s gratuity fund scheme, long term compensated absences are company''s defined benefit plans. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation on the date of the balance sheet.Gratuity Liability is funded through a Group Gratuity Scheme with Life Insurance Corporation of India wherein contributions are made and charged to revenue on annual basis.

9 Accounting forTaxesonIncome:

Tax expense comprises of current and deferred tax. Current 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 tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years and has been accounted as per provisions of the Accounting Standard-22 issued by The institute of Chartered Accountants of India.

10 ImpairmentofAssets:

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 recognised wherever carrying amount of an asset exceeds its recoverable value. The recoverable valueis greaterof the asset''s net selling price or value in use. Inassessing value in use, the estimated future cash flows are discountedtotheir present value at weighted average costofcapital. After impairment, depreciation isprovided onthe revised carrying amountof the asset over its remaining useful life.

11 Borrowing Costs:

Borrowing costs that are attributable to the acquisition and construction of an assets that necessarily takes substantial period of timeto get ready for its intended use are capitalised as part of cost of respective assets. All other borrowing costs are recognised as an expenses in the year in which they are incurred. Borrowing cost consists of interest and other costs that anentity incursinconnection with the borrowingof funds.

12 Expenditure during Construction Period:

In case of new projects/substantial expansions of existing factories, expenditure incurred, including trial production expenses net of revenue earned and attributable interest and financing costs prior to commencement of commercial production are capitalized.

13 Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation asaresultofapast event;

b) a probable outflow ofresourcesisexpectedto settle the obligation and;

c) the amountof obligation canbereliably estimated;

Reimbursements expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent Liabilityisdisclosedincaseof

a) a present obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation;

b) a possible obligation, of which the probabilityofoutflowof resourcesis remote. ContingentAssets are neither recognised nor disclosed.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.


Mar 31, 2012

1. System of Accounting:

The Financial Statement has been prepared to comply with the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.The financial statement has been prepared under the historical cost convention on accrual basis except in case of assets for which revaluation is carried out. The accounting policies have been consistently applied by the company unless otherwise stated.

2. Fixed Assets:

All Fixed Assets are valued at historical costs less accumulated depreciation. Cost of assets comprise of purchase price and any attributable cost of bringing the asset to its working condition except in case of assets for which revaluation is carried out.

3. Depreciation:

Depreciation has been provided using Written Down Value method as per rates prescribed by Schedule XIV of the Companies Act, 1956.

4. 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. Current investments are carried at lower of cost or fair value determined on an individual investment basis.

Long-term investments are carried at cost. However, provision made for diminution in the value of investments is made to recognise a decline other than temporary.

5 Inventories:

a) Raw material - Lower of cost or net realisable value. However, materials and other items held for use in the production of finished goods are not written down below cost, if finished product in which they will be incorporated are expected to be sold at or above cost. Cost is determined on weighted average basis.

b) Work in Progress and Finished Goods - Lower of cost or net realisable value. Cost includes direct materials, labour and proportion of manufacturing overheads based on normal operating capacity. Cost is determined on a weighted average basis. Net Realisable value is the estimated selling price in ordinary course of business, less estimated costs necessary to make the sale.

6 Revenue Recognition:

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

a) Sale of Goods : Revenue in respect of sale of products is recognised at the time of dispatch of the goods, when significant risks and rewards of ownership of the goods is passed to the buyers.

b) Rendering of Services : Revenue from service is recoginsed when the service is performed, as per the terms of contract, and the performance of service is regarding as achieved when no significant uncertainty exists regarding the amount of consideration that will be derived from rendering the services.

c) Interest : Revenue is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

d) Insurance Claims : Receivable on account of insurance are accounted for to the extent the Company is reasonably certain of their ultimate collection.

e) Export Benefits : Export benefits under Duty Drawback Scheme are accounted for in the year of Export of Goods.

7 Foreign Currency Transactions:

a) Initial recognition : Foreign currency transactions are recorded in the reporting currency, by applying the foreign currency amount the exchange rate prevailing at the date of transaction.

b) Conversion : Foreign currency monetary items are reported using the closing rate. 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 the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in foreign currency are reported using the exchange rates that existed when the value is determined.

c) Exchange differences : Exchange differences arising on reporting monetary items of company at the rate different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arises. However, exchange difference arising on reporting of "Long Term Foreign Currency Monetary Item (LTFCMI)" in so far as they relate to acquisition of capital assets are added to that assets and in other cases, such differences are accumulated in "Foreign Currency Monetary Item Translation Difference Account (FCMITDA)."

8 Benefits to Employees:

a) Short term Employee Benefit:

All employees benefits payable with in twelve month of rendering of the service are classified as short-term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia etc. and are recognised in the period in which the employee renders the related service.

b) Post Employment benefits:

(i) Defined Contribution Plans:

The Company's State government Provident Fund Scheme and Employee State Insurance Scheme are defined contribution plans. The contribution paid/ payable under the scheme is recognised during the period in which the employee renders the related service.

(ii) Defined Benefits Plans:

The employee's gratuity fund scheme, long term compensated absences are company's defined benefit plans. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation on the date of the balance sheet.Gratuity Liability is funded through a Group Gratuity Scheme with Life Insurance Corporation of India wherein contributions are made and charged to revenue on annual basis.

9 Accounting for Taxes on Income:

Tax expense comprises of current and deferred tax. Current 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 tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years and has been accounted as per provisions of the Accounting Standard-22 issued by The institute of Chartered Accountants of India.

10 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 recognised wherever carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the asset's net selling price or value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at weighted average cost of capital.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

11 Borrowing Costs:

Borrowing costs that are attributable to the acquisition and construction of an assets that necessarily takes substantial period of time to get ready for its intended use are capitalised as part of cost of respective assets. All other borrowing costs are recognised as an expenses in the year in which they are incurred. Borrowing cost consists of interest and other costs that an entity incurs in connection with the borrowing of funds.

12 Expenditure during Construction Period:

In case of new projects/substantial expansions of existing factories, expenditure incurred, including trial production expenses net of revenue earned and attributable interest and financing costs prior to commencement of commercial production are capitalized.

13 Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation as a result of a past event;

b) a probable outflow of resources is expected to settle the obligation and;

c) the amount of obligation can be reliably estimated;

Reimbursements expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent Liability is disclosed in case of

a) a present obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation;

b) a possible obligation, of which the probability of outflow of resources is remote.

Contingent Assets are neither recognised nor disclosed.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.


Mar 31, 2011

1. System of Accounting:

The Financial Statement have been prepared to comply with the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.The financial statements have been prepared under the historical cost convention on accrual basis except in case of assets for which revaluation is carried out. The accounting policies have been consistently applied by the company unless otherwise stated.

2. Fixed Assets:

All Fixed Assets are valued at historical costs less accumulated depreciation. Cost of assets comprise of purchase price and any attributable cost of bringing the asset to its working condition except in case of assets for which revaluation is carried out.

3. Depreciation:

Depreciation has been provided using Written Down Value method as per rates prescribed by Schedule XIV of the Companies Act, 1956.

4. 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. Current investments are carried at lower of cost and fair value determined on an individual investment basis.

Long-term investments are carried at cost. However, provision for diminution in the value is made to recognise a decline other than temporary in the value of the investments.

5 Inventory Valuation:

Raw material- Lower of cost and net realisable value. However, materials and other items held for use in the production of finished goods are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis.

Work in Process and Finished Goods- Lower of cost and net realisable value. Cost includes direct materials, labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on a weighted average basis.

Net Realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

6 Revenue Recognition:

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

a) Sale of Goods: Revenue in respect of sale of products is recognised at the time of dispatch of the goods, when the significant risks and rewards of ownership of the goods is passed to the buyer.

b) Rendering of Services Revenue from the service is recoginsed when the service is performed, as per the terms of contract, and the performance of service is regarded as achieved when no significant uncertainty exists regarding the amount of consideration that will be derived from rendering the service.

c) Interest Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

d) Insurance Claims Claims receivable on account of insurance are accounted for to the extent the Company is reasonably certain of their ultimate collection.

e) Export Benefits Export benefits under Duty Drawback Scheme are accounted for in the year of export of goods.

7 Foreign Currency Transactions:

a) Initial recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate prevailing at the date of the transaction.

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

c) Exchange differences Exchange differences arising on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise.

8 Employees Benefits:

a) Short term Employee Benefit:

All employee benefits payable with in twelve month of rendering of the service are classified as short-term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia etc. and are recognised in the period in which the employee renders the related service.

b) Post Employment benefits:

(i) Defined Contribution Plans:

The Company's State government provident fund scheme and employee state insurance scheme are defined contribution plans. The contribution paid/ payable under the scheme is recognised during the period in which the employee renders the related service.

(ii) Defined Benefits Plans:

The employee's gratuity fund scheme, long term compensated absences are company's defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation on the date of the balance sheet.Gratuity Liability is funded through a Group Gratuity Scheme with Life Insurance Corporation of India wherein contributions are made and

charged to revenue on annual basis.

9 Accounting for Taxes on Income:

Tax expense comprises of current 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 reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years and has been accounted as per provisions of the Accounting Standard-22 issued by The institute of Chartered Accountants of India.

Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

10 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 recognised wherever the carrying amount of an asset exceeds its recoverable amount.

The recoverable amount is the greater of the asset's net selling price and value in use. 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.

11 Borrowing Costs:

Borrowing costs directly attributable to the acquisition and construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consists of interest and other costs that an entity incurs in connection with the borrowing of funds.

12 Expenditure during Construction Period:

In case of new projects/substantial expansions of existing factories, expenditure incurred, including trial production expenses net of revenue earned and attributable interest and financing costs prior to commencement of commercial production are capitalized.

13 Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation as a result of a past event;

b) a probable outflow of resources is expected to settle the obligation and; the amount of obligation can be reliably estimated; Reimbursements expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent Liability is discolsed in case of

a) a present obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation;

b) a possible obligation, of which the probability of outflow of resources is remote. Contingent Assets are neither recognised nor disclosed.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.


Mar 31, 2010

1. System of Accounting

The Financial Statement have been prepared to comply with the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on accrual basis. The accounting policies have been consistently applied by the company unless otherwise stated.

2. Fixed Assets

All Fixed Assets are valued at historical costs less accumulated depreciation. Cost of assets comprise of purchase price and any attributable cost of bringing the asset to its working condition.

3. Depreciation

Depreciation has been provided on WDV method as per rates prescribed by Schedule XIV of the Companies Act, 1956.

4. Investments

Investments are valued at the cost.

5. Inventory Valuation

(a) Raw Materials and Components are valued at cost.

(b) Work in Progress is valued at prime cost and includes direct labour & overhead charges.

(c) Finished goods are valued at works cost/ landed cost and inclusive of Excise Duty & Cess thereon, if any.

6. Foreign Currency Transactions

Foreign Currency Transactions are accounted for on the exchange rate prevailing at the transaction date. Current Assets and Current Liabilities on the date of Balance Sheet are restated at the exchange rates prevailing at that date. Variations

on settlement/restatement are recognised as gain or loss in exchange in Profit & Loss Account.

7. Revenue Recognition

(a) Sales are recognised at the time of dispatch of Goods from the factory.

(b) Services are recoginsed when performed as per contract.

8. Benefits to Employees

(a) Short term Employee Benefit:

All employee benefits payable with in twelve month of rendering of the service are classified as short-term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia etc. and are recognised in the period in which the employee renders the related service.

(b) Post Employment benefits:

(i) Defined Contribution Plans:

The Companys State government provident fund scheme and employee state insurance scheme are defined contribution plans. The contribution paid/ payable under the scheme is recognised during the period in which the employee renders the related service.

(ii) Defined Benefits Plans:

The employees gratuity fund scheme, long term compensated absences are companys defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation on the date of the balance sheet.Gratuity Liability is funded through a Group Gratuity Scheme with Life Insurance Corporation of India wherein contributions are made and charged to revenue on annnual basis.

9. Accounting for Taxes on Income

Provision for taxation for the year comprises of current taxes and deferred taxes. Current taxes consist of Income- Tax/ Wealth Tax payable on current year Income / Wealth. Deferred Tax is calculated for timing differences and has been accounted as per provisions of the Accounting Standard-22 issued by The institute of Chartered Accountants of India.

10. Impairment of Assets

The carrying amount of assets is reviewed at each Balance Sheet date to ascertain Impairment based on Internal/ external factors. An impairment loss is recognised, when the carrying amount of an asset exceed its realisable value. The realisable value is greater of the assets net selling price.

11. Borrowing Costs

Borrowing costs that are attributable to the acquisition, construction of qualifying assets are capitalised as part of cost of such assets upto the date the assets are ready for its intended use. All other borrowing costs are recognised as an expenses in the year in which they are incurred.

12. Expenditure during Construction Period

In case of new projects/substantial expansions of existing factories, expenditure incurred, including trial production expenses net of revenue earned and attributable interest and financing costs prior to commencement of commercial production are capitalized.

13. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation as a result of a past event;

b) a probable outflow of resources is expected to settle the obligation and;

c) the amount of obligation can be reliably estimated; Reimbursements expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent Liability is discoised in case of

a) a present obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation;

b) a possible obligation, of which the probability of outflow of resources is remote. Contingent Assets are neither recognised nor disclosed.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

 
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