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Accounting Policies of Amara Raja Batteries Ltd. Company

Mar 31, 2015

A. Basis of Preparation of Financial Statements

The financial statements are prepared under historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles in India. The financial statements are prepared to comply in all material respects with the Accounting Standards as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of Companies (Accounts) Rules, 2014, the pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 2013 and Companies Act, 1956 to the extent applicable and guidelines issued by the Securities and Exchange Board of India. The Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard or amendments to the provisions of any statue which requires a change in the accounting policy hitherto in use.

b. Use of Estimates

The preparation of the financial statements requires management of the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosures relating to the contingent liabilities and commitments. Examples of such estimates include provisions for warranty claims, provisions for doubtful debts and advances, provisions for sales incentive and promotional schemes offered to customers, employee benefit plans, useful lives of fixed assets and provisions for impairment. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

The judgments, estimates and underlying assumptions are made with the management's best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c. Fixed assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets is inclusive of freight, non-refundable duties and taxes, the cost of installation/erection, pre-production expenses including cost of trial runs and other incidental expenses incurred to bring the asset to its present location and condition.

Intangible assets are stated at cost of acquisition less accumulated amortisation. All costs, including financing costs on specific borrowings utilised for financing the assets, incurred till the time the asset is put to use for intended purpose are capitalised.

Capital work-in-progress and intangible assets under development are stated at the amount expended upto the date of Balance Sheet.

d. Depreciation and Amortisation

Depreciation on fixed assets is provided on straight line basis, at the higher of the following

a) Rates determined on the basis of useful life of the assets estimated by the management or

b) Rates specified in Schedule II of the Companies Act, 2013.

The following are the estimated useful lives adopted by the management in computing depreciation.

Depreciation on assets added/ disposed off during the year is provided on pro-rata basis from/upto the date of addition or disposal, as the case may be.

Individual assets costing up to Rs. 5,000 each are fully depreciated in the year of purchase since in the opinion of the management; the estimated useful lives of the said assets are below one year.

Intangible assets, comprising of expenditure on computer software, are amortised on a straight line method over a period of five years. Cost of lease hold land and cost of leasehold land development fee is amortised over the period of lease on proportionate basis.

e. Impairment of Assets

At each Balance Sheet date, the Company reviews the carrying amounts of the assets to determine whether there is any indication of impairment of assets. If any indication exists, the recoverable amount is estimated, at the higher of the realisable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognised in the Statement of profit and loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The impairment loss recognised in the previous accounting periods, if any, is reversed if there has been any change in the estimated recoverable amount.

f. Borrowing Costs

Borrowing costs, that are directly attributable to the acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that they will result in future economic benefits and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

g. Investments

Trade investments are the investments meant to enhance the Company's interest. Investments are classified as current or non-current based on the management's intention at the time of investment. Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such diminution is other than of temporary nature.

Current investments are carried at lower of cost and fair market value.

h. Inventories

i) Inventories are valued at lower of cost and net realisable value.

ii) In respect of raw materials, bought-out items, consumables, stores and spares, cost is ascertained on a weighted average basis. Cost includes freight, handling charges and non-recoverable taxes and duties.

iii) In respect of work-in-process and finished goods, cost is determined on weighted average basis. Cost includes all direct costs and applicable production overheads incurred in bringing such inventories to their present location and condition. Finished goods are valued inclusive of excise duty.

iv) Goods in transit are stated at actual cost incurred upto the date of Balance Sheet.

v) Scrap is valued at an estimated net realisable value.

Provision for obsolescence is made wherever necessary. Obsolete inventory items when identified and technically determined, are valued at estimated net realisable value.

i. Revenue Recognition

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

i) Revenue from sale of goods is recognised when the risks and rewards in respect of ownership are transferred to the buyer under the terms of the contract which usually coincide with the dispatch of goods to the customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales include excise duty and service charges recovered and are stated net of trade discounts, allowances and sales returns.

iii) Revenue from sale of services is recognised to the extent of services performed as per the agreements/arrangements with the customers.

iv) Interest income is recognised on a time proportion basis taking into account the amounts invested and the rate of interest.

v) Cash discounts are recognised on a time proportion basis with reference to the due date for payment and actual date of payment.

vi) Dividend income is accounted for in the year in which the right to receive the payment is established.

vii) Insurance claims are recognized upon acceptance by the Insurance Company.

viii) Royalty income is recognized in accordance with the substance of the relevant agreement and on an accrual basis.

j. Employee Benefits

I) Defined Contribution Plans

i) Company's contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual. Provident Fund contributions are made to the Government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions.

ii) Company's contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by Life Insurance Corporation of India and are recognised in the Statement of Profit and Loss at predetermined rates in the year in which the employees have rendered service. The Company has no further obligations to the Scheme beyond its monthly contributions.

II) Defined Benefit Plans

i) Company's liability towards Gratuity in respect of eligible employees at retirement, death, incapacitation or termination of employment is funded and is being administrated by the Life Insurance Corporation of India. Cost of providing these benefits is determined on the basis of actuarial valuation at the end of each financial year using projected unit credit method and the incremental expense thereon is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service.

ii) Expense arising on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service in lieu of such leave.

iii) Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss in the year in which they arise.

k. Research and Development Expenses

Capital expenditure on Research and Development is classified under tangible/intangible assets and depreciated in accordance with the Company's policy mentioned above.

Research costs are charged to revenue as and when incurred. Development expenditure incurred on an individual project is recognised as an intangible asset when the capitalisation criteria is met. Other development costs are recognised in the Statement of Profit and Loss as and when incurred.

Development expenditure as capitalised above is amortised over the estimated period of useful life or economic benefits not exceeding ten years.

l. Foreign Currency Transactions

i) The reporting currency of the Company is Indian Rupee.

ii) Transactions in foreign currency are initially recorded in the reporting currency at the exchange rate prevailing on the date of transaction and charged or credited to revenue with the difference in rate of exchange arising on actual receipt/payment during the year.

iii) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

iv) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

v) In respect of commodity hedging

- The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Statement of Profit and Loss.

- In respect of contracts, which are outstanding as on the date of Balance Sheet are valued at prevailing market price and the resultant gain/loss, if any, is recognised in the Statement of Profit and Loss.

m. Income Taxes

Income tax expense comprises current tax and deferred tax.

i) Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

ii) Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods, at the rate of tax enacted or substantively enacted by the balance sheet date.

iii) Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised in future period. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of their realisation in future period.

n. Provisions, Contingent Liabilities and Contingent assets

Provisions are recognised 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 their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation 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. The Company does not recognise contingent liabilities but the same are disclosed in the Notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

o. Product Warranties

The Company estimates and provides for liability for product warranties in the year in which the products are sold. These estimates are established using historical information on the nature, frequency, quantum of warranty claims and corrective actions against product failures and the estimates are reviewed annually for any material changes in assumptions. The cost of warranty is net of realisable scrap value and includes the applicable taxes and duties like excise duty and also the best estimate of relevant freight expenses. The timing of outflows will vary based on the actual warranty claims. Provision is also recognised for product warranties in respect of claims received and remaining unsettled as at the date of Balance Sheet.

p. Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for claims which are no longer required.

q. Provision for doubtful trade receivables

Receivables due from customers, which remain unpaid for more than one year from the due date and / or other receivables which are otherwise considered doubtful are recognized and provided for as provision for doubtful trade receivables.

r. Dividends

Provision for dividends payable, including income tax thereon, is recognised in the books of account as proposed by the Board of Directors, pending approval of shareholders at the ensuing Annual General Meeting.

s. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and on hand, including cheques on hand. The Company considers all highly liquid investments, which are readily convertible into cash, to be cash equivalents.

t. Leases

The Leases where the Lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss as per the applicable lease terms.

u. Segment Reporting

The Company is engaged in the business of manufacture and sale of lead acid storage batteries. This, in the context of Accounting Standard 17 on Segment Reporting, as specified in the Companies (Accounting Standards) Rules, 2006, is considered to constitute one single primary segment. Further, there is no reportable secondary segment i.e. Geographical Segment.


Mar 31, 2014

A. Basis of Preparation of Financial Statements

The financial statements are prepared under historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles in India. The financial statements are prepared to comply in all material respects with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956, read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013, the pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 1956 and the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India

b. Use of Estimates

The preparation of the financial statements requires the management of the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

The judgments, estimates and underlying assumptions are made with the management''s best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods

c. Fixed assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets is inclusive of freight, non-refundable duties and taxes, financial costs on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection, pre-production expenses including cost of trial runs and other incidental expenses incurred to bring the asset to its present location and condition Intangible assets are stated at cost of acquisition less accumulated amortisation. All costs, including financing costs on specific borrowings utilised for financing the assets, incurred till the time the asset is put to use for intended purpose are capitalised

Capital work-in-progress and intangible assets under development are stated at the amount expended upto the date of Balance Sheet.

d. Depreciation and Amortisation

Depreciation on fixed assets is provided on a straight line basis, at the following rates, which are determined on the basis of useful life of the assets estimated by the management or at rates specified in Schedule XIV to the Companies Act, 1956, whichever is higher:

Depreciation on assets added/ disposed off during the year is provided on pro-rata basis from/upto the date of addition or disposal, as the case may be.

Individual assets costing up to Rs.5,000 each are fully depreciated in the year of purchase.

Intangible assets, comprising of expenditure on computer software, are amortised on a straight line method over a period of five years

Cost of lease hold land including development fee is amortised over the period of lease on proportionate basis

e. Impairment of Assets

At each Balance Sheet date, the Company reviews the carrying amounts of the assets to determine whether there is any indication of impairment of assets. If any indication exists, the recoverable amount is estimated, at the higher of the realisable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognised in the Statement of Profit and Loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs

The impairment loss recognised in the previous accounting periods, if any, is reversed if there has been any change in the estimated recoverable amount.

f. Borrowing Costs

Borrowing costs, that are directly attributable to the acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that they will result in future economic benefits and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred

g. Investments

Trade investments are the investments meant to enhance the Company''s interest. Investments are classified as current or non-current based on the management''s intention at the time of investment. Long-term investments are stated at cost. Provision for diminution in the value of ong-term investments is made only if such diminution is other than of temporary nature.

Current investments are carried at lower of cost and fair market value.

h. Inventories

i) Inventories are valued at lower of cost and net realisable value.

ii) In respect of raw materials, bought-out items, consumables, stores and spares, cost is ascertained on a weighted average basis. Cost ncludes freight, handling charges and non-recoverable taxes and duties

ii) In respect of work-in-process and finished goods, cost is determined on weighted average basis. Cost includes all direct costs and applicable production overheads incurred in bringing such inventories to their present location and condition. Finished goods are valued nclusive of excise duty.

iv) Goods in transit are stated at actual cost incurred upto the date of Balance Sheet.

v) Scrap is valued at an estimated net realisable value.

Provision for obsolescence is made wherever necessary. Obsolete inventory items when identified and technically determined, are valued at estimated net realisable value.

i. Revenue Recognition

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

i) Revenue from sale of goods is recognised when the risks and rewards in respect of ownership are transferred to the buyer under the terms of the contract which usually coincide with the dispatch of goods to the customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales include excise duty and service charges recovered and are stated net of trade discounts, allowances and sales returns

ii) Revenue from sale of services is recognised to the extent of services performed as per the agreements/arrangements with the customers

iv) Interest income is recognised on a time proportion basis taking into account the amounts invested and the rate of interest.

v) Cash discounts are recognised on a time proportion basis with reference to the due date for payment and actual date of payment.

vi) Dividend income is accounted for in the year in which the right to receive the payment is established

vii) Insurance claims are recognised upon acceptance by the Insurance Company.

viii) Royalty income is recognised in accordance with the substance of the relevant agreement and on an accrual basis

j. Employee Benefits

I) Defined Contribution Plans

i) Company''s contributions to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual. Provident Fund contributions are made to the Government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions

ii) Company''s contributions to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by Life Insurance Corporation of India and are recognised in the Statement of Profit and Loss at predetermined rates in the year in which the employees have rendered service. The Company has no further obligations to the Scheme beyond its monthly contributions

II) Defined Benefit Plans

i) Company''s liability towards Gratuity in respect of eligible employees at retirement, death, incapacitation or termination of employment is funded and is being administrated by the Life Insurance Corporation of India. Cost of providing these benefits is determined on the basis of actuarial valuation at the end of each financial year using projected unit credit method and the incremental expense thereon is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service.

ii) Expense arising on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service in lieu of such leave.

ii) Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss in the year in which they arise.

k. Research and Development Expenses

Capital expenditure on Research and Development is classified under tangible/intangible assets and depreciated in accordance with the Company''s policy mentioned above.

Research costs are charged to revenue as and when incurred. Development expenditure incurred on an individual project is recognised as an ntangible asset when the capitalisation criteria is met. Other development costs are recognised in the Statement of Profit and Loss as and when ncurred

Development expenditure as capitalised above is amortised over the estimated period of useful life or economic benefits not exceeding ten years

I. Foreign Currency Transactions

i) The reporting currency of the Company is Indian Rupee.

ii) Transactions in foreign currency are initially recorded in the reporting currency at the exchange rate prevailing on the date of transaction and charged or credited to revenue with the difference in rate of exchange arising on actual receipt/payment during the year.

ii) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised iv) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise, v) In respect of commodity hedging

- The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Statement of Profit and Loss

- In respect of contracts, which are outstanding as on the date of Balance Sheet are valued at prevailing market price and the resultant gain/loss, if any, is recognised in the Statement of Profit and Loss

m. Income Taxes

ncome tax expense comprises current tax and deferred tax.

i) Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

ii) Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods, at the rate of tax enacted or substantively enacted by the Balance Sheet date.

ii) Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised in future period. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of their realisation in future period

n. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised 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 their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates

Contingent liability is disclosed for (i) Possible obligation 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. The Company does not recognise contingent liabilities but the same are disclosed in the notes

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised

o. Product Warranties

The Company estimates and provides for liability for product warranties in the year in which the products are sold. These estimates are established using historical information on the nature, frequency, quantum of warranty claims and corrective actions against product failures The cost of warranty is net of realisable scrap value and includes the applicable taxes and duties like excise duty and also the best estimate of relevant freight expenses. The timing of outflows will vary based on the actual warranty claims. Provision is also recognised for product warranties in respect of claims received and remaining unsettled as at the date of Balance Sheet.

p. Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for claims which are no longer required

q. Provision for doubtful trade receivables

Receivables due from customers, which remain unpaid for more than one year from the due date and / or other receivables which are otherwise considered doubtful are recognised and provided for as provision for doubtful trade receivables

r. Dividends

Provision for dividends payable, including income tax thereon, is recognised in the books of account as proposed by the Board of Directors, pending approval of shareholders at the ensuing Annual General Meeting

s. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and on hand, including cheques on hand. The Company considers all highly liquid nvestments, which are readily convertible into cash, to be cash equivalents

t. Leases

The Leases where the Lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss as per the applicable lease terms

u. Segment Reporting

The Company is engaged in the business of manufacture and sale of lead-acid storage batteries. This, in the context of Accounting Standard 17 on Segment Reporting, as specified in the Companies (Accounting Standards) Rules, 2006, is considered to constitute one single primary segment. Further, there is no reportable secondary segment i.e. Geographical Segment.

b) Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a face value of Rs.1 each. Each holder of equity share is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting, except in case of interim dividend. In the event of liquidation, the holders of equity share will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding

d) Aggregate number of bonus shares issued during the period of five years immediately preceding the reporting date

During the financial year 2008-09 the Company has allotted 28,468,750 equity shares of face value of Rs.2 each as fully paid-up bonus shares by capitalising part of general reserve.

Interest free sales tax deferment

The Company has availed interest free sales tax deferment under Andhra Pradesh sales tax deferment scheme (Target 2000) from the financial year 1997-98 as per the eligibility norms in respect of expanded capacities. The Company has availed total deferment of Rs.811.40 million since March,1998, which is repayable after a period of 14 years from the date of each availment in annual installments

- Eligible amount of interest free sales tax deferment - Rs.813.33 million

- Period eligible for availment - January 1998 till September 2015


Mar 31, 2013

A. Basis of Preparation of Financial Statements

The financial statements are prepared under historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles in India. The financial statements are prepared to comply in all material respects with the Accounting Standards notified under section 211(3C) of the Companies Act, 1956, the pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India.

b. Use of Estimates

The preparation of the financial statements requires the management of the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

The judgments, estimates and underlying assumptions are made with the management''s best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c. Fixed assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets is inclusive of freight, non-refundable duties and taxes, financial costs on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection and other incidental expenses incurred to bring the asset to its present location and condition.

Intangible assets are stated at cost of acquisition less accumulated amortisation. All costs, including financing costs on specific borrowings utilised for financing the assets, incurred till the time the asset is put to use for intended purpose are capitalised. Capital work-in-progress and intangible assets under development are stated at the amount expended upto the date of Balance Sheet.

d. Depreciation and Amortisation

Depreciation on fixed assets is provided on a straight line basis, at the following rates, which are determined on the basis of useful life of the assets estimated by the management or at rates specified in Schedule XIV to the Companies Act, 1956, whichever is higher:

(Refer Note No. 23 of the financial statements for the additional depreciation accounted due to revision in the estimated useful life of fixed assets during the year).

Depreciation on assets added/disposed off during the year is provided on pro-rata basis from/upto the date of addition or disposal, as the case may be.

Individual assets costing up to H5,000 each are fully depreciated in the year of purchase.

Intangible assets, comprising of expenditure on computer software, are amortised on a straight line method over a period of five years.

Cost of leasehold land is amortised over the period of lease on proportionate basis.

e. Impairment of Assets

At each Balance Sheet date, the Company reviews the carrying amounts of the assets to determine whether there is any indication of impairment of assets. If any indication exists, the recoverable amount is estimated, at the higher of the realisable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognised in the Statement of Profit and Loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The impairment loss recognised in the previous accounting periods, if any, is reversed if there has been any change in the estimated recoverable amount.

f. Borrowing Costs

Borrowing costs, that are directly attributable to the acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that they will result in future economic benefits and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

g. Investments

Trade investments are the investments meant to enhance the Company''s interest. Investments are classified as current or non- current based on the management''s intention at the time of investment. Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such diminution is other than of temporary nature.

Current investments are carried at lower of cost and fair market value.

h. Inventories

i) Inventories are valued at lower of cost and net realisable value.

ii) In respect of raw materials, bought-out items, consumables, stores and spares, cost is ascertained on a weighted average basis. Cost includes freight, handling charges and non-recoverable taxes and duties.

iii) In respect of work-in-process and finished goods, cost is determined on weighted average basis. Cost includes all direct costs and applicable production overheads incurred in bringing such inventories to their present location and condition. Finished goods are valued inclusive of excise duty.

iv) Goods in transit are stated at actual cost incurred upto the date of Balance Sheet.

v) Scrap is valued at estimated net realisable value.

Provision for obsolescence is made wherever necessary. Obsolete inventory items when identified and technically determined, are valued at estimated net realisable value.

i. Revenue Recognition

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

i) Revenue from sale of products is recognised when the risks and rewards in respect of ownership are transferred to the buyer under the terms of the contract which usually coincide with the dispatch of goods to the customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales include excise duty and service charges recovered and are stated net of trade discounts, allowances and sales returns.

iii) Revenue from sale of services is recognised to the extent of services performed as per the agreements/arrangements with the customers.

iv) Interest income is recognised on a time proportion basis taking into account the amounts invested and the rate of interest.

v) Dividend income is accounted for in the year in which the right to receive the payment is established.

j. Employee Benefits

I) Defined Contribution Plans

i) Company''s contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual. Provident Fund contributions are made to the Government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions.

ii) Company''s contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by Life Insurance Corporation of India and are recognised in the Statement of Profit and Loss at predetermined rates in the year in which the employees have rendered service. The Company has no further obligations to the Scheme beyond its monthly contributions.

II) Defined Benefits Plans

i) Company''s liability towards Gratuity in respect of eligible employees at retirement, death, incapacitation or termination of employment is funded and is being administrated by Life Insurance Corporation of India. Cost of providing these benefits is determined on the basis of actuarial valuation at the end of each financial year using projected unit credit method and the incremental expense thereon is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service.

ii) Expense arising on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service in lieu of such leave.

iii) Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss in the year in which they arise.

k. Research and Development Expenses

Capital expenditure on Research and Development is classified under tangible/intangible assets and depreciated in accordance with the Company''s policy mentioned above.

Research costs are charged to revenue as and when incurred. Development expenditure incurred on an individual project is recognised as an intangible asset when the capitalisation criteria are met. Other development costs are recognised in the Statement of Profit and Loss as and when incurred.

Development expenditure as capitalised above is amortised over the estimated period of useful life or economic benefits not exceeding ten years.

l. Foreign Currency Transactions

i) The reporting currency of the Company is Indian Rupee.

ii) Transactions in foreign currency are initially recorded in the reporting currency at the exchange rate prevailing on the date of transaction and charged or credited to revenue with the difference in rate of exchange arising on actual receipt/payment during the year.

iii) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

iv) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

v) In respect of commodity hedging

- The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Statement of Profit and Loss.

- In respect of contracts, which are outstanding as on the date of Balance Sheet are valued at prevailing market price and the resultant gain/loss, if any, is recognised in the Statement of Profit and Loss.

m. Income Taxes

Income tax expense comprises current tax and deferred tax.

i) Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

ii) Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods, at the rate of tax enacted or substantively enacted by the Balance Sheet date.

iii) Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised in future period. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of their realisation in future period. n. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised 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 their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation 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. The Company does not recognise contingent liabilities but the same are disclosed in the notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

o. Product Warranties

The Company estimates and provides for liability for product warranties in the year in which the products are sold. These estimates are established using historical information on the nature, frequency, quantum of warranty claims and corrective actions against product failures. The cost of warranty is net of realisable scrap value and includes the applicable taxes and duties like excise duty and also the best estimate of relevant freight expenses. The timing of outflows will vary based on the actual warranty claims. Provision is also recognised for product warranties in respect of claims received and remaining unsettled as at the date of Balance Sheet.

p. Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for claims which are no longer required.

q. Provision for doubtful trade receivables

Receivables due from customers, which remain unpaid for more than one year from the due date and / or other receivables which are otherwise considered doubtful are recognised and provided for as provision for doubtful trade receivables.

r. Dividends

Provision for dividends payable, including income tax thereon, is recognised in the books of account as proposed by the Board of Directors, pending approval of shareholders at the ensuing Annual General Meeting.

s. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and on hand, including cheques on hand. The Company considers all highly liquid investments, which are readily convertible into cash, to be cash equivalents.

t. Leases

The Leases where the Lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss as per the applicable lease terms.

u. Segment Reporting

The Company is engaged in the business of manufacture and sale of lead-acid storage batteries. This, in the context of Accounting Standard 17 on Segment Reporting, as specified in the Companies (Accounting Standards) Rules, 2006, is considered to constitute one single primary segment. Further, there is no reportable secondary segment i.e. Geographical Segment.


Mar 31, 2012

A. Basis of Preparation of Financial Statements

The Company has prepared the financial statements under historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles in India. The financial statements are prepared to comply in all material respects with the Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956, the pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India.

b. Use of Estimates

The preparation of the financial statements requires management of the Company to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

The judgements, estimates and underlying assumptions are made with the management's best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c. Fixed assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets is inclusive of freight, non-refundable duties and taxes, financial costs on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection and other incidental expenses incurred to bring the asset to its present location and condition.

Intangible assets are stated at cost of acquisition less accumulated amortisation. All costs, including financing costs on specific borrowings utilised for financing the assets, incurred till the time the asset is put to use for intended purpose are capitalised.

d. Depreciation and Amortisation

Depreciation is charged on a pro-rata basis at the straight line method rates prescribed in schedule XIV to the Companies Act, 1956 except in respect of the following, where the depreciation is charged based on their estimated useful life:

Computers - 4 Years; Office Equipment - 8 Years; Moulds - 3 Years

Individual assets costing up to Rs5,000/- each are fully depreciated in the year of purchase.

Intangible assets, comprising of expenditure on computer software, are amortised on a straight line method over a period of four years.

e. Impairment of Assets

At each Balance Sheet date, the Company reviews the carrying amounts of assets to determine whether there is any indication of impairment of assets. If any indication exists, the recoverable amount is estimated, at the higher of the realisable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognised in the Statement of Profit and Loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. As per the assessment conducted by the Company as at March 31, 2012, there were no indications that the fixed assets have suffered an impairment loss.

f. Borrowing Costs

Borrowing Costs, that are directly attributable to the acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that

they will result in future economic benefits and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

g. Investments

Trade investments are the investments meant to enhance the Company's interest. Investments are classified as current or non- current based on the management's intention at the time of investment. Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is permanent in nature.

h. Inventories

i) Inventories are valued at the lower of cost and net realisable value.

ii) In respect of raw materials, bought-out items, consumables, stores and spares, including stock-in-transit, cost is ascertained on a weighted average basis. Cost includes freight, handling charges and non-recoverable taxes and duties.

iii) In respect of work-in-process and finished goods, cost includes all direct costs and applicable production overheads incurred in bringing such inventories to their present location and condition. Cost of finished goods includes excise duty.

iv) Scrap is valued at an estimated net realisable value.

Provision for obsolescence is made wherever necessary.

i. Revenue Recognition

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

i) Revenue from sale of products is recognised when the risks and rewards in respect of ownership are transferred to the buyer under the terms of the contract which usually coincide with the dispatch of goods to customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales include excise duty and service charges recovered and are stated net of trade discounts, allowances and sales returns.

iii) Revenue from sale of services is booked based on agreements/arrangements with the concerned parties.

iv) Interest on investments and deposits is booked on a time proportion basis taking into account the amounts invested and the rate of interest.

v) Dividend income is accounted for in the year in which the right to receive the payment is established.

j. Employee Benefits

I) Defined Contribution Plans

i) Company's contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual.

ii) Company's contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administered by the Life Insurance Corporation of India and are recognised in the Statement of Profit and Loss at predetermined rates in the year in which the employees have rendered service.

II) Defined Benefit Plans

i) Company's liability to Gratuity to eligible employees at retirement, death, incapacitation or termination of employment is funded and is being administered by the Life Insurance Corporation of India. Cost of providing these benefits is determined on the basis of actuarial valuation at the end of each financial year and the incremental expense thereon is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service.

ii) Expenses on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service in lieu of such leave.

iii) Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss in the year in which they arise.

k. Research and Development Expenses

Capital expenditure on Research and Development is classified under tangible/intangible assets and depreciated in accordance with the Company's policy mentioned above.

Research costs are charged to revenue as and when incurred. Development expenditure incurred on an individual project is recognised as an intangible asset when the capitalisation criteria are met. Other development costs are recognised in the Statement of Profit and Loss as and when incurred.

Development expenditure as capitalised above is amortised over the estimated period of useful life or economic benefits not exceeding ten years.

I. Foreign Currency Transactions

i) The reporting currency of the Company is Indian Rupee.

ii) Transactions in foreign currency are initially recorded in the reporting currency at the exchange rate prevailing on the date of transaction, and charged or credited to revenue with the difference in the rate of exchange arising on actual receipt/payment during the year.

iii) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

iv) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

v) In respect of commodity hedging

- The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Statement of Profit and Loss.

- In respect of contracts, which are outstanding as on the date of Balance Sheet are valued at prevailing market price and the resultant gain/loss, if any, is recognised in the Statement of Profit and Loss.

m. Income Taxes

Income tax expense comprises current tax and deferred tax.

i) Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

ii) Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods, at the rate of tax enacted or substantively enacted by the Balance Sheet date.

iii) Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised in future period. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of their realisation.

n. Provisions, Contingent Liabilities and Contingent assets

Provisions are recognised 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 their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation 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. The Company does not recognise contingent liabilities but the same are disclosed in the Notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

o. Product Warranties

The Company estimates and provides for liability for product warranties in the year in which the products are sold. These estimates are established using historical information on the nature, frequency and quantum of warranty claims; and management's estimate regarding possible future incidence based on corrective actions against product failures. The cost of warranty includes the applicable taxes and duties like excise duty and also the best estimate of relevant freight expenses. The timing of outflows will vary based on the actual warranty claims. Provision is also recognised for product warranties in respect of claims received and remaining unsettled as at the date of Balance Sheet.

p. Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contract after adjusting for any claims which are no longer required.

q. Dividends

Provision for dividends payable, including income tax thereon, is recognised in the books of account as proposed by the Board of Directors, pending approval of shareholders at the Annual General Meeting.

r. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and on hand, including cheques on hand. The Company considers all highly liquid investments, which are readily convertible into cash, to be cash equivalents.

s. Leases

The Leases where the Lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss as per the applicable lease terms.

t. Segment Reporting

The Company is engaged in the business of manufacture and sale of lead acid storage batteries. This, in the context of Accounting Standard 17 on Segment Reporting, as specified in the Companies (Accounting Standards) Rules, 2006, is considered to constitute one single primary segment. Further, there is no reportable secondary segment i.e. Geographical Segment.


Mar 31, 2011

1. General

Financial statements are prepared under historical cost convention and in accordance with generally accepted accounting practices.

2. Fixed assets

Fixed assets are stated at cost net of CENVAT and VAT credit less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties and taxes, interest, if any, on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection, and other incidental expenses.

3. Intangible assets

Intangible assets are stated at cost of acquisition less accumulated amortisation. Intangible assets, which are in the nature of computer software are amortised over a period of 4 years on straight line method.

4. Depreciation

Depreciation is provided on straight line basis in accordance with the rates and rules prescribed under Schedule - XIV to the Companies Act, 1956, except in respect of the following, where the depreciation is provided based on their estimated useful life

Computers - 4 Years ; Office Equipment - 8 Years; Moulds - 3 Years

5. Investments

Long-term investments are stated at cost less provision required, if any, for the permanent diminution in value thereof. Dividends thereon are accounted as and when received.

6. Inventories

a. Finished goods are valued at lower of cost or market value.

b. Raw Materials, Work in Process, Stores and Spares, Materials in transit etc., are valued at cost.

c. Scrap is valued at an estimated net realisable value.

7. Sales

Gross Sales are inclusive of Excise Duty, Sales tax/VAT, Service tax, Insurance, Octroi, Service charges etc., recovered thereon and net of trade discounts / trade incentives.

8. Employee Benefits

I) Defined Contribution Plans

a) Company's contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual.

b) Company's contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by the Life Insurance Corporation of India Limited, and are charged to Profit and Loss Account at predetermined rates in the year in which the employees have rendered service.

II) Defined Benefit Plans

a) Company's liability to Gratuity on retirement of its eligible employees is funded and is being administrated by the Life Insurance Corporation of India Limited. The incremental expense thereon for each year is arrived at as per actuarial valuation and is recognised and charged to Profit and Loss Account in the year in which the employee has rendered service.

b) Expenses on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised and charged to Profit and Loss Account in the year in which the employee has rendered service in lieu of such leave.

c) Gains / Losses arrived at in the above actuarial valuations are charged to Profit and Loss Account.

9. Research and Development Expenses Research and Development costs of revenue nature are charged to revenue as and when incurred, and of capital nature is capitalised and depreciation thereon is provided as per the rates prescribed in schedule XIV to the Companies Act, 1956.

10. Foreign Currency Transactions

a) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and charged to revenue with the difference in the rate of exchange arising on actual receipt/payment during the year.

b) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

c) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

11. Warranty Claims and Provisions The company makes provision for the probable future liability on account of warranty as at the end of the financial year, in addition to meeting the actual warranty claimed.

12. Late Delivery Charges The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for the claims which are no longer required.

13. Taxation Provision is made for Income-tax liability estimated to arise on the results for the year at the current rate of tax in accordance with the Income tax Act, 1961.

- Deferred tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the rate of tax enacted or substantively enacted by the balance sheet date.

- Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of realisation.

14. Dividends Provision is made in the accounts for the dividends payable by the Company, as recommended by the Board of Directors, pending approval of the shareholders at the Annual General Meeting. Income Tax on dividends payable is provided for in the year to which such dividends relate.

15. Impairment of Assets At the date of each Balance Sheet, the company evaluates indications of the impairment internally, if any, to the carrying amount of its fixed and other assets. If any indication does exist, the recoverable amount is estimated at the higher of the realisable value and value in use, as considered appropriate. If the estimated realisable value is less than the carrying amount, an impairment loss is recognised.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for the asset in prior years.

16. Contingent Liabilities Contingent liabilities are not recognised in the accounts, but are disclosed after a careful evaluation of the concerned facts and legal issues involved.

17. Borrowing Costs Borrowing costs directly attributable for acquisition of qualifying assets are capitalised as part of the asset. Other borrowing costs are charged to revenue as and when incurred.

18. Commodity Hedging The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Profit & Loss account. In respect of contracts, which are outstanding as on date of Balance Sheet are valued at prevailing market price and the resultant loss, if any, is provided.


Mar 31, 2010

1. General

Financial statements are prepared under historical cost convention and in accordance with generally accepted accounting practices.

2. Fixed Assets

Fixed assets are stated at cost net of CENVAT and VAT credit less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties and taxes, interest, if any, on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection, and other incidental expenses.

3. Intangible Assets

Intangible assets are stated at cost of acquisition less accumulated amortisation. Intangible assets, which are in the nature of computer software are amortised over a period of 4 years on straight line method.

4. Depreciation

Depreciation is provided on straight line basis in accordance with the rates and rules prescribed under Schedule - XIV to the Companies Act, 1956, except in respect of the following, where the depreciation is provided based on their estimated useful life

Computers - 4 Years ; Office Equipments – 8 Years; Moulds – 3 Years

5. Investments

Long-term investments are stated at cost less provision required, if any, for the permanent diminution in value thereof. Dividends thereon are accounted as and when received.

6. Inventories

a. Finished goods are valued at lower of cost or market value.

b. Raw Materials, Work in Process, Stores and Spares, Materials in transit etc., are valued at cost.

c. Stock of scrap is valued at an estimated net realisable value.

7. Sales

Gross Sales are inclusive of Excise duty, Sales tax/VAT, Service tax, Insurance, Octroi, Service charges etc., recovered thereon.

8. Employee Benefits

I) Defined Contribution Plans

a) Company’s contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual.

b) Company’s contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by the Life Insurance Corporation of India Limited, and are charged to Profit and Loss Account at predetermined rates in the year in which the employees have rendered service.

II) Defined Benefit Plans

a) Company’s liability to Gratuity on retirement of its eligible employees is funded and is being administrated by the Life Insurance Corporation of India Limited. The incremental expense thereon for each year is arrived at as per actuarial valuation and is recognised and charged to Profit and Loss Account in the year in which the employee has rendered service.

b) Expenses on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised and charged to Profit and Loss Account in the year in which the employee has rendered service in lieu of such leave.

c) Gains / losses arrived at in the above actuarial valuations are charged to Profit and Loss Account.

9. Research and Development Expenses Research and development costs of revenue nature are charged to revenue as and when incurred, and of capital nature is capitalised and depreciation thereon is provided as per the rates prescribed in schedule XIV to the Companies Act, 1956.

10. Foreign Currency Transactions

a) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and charged to revenue with the difference in the rate of exchange arising on actual receipt/payment during the year.

b) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

c) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

11.Warranty Claims and Provisions

The Company makes provision for the probable future liability on account of warranty as at the end of the financial year, in addition to meeting the actual warranty claimed.

12.Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for the claims which are no longer required.

13.Taxation

Provision is made for Income-tax liability estimated to arise on the results for the year at the current rate of tax in accordance with the Income Tax Act, 1961.

- Deferred tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the current rate of tax.

- Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of realisation.

14.Dividends

Provision is made in the accounts for the dividends payable by the Company as recommended by the Board of Directors, pending approval of the shareholders at the Annual General Meeting. Income Tax on dividends payable is provided for in the year to which such dividends relate.

15.Impairment of Assets

At the date of each Balance Sheet, the Company evaluates indications of the impairment internally, if any, to the carrying amount of its fixed and other assets. If any indication does exist, the recoverable amount is estimated at the higher of the realisable value and value in use, as considered appropriate. If the estimated realisable value is less than the carrying amount, an impairment loss is recognised.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for the asset in prior years.

16.Contingent Liabilities

Contingent liabilities are not recognised in the accounts, but are disclosed after a careful evaluation of the concerned facts and legal issues involved.

17.Borrowing Costs

Borrowing costs directly attributable for acquisition of qualifying assets are capitalised as part of the asset. Other borrowing costs are charged to revenue as and when incurred.

18.Commodity Hedging

The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Profit and Loss account. In respect of contracts, which are outstanding as on date of Balance Sheet are valued at prevailing market price and the resultant loss, if any, is provided.

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