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Accounting Policies of Apar Industries Ltd. Company

Mar 31, 2015

1. Basis of Preparation of financial statements :

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (''GAAP'') under the historical cost-convention on the accrual basis. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except, where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in use.

2. Use of estimates :

The preparation of financial statements is in conformity with generally accepted accounting principles (''GAAP'') which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3. Fixed assets, Depreciation and Amortisation :

(I) Fixed assets are stated at cost of acquisition / construction (net of CENVAT) less accumulated depreciation. Cost includes purchase price and other costs attributable to acquisition / construction of fixed assets.

(II) (i) Depreciation on assets is provided over the useful lives of assets as prescribed under Schedule II of the Companies Act, 2013.

(ii) In respect of following assets, based on management experience and independent technical evaluation carried out by external technical consultants, the management has estimated useful lives, which are different then prescribed in Schedule II.

(iii) Depreciation is provided on written down value method except in respect of building and plant and machinery purchased after 30.4.1987, which are depreciated on straight line method.

(iv) Capital Expenditure in respect of which ownership does not vest with the Company is amortized over a period of five years. Leasehold land is amortized over the period of lease.

(v) In respect of Cable division all assets are depreciated on straight line method.

(vi) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the Accounting Standard (AS) 16 Borrowing Costs'' are capitalised as a part of the cost of fixed assets.

(vii) Pre-operation expenses including trial run expenses (net of revenue) are capitalised.

4. Impairment of assets :

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Company''s assets. An impairment loss is recognised in the Statement of profit and loss, wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognised in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been change in recoverable amount.

5. Investments :

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

6. Inventories :

Inventories are valued at lower of standard cost or net realizable value. Cost includes material cost, cost of labour and attributable

manufacturing overheads. Cost of materials is arrived at on weighted average basis. Inventory of scrap is valued at estimated realisable value. Inventories of finished goods include excise duty as applicable.

7. Government grants :

(i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance that the Company will comply with the conditions attached to them.

(ii) Government grants, which are in the nature of refundable interest free loans received from government/semi-government authorities, are credited to secured/unsecured loans.

(iii) Government grants which are in the nature of subsidies received from government/semi-government authorities and which are non-refundable are credited to reserves.

8. Employee stock options :

In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortized over vesting period.

9. Voluntary retirement schemes :

Compensations paid under voluntary retirement schemes are amortized over a period not exceeding 5 years, up to 31st March, 2010. The expenses incurred after 31st March, 2010 are charged to Statement of profit and loss.

10. Enterprise resource planning cost :

Cost of implementation of ERP Software including all related direct expenditure is amortized over a period of 5 years on successful implementation.

11. Share issue expenses :

Share issue expenses are written off against share premium account if any or amortized over a period of 5 years.

12. Revenue recognition :

(i) Sale of goods is recognised on despatch to customers and on date of shipment in case of exports. Sales exclude amounts recovered towards sales tax and excise duty and is net of returns.

(ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers.

(iii) Dividend income on investment is recognised when the right to receive payment is established.

(iv) In respect of service activities, income is recognised as and when services are rendered.

(v) Lease rental on operating lease is accounted on accrual basis.

13. Post-employment benefits :

Defined Contribution Plans: In respect of the Company''s provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate. In respect of the Company''s approved superannuation scheme, the Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company''s contribution paid/payable under these schemes is recognised as expense in the Statement of profit and loss during the period in which the employee renders the related service.

Defined Benefit Plans: In respect of the Company''s gratuity and leave wages schemes, the present value of the obligation under such scheme is determined based on actuarial valuation using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Statement of profit and loss. Long-term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

14. Translation of foreign currency :

(i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction dates.

(ii) Monetary items remaining unsettled at the year end are translated / reported at the year end rate. Exchange differences arising on such revaluation are recognised in the Statement of profit and loss.

(iii) Non-Monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted.

(iv) In case of forward contracts, premium on the forward contracts is recognised as income or expense over the life of the contract.

(v) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of profit and loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

15. Derivative Contracts :

Derivative contract entered into, to hedge commodity/forex unexecuted Firm commitment and highly probable forecast transaction are recognised in the financial statement at fair value as on Balance sheet date. The gains or losses arising out of fair valuation of derivative contracts are recognised in the Statement of profit and loss or Balance sheet as the case may be after applying the test of hedge effectiveness. The gain or losses are recognised as Hedge Reserve'' in the Balance sheet when the hedge is effective and where the hedge is ineffective the same is recognised in the Statement of profit and loss. The gains and losses on roll over or cancellation of derivative contract which qualify as effective hedge are recognised in the Statement of profit and loss in the same period in which the hedge item is accounted.

16. Export benefits/Incentives :

The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and Focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to Advance Licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made. The benefits in the form of entitlements to status holders licenses are accounted when licenses are utilised.

17. Claims against the Company not acknowledged as debts :

The demands under disputed showcause notices / orders of statutory authorities are provided in the accounts on the basis of management''s estimate and the balance, if any, are included in contingent liability.

18. Taxes on income :

(a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments / appeals.

(b) Deferred tax is recognised on timing differences between the accounted income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(c) Deferred tax assets relating to unabsorbed depreciation / business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(d) Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

19. Provision for contingencies :

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of contingent liability is made when there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities, etc. is made when the Company based on legal advise wherever necessary estimates that the liability has been incurred and the amount can be reasonably estimated.

20. Accounting for interest in joint ventures :

Interest in joint ventures (i.e., jointly controlled entity) are accounted for as follows :

(a) income on investment in incorporated jointly controlled entity is recognised when the right to receive the same is established.

(b) investment in such joint venture is carried at cost after providing for any Permanent diminution in value.

21. Borrowing costs :

(a) Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.

(b) All other borrowing costs are recognised as expense in the period in which they are incurred.

22. Lease accounting :

Operating lease rentals are expensed with reference to lease terms and other considerations.

a. Reconciliation of the number of shares outstanding at the beginning and at the end of the year. Equity Shares

*Issued during the year to the Employees / Director under Apar Industries Limited Stock Option Plan - 2007 at Rs.207.05 per share. b. Terms/rights attached to equity shares

i) The Company has one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled

to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of

Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

ii) During the year ended 31st March 2015, the amount of per share dividend recognised as distributions to equity shareholders is Rs. 3.50, ( Previous year Rs. 5.25 ).

iii) In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the

Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares

held by the shareholders.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

d. Shares reserved for issue under options

The Company provides share-based payment to its employees. During the year ended 31st March 2015, an Employee Stock Option Plan (ESOP) was in existence. The relevant details of the scheme and the grant are as below :

Members'' approval was obtained at the Annual General Meeting held on 9th August, 2007 for introduction of Employee Stock Option Scheme to issue and grant upto 1,616,802 options, but the Board has granted 175,150 options till date.

During the year, Company has alloted 26072 equity shares of Rs. 10/- each to employees/Directors of the Company under Employee stock option plan 2007 at an exercise price of Rs. 207.05 per share.

— The Foreign Currency term loan from Credit Agricole CI Bank, Singapore is secured by exclusive charge on the assets acquired by the Company with the proceeds of the facility.

— The Foreign Currency term loan from Union Bank of India, Hong Kong is secured by first charge by way of equitable mortgage by deposit of title deeds of Company''s Athola properties and exclusive hypothecation charge on the assets acquired by the Company with the proceeds of the facility situated at other locations.

— The rupees term loan from ING Vysya Bank Ltd (Now Kotak Mahindra Bank) is secured by first charge by way of equitable mortgage by deposit of title deed of Company''s Khatalwada properties and hypothecation of movable plant & machinery at Khatalwada excluding movable machinery hypothecated to ECB Lenders.

— Terms of repayment of term loan.

— In respect of Foreign Currency Term Loans from Bank in August, 2015Rs.9.37 crore, in May, 2016 Rs.10.00 crore, in August, 2016 Rs. 12.50 crore, in May, 2017Rs.11.25 crore, in May, 2018Rs.14.37 crore,.

— In respect of Rupee Term Loan from Bank in 15 quarterly installments commencing from March, 2016 till September, 2019, 14 installments of Rs. 3.33 crore each and last of Rs. 3.34 crore.

Working capital loans from banks (secured) Rs. 162.32 crore are secured by :

(i) hypothecation of specified stocks, specified book debts of the Company.

(ii) first charge by way of equitable mortgage by deposit of title deeds of Company''s specified immovable properties, both present and future.

(The above information regarding micro and small enterprises has been determined on the basis of information available with the Company],

Note:

(a] There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31st March, 2015,

(b] Other payables includes security deposit, book overdraft and advance from customers,

1] Registration of Petroleum Specialities FZE in Hamriyah, Sharjah: The Company''s Wholly-owned Subsidiary, Petroleum Specialities Pte. Ltd, Singapore, (PSPL] is setting up a manufacturing facility in the Hamriyah Free Zone Authority, UAE, for the manufacture of a comprehensive range of Speciality oils and Lubricants. For the purpose, it has incorporated on 18th November, 2014, a wholly owned subsidiary Company Viz Petroleum Specialities FZE, in the Free trade Zone, Sharjah, UAE.

2] During the year, the Company (AIL] has purchased 169,181 Equity shares representing 2.50% of the Share of Apar Chematek Lubricants Limited (ACLL] held by Chematek S.p.A. The said shares were transferred in the name of the Company on 22nd July, 2014. Consequent upon the transfer of above 169,181 equity shares in the name of AIL, the shareholding of AIL in ACLL was increased to 100%. The name of the Company (ACLL] was change from ''Apar Chematek Lubricants Limited'' to ''Apar Lubricants Limited'' with effect from 5th September, 2014.

During the year, the Board of Directors of Apar Lubricants Limited (ALL] and Apar Industries Limited (AIL] at their respective Board Meetings held on 5th February, 2015, have decided to amalgamate ALL with AIL with effect from the Appointed Date of 1st January, 2015, subject to the approvals of the Hon''able High Court of Gujarat and other regulatory authorities.

Note :

[i] There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as at 31st March, 2015.

[ii] Against letters of credit for Company''s import of raw materials and working capital loans.


Mar 31, 2013

1. Basis of Preparation of financial statements:- The financial statements are prepared on accrual basis under the historical cost convention and comply in all material aspects with the generally accepted accounting principles in India, the Accounting Standards prescribed under Section 211(3C) of the Companies Act,1956 and the applicable provisions thereof.

2. Use of estimates:- The preparation of financial statements is in conformity with generally accepted accounting principles ("GAAP") which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3. Fixed assets, Depreciation and Amortisation:-

(i) Fixed assets are stated at cost of acquisition / construction (net of CENVAT) less accumulated depreciation. Cost includes purchase price and other costs attributable to acquisition / construction of fixed assets.

(ii) Depreciation on assets is provided at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956 (except as stated in

(iii) below):

(a) On written down value method except in respect of building and plant and machinery purchased after 30.4.1987, which are depreciated on straight line method.

(b) Capital Expenditure in respect of which ownership does not vest with the Company is amortised over a period of five years. Leasehold land is amortised over the period of lease.

(c) Certain items of plant and machinery which have been considered to be continuous process plant by the management are depreciated at the prescribed rates.

(d) In respect of Cable division all assets are depreciated on straight line method.

(iii) In the cases where the estimated useful life of the asset is less as compared to useful life estimated in Schedule XIV of the Companies Act, 1956, such assets are depreciated at rates higher than those prescribed under Schedule XIV of the Companies Act, 1956.

Asset Rate

Factory building at Nalagarh Over the lease period of 8 years (iv) In respect of assets costing less than Rs. 5,000 each and temporary structures, 100% depreciation is provided in the year of addition.

(v) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the Accounting Standard (AS) 16 on "Borrowing Costs" are capitalised as a part of the cost of fixed assets.

(vi) Pre-operation expenses including trial run expenses (net of revenue) are capitalised.

4. Impairment of assets: -

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Company''s assets. An impairment loss is recognised in the Statement of profit and loss wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognised in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been change in recoverable amount.

5. Investments: -

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

6. Inventories :- Inventories are valued at lower of standard cost or net realisable value. Cost includes material cost, cost of labour and attributable manufacturing overheads. Cost of materials is arrived at on weighted average basis. Inventory of scrap is valued at estimated realisable value. Inventories of finished goods include excise duty as applicable.

7. Government grants: -

(i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance that the Company will comply with the conditions attached to them.

(ii) Government grants, which are in the nature of refundable interest free loans received from government/semi-government authorities, are credited to secured/unsecured loans.

(iii) Government grants which are in the nature of subsidies received from government/semi-government authorities and which are non-refundable are credited to reserves.

8. Employee stock options:- In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over vesting period.

9. Voluntary retirement schemes:- Compensations paid under voluntary retirement schemes are amortised over a period not exceeding 5 years, up to March 31, 2010. The expenses incurred after March 31, 2010 are charged to Statement of profit and loss.

10. Enterprise resource planning cost:- Cost of implementation of ERP Software including all related direct expenditure is amortised over a period of 5 years on successful implementation.

11. Share issue expenses:- Share issue expenses are written off against share premium account if any or amortised over a period of 5 years.

12. Revenue recognition:- (i) Sale of goods is recognised on despatch to customers and on date of shipment in case of exports. Sales exclude amounts recovered towards sales tax and excise duty and is net of returns.

(ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers.

(iii) Dividend income on investment is recognised when the right to receive payment is established.

(iv) In respect of service activities, income is recognised as and when services are rendered.

(v) Lease rental on operating lease is accounted on accrual basis.

13. Post-employment benefits:- Defined Contribution Plans: In respect of the Company''s provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate. In respect of the Company''s approved superannuation scheme, the Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company''s contribution paid/payable under these schemes is recognised as expense in the Statement of profit and loss during the period in which the employee renders the related service.

Defined Benefit Plans: In respect of the Company''s gratuity and leave wages schemes, the present value of the obligation under such scheme is determined based on actuarial valuation using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Statement of profit and loss. Long-term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

14. Translation of foreign currency:- (i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction dates.

(ii) Monetary items remaining unsettled at the year end are translated / reported at the year end rate. Exchange differences arising on such revaluation are recognised in the Statement of profit and loss.

(iii) Non-Monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted.

(iv) In case of forward contracts, premium on the forward contracts is recognised as income or expense over the life of the contract.

(v) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of profit and loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

15. Derivative Contracts:- Derivative contract entered into, to hedge commodity/forex unexecuted Firm commitment and highly probable forecast transaction are recognised in the Financial Statement at fair value as on Balance sheet date. The gains or losses arising out of fair valuation of derivative contracts are recognised in the Statement of profit and loss or Balance sheet as the case may be after applying the test of hedge effectiveness. The gain or losses are recognised as ''Hedge Reserve'' in the Balance Sheet when the hedge is effective and where the hedge is ineffective the same is recognised in the Statement of profit and loss. The gains and losses on roll over or cancellation of derivative contract which qualify as effective hedge are recognised in the Statement of profit and loss in the same period in which the hedge item is accounted.

16. Export benefits/Incentives:- The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and Focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to Advance Licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made. The benefits in the form of entitlements to status holders licenses are accounted when licenses are utilised.

17. Claims against the Company not acknowledged as debts:- The demands under disputed showcause notices / orders of statutory authorities are provided in the accounts on the basis of management''s estimate and the balance, if any are included in contingent liability.

18. Taxes on income:- (a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments / appeals.

(b) Deferred tax is recognised on timing differences between the accounted income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(c) Deferred tax assets relating to unabsorbed depreciation / business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(d) Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

19. Provision for contingencies:- A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of contingent liability is made when there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities, etc. is made when the Company based on legal advise wherever necessary estimates that the liability has been incurred and the amount can be reasonably estimated.

20. Accounting for interest in joint ventures:- Interest in joint ventures (i.e., jointly controlled entity) are accounted for as follows:

(a) income on investment in incorporated jointly controlled entity is recognised when the right to receive the same is established.

(b) investment in such joint venture is carried at cost after providing for any Permanent diminution in value.

21. Borrowing costs:- (a) Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve month) to get ready for its intended use or sale.

(b) All other borrowing costs are recognised as expense in the period in which they are incurred.

22. Lease accounting:- Operating lease rentals are expensed with reference to lease terms and other considerations.


Mar 31, 2012

1. Basis of Preparation of financial statements:-

The financial statements are prepared on accrual basis under the historical cost convention and comply in all material aspects with the generally accepted accounting principles in India, the Accounting Standards prescribed under Section 211(3C) of the Companies Act, T9-56 and the applicable provisions thereof.

2. Use of estimates:-

The preparation of financial statements is in conformity with generally accepted accounting principles ("GAAP") which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3. Fraed assets, depreciation and amortisation:-

(i). fixed assets are stated at cost of acquisition / construction (net of CENVAT) less accumulated depreciation. Cost includes purchase price arid other costs attributable to acquisition / construction of fixed assets.

(ii) Depreciation on assets is provided at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956 (except as stated in (iii) below):

(a) On written down value method except in respect of building and plant and machinery purchased after 30.4.1987, which are depreciated on straight line method.

(b) Capital expenditure in respect of which ownership does not vest with the Company is amortised over a period of five years. Leasehold land is amortised over the period of lease.

(c) Certain items of plant and machinery which have been considered to be continuous process plant by the management are depreciated at the prescribed rates.

(d) In respect of Cable division (erstwhile Uniflex Cables Limited) all assets are depreciated on straight line method.

(iii) In the cases where the estimated useful life of the asset is less as compared to useful life estimated in Schedule XIV of the Companies Act, 1956, such assets are depreciated at rates higher than those prescribed under Schedule XIV of the Companies Act. 1956.

Asset Rate

Factory building at Nalagarh Over the lease period of 8 years

(iv) In respect of assets costing less than Rs. 5,000 each and temporary structures, 100% depreciation is provided in the year of addition.

(v) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the Accounting Standard (AS) 16 on "Borrowing Costs" are capitalised as a part of the cost of fixed assets.

(vi) Pre-operation expenses including trial run expenses (net of revenue) are capitalised.

4. Iimpaiinnnefit of assets: -

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Company's assets. An impairment loss is recognised in the Statement of profit and loss wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognised in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been change in recoverable amount.

5. Investments: -

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

6. Inventories

Inventories are valued at lower of standard cost or net realisable value. Cost includes material cost, cost of labour and attributable manufacturing overheads. Cost of materials is arrived at on weighted average basis except in respect of Cable division (erstwhile Uniflex Cables Limited) where it is on FIFO basis. Inventory of scrap is valued at estimated realisable value. Inventories of finished goods include excise duty as applicable.

7. Government grants: -

(i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance that the Company will comply with the conditions attached to them.

(ii) Government grants, which are in the natuie of refundable interest free loans received from government/semi-government authorities, are credited to securcd/unsecurcd loans.

(iii) Government grants which are in the nature of subsidies received from government/semi government authorities and which are non refundable are credited to reserves.

8. Employee stock options:-

In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over vestii.g peiiod.

9. Voluntary relit cment schcmcs:-

Compensations paid under voluntary retirement schemes arc amortised over a period not exceeding 5 years, up to 31st March, 2010. The expenses incurred after 31st March, 2010 are charged to Statement of profit and less.

10. Enterprise resouice planning cost.

Cost of implementation of ERP Software includiny all ielated uiied expenditure is amortised ovei a period of five years on successful implementation.

11. Share issue expenses:

Share issue expenses are written off against share premium account if any or amortised over a period of five /ears.

12. Revenue recognition: -

(i) Sale of goods is recognised on despate! i to customers and on date of shipment in case of exports. Sales exclude amounts recovered towards sales tax and excise duty and is net of returns.

(ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers.

(iii) Dividend income on investment is recognised when the right to receive payment is established.

(iv) In respect of service activities, income is recognised as and when services are rendRs.red

(v) Lease rental on operating lease is accounted on accrual basis

13. Post-employment benefits:

Defined Contribution Plans: In respect of the Company's provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the rctui: i on investments made by the Government from the contributions and the notified interest rate. In respect of the Company's approved superannuation scheme, the Company makes specified contributions to the superannuation fund administeied by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company's contiibution paid/payable under these schemes is recognised as expense in the Statement of profit and loss duiing the period in which the employee renders the related se; vice.

Defined Benefit Plans. In respect of the Company's yiatuity and leave wages schemes, the present value of the obligation under such scheme is detennined based on actuarial valuation usiiiy the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on Government securities as at the balancc sheet date. Actuarial gains and losses are recognised immediately in the Statement of profit and loss. Long term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

14. Translation of foreign currency :-

(i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction dates.

(ii) Monetary items remaining unsettled at the year end are translated / reported at the year end rate Fxchange differences arising on such revaluation are recognised in the Statement of profit and loss.

(iii) Non-Monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted.

(iv) In case of forward contracts, premium on the forward contracts is recognised as income or expense over the life of the contract.

(v) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of profit and loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

15. Derivative contracts:-

Derivative contract entered into, to hedge commodity/forex unexecuted Firm commitment and highly probable forecast transaction are recognised in the Financial Statement at fair value as on Balance sheet date. The gains or losses arising out of fair valuation of derivative contracts are recognised in the Statement of profit and loss or Balance sheet as the case may be after applying the test of hedge effectiveness. The gain or losses are recognised as 'Hedge Reserve' in the Balance Sheet when the hedge is effective and where the hedge is ineffective the same is recognised in the Statement of profit and loss. The gains and losses on roll over or cancellation of derivative contract which qualify as effective hedge are recognised in the Statement of profit and loss in the same period in which the hedge item is accounted.

16. Export benefits/incentives: -

The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and Focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to Advance Licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made.

17. Claims against the Company not acknowledged as debts: -

The demands under disputed showcause notices / orders of statutory authorities are provided in the accounts on the basis of management's estimate and the balance, if any are included in contingent liability.

18. Taxes on income:-

(a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments / appeals.

(b) Deferred tax is recognised on timing differences between the accounted income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(c) Deferred tax assets relating to unabsorbed depreciation / business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(d) Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

19. Provision for contingencies:-

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of contingent liability is made when there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities, etc. is made when the Company, based on legal advise wherever necessary, estimates that the liability has been incurred and the amount can be reasonably estimated.

20. Accounting for interest in joint ventures

Interest in joint ventures (i.e., jointly controlled entity) are accounted for as follows:

(a) income on investment in incorporated jointly controlled entity is recognised when the right to receive the same is established.

(b) investment in such joint venture is carried at cost after providing for any permanent diminution in value.

21. Borrowing costs

(a) Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve month) to get ready for its intended use or sale.

(b) All other borrowing costs are recognised as expense in the period in which they are incurred.

22. Lease accounting

Operating lease rentals are expensed with reference to lease terms and other considerations.

b. Disclosure as required by Accounting Standard (AS) 14 Accounting for Amalgamations :

(i) Uniflex Cables Limited (UCL) was engaged in the business of manufacturing & sale of insulated Wires and Cables including Optical fibre and jelly- filled Cables.

(ii) UCL was declared as Sick Industrial Company by Hon'ble Board for Industrial & Financial Reconstruction (BIFR) on 15th October, 2010.

(iii) Pursuant to the Rehabilitation Scheme of UCL, envisaging Amalgamation of UCL with the Company by Hon'ble BIFR vide the Order dated 13th September, 2012 sanctioned Amalgamation retrospectively with effect from 1 st April, 2010 (the appointed date). The Scheme has accordingly, been given effect in financial statements. The effective date of amalgamation is 18th September, 2012.

(iv) The amalgamation has been accounted for under the 'Pooling of Interest method' as prescribed by Accounting Standard (AS) 14 Accounting for Amalgamations, specified by the Companies (Accounting Standard) Rules, 2006. Accordingly, the assets, liabilities including contingent liabilities and reserve of UCL as at 1st April, 2010 have been taken at their book values as stipulated in the said Scheme.The reserves of the transferor Company have been transferred to the respective reserves.

(v) Based on the approved exchange ratio as provided in the Scheme, 2,498,037 number of equity shares will be issued to the equity share holders of UCL in the ratio of 1 equity share of the face value of Rs. 10 each in the Company for every 10 equity shares held in erstwhile UCL. In terms of the Scheme, the said equity shares, when issued and allotted by the Company shall rank, in all respects pari-passu with the existing equity shares of the Company. Pending allotment of the said equity shares, the amount has been disclosed under 'Share Capital Suspense Account' in Note 2.

(vi) The difference between the amount of share capital of the erstwhile UCL and the amount of fresh share capital issued by the Company on amalgamation amounting to Rs. 224.82 million is treated as capital reserve and has been added to the Capital Reserve of the Company.

(viii) As provided in the Scheme 1,635,388 number of equity shares to be issued by the Company in lieu of 16,353,875 number of equity shares held by the Company in the erstwhile UCL will be transferred to 'AIL Benefit Trust' for the sole benefit of the Company. Accordingly, the cost (net of provision for dimunition in value) of the aforesaid investment of the Company Rs. 278.83 million is reflected as "Receivable from AIL Benefit Trust", under 'Other Current Assets' in "Note 19".

(ix) After giving effect to the scheme net-worth of erstwhile UCL, has become positive and as such the company will make an application to Hon'ble BIFR to take discharge from BIFR.

(x) Deferred tax asset ofRs. 263.50 million has been created for carried forward losses/depreciation and timing differences of erstwhile UCL by crediting to General Reserve.

(xi) In view of amalgamation, current year figures are not strictly comparable to those of the previous year.


Mar 31, 2011

1. Basis of preparation of financial statements:- The financial statements are prepared on accrual basis under the historical cost convention and comply in all material aspects with the generally accepted accounting principles in India, the Accounting Standards prescribed under section 211(3C) of the Companies Act, 1956 and the applicable provisions thereof.

2. Use of estimates:- The preparation of financial statements is in conformity with generally accepted accounting principles ("GAAP") which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3. Fixed assets, depreciation and amortisation:- (i) Fixed assets are stated at cost of acquisition/construction (net of CENVAT) less accumulated depreciation. Cost includes

purchase price and other costs attributable to acquisition/construction of fixed assets.

(ii) Depreciation on assets is provided at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956 (except as stated in (iii) below):

(a) On written down value method except in respect of building and plant and machinery purchased after 30.04.1987, which are depreciated on straight line method.

(b) Capital expenditure in respect of which ownership does not vest with the Company is amortised over a period of five years. Leasehold land is amortised over the period of lease.

(c) Certain items of plant and machinery which have been considered to be continuous process plant by the management are depreciated at the prescribed rates.

(iii) In cases where the estimated useful life of the asset is less as compared to useful life estimated in Schedule XIV of the Companies Act, 1956, such assets are depreciated at rates higher than those prescribed under Schedule XIV of the Companies Act, 1956.

Asset Rate

Factory building at Nalagarh Over the lease period of 8 years

(iv) In respect of assets costing less than Rs. 5,000 each and temporary structures, 100% depreciation is provided in the year of addition.

(v) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the Accounting Standard 16 on "borrowing costs" are capitalised as a part of the cost of fixed assets.

(vi) Pre-operation expenses including trial run expenses (net of revenue) are capitalised.

4. Impairment of assets: -

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Company's assets. An impairment loss is recognised in the profit and loss account wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognised in the profit and loss account. The impairment loss recognised in prior accounting period is reversed if there has been change in recoverable amount.

5. Investments: -

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

6. Inventories :- Inventories are valued at lower of standard cost or net realisable value. Cost includes material cost, cost of labour and attributable manufacturing overheads. Cost of materials is arrived at on weighted average basis. Inventory of scrap is valued at estimated realisable value. Inventories of finished goods include excise duty as applicable.

7. Government grants: -

(i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance that the Company will comply with the conditions attached to them.

(ii) Government grants, which are in the nature of refundable interest free loans received from government/semi-government authorities, are credited to secured/unsecured loans.

(iii) Government grants which are in the nature of subsidies received from government/semi-government authorities and which are non-refundable are credited to reserves.

8. Employee stock options:- In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over vesting period.

9. Voluntary retirement schemes:- Compensations paid under voluntary retirement schemes are amortised over a period not exceeding 5 years, up to March 31, 2010.

10.Enterprise resource planning cost:

Cost of implementation of ERP software, including all related direct expenditure is amortised over a period of 5 years on successful implementation.

11.Share issue expenses:

Share issue expenses are written off against share premium account, if any, or amortised over a period of 5 years.

12.Revenue recognition: -

(i) Sale of goods is recognised on despatch to customers and on date of shipment in case of exports. Sales exclude amounts recovered towards sales tax and excise duty and is net of returns.

(ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers.

(iii) Dividend income on investment is recognised when the right to receive payment is established.

(iv) In respect of service activities, income is recognised as and when services are rendered.

(v) Lease rental on operating lease is accounted on accrual basis.

13.Post-employment benefits:

Defined contribution plans: In respect of the Company's provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate. In respect of the Company's approved superannuation scheme, the Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company's contribution paid/payable under these schemes is recognised as expense in the profit and loss account during the period in which the employee renders the related service.

Defined benefit plans: In respect of the Company's gratuity and leave wages schemes, the present value of the obligation under such scheme is determined based on actuarial valuation using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the profit and loss account. Long-term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

14.Translation of foreign currency :- (i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction dates.

(ii) Monetary items remaining unsettled at the year end are translated/reported at the year end rate. Exchange differences arising on such revaluation are recognised in the profit and loss account.

(iii) Non-monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted.

(iv) In case of forward contracts, premium on the forward contracts is recognised as income or expense over the life of the contract.

15.Hedging transactions (metals):- All gains or losses in respect of hedging transactions are recognised in the financial statements on settlement/squaring off. Commission etc. in respect of such transactions is accounted on accrual basis.

16. Export benefits/incentives: -

The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to advance licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made.

17. Claims against the Company not acknowledged as debts: -

The demands under disputed showcause notices/orders of statutory authorities are provided in the accounts on the basis of management's estimate and the balance, if any, are included in contingent liability.

18. Taxes on income:- (a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments/appeals.

(b) Deferred tax is recognised on timing differences between the accounted income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(c) Deferred tax assets relating to unabsorbed depreciation/business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(d) Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

19. Provision for contingencies:- A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of contingent liability is made when there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities etc., is made when the Company based on legal advise wherever necessary, estimates that the liability has been incurred and the amount can be reasonably estimated.

20.Accounting for interest in joint ventures

Interest in joint ventures (i.e., jointly controlled entity) are accounted for as follows:

(a) Income on investment in incorporated jointly controlled entity is recognised when the right to receive the same is established.

(b) Investment in such joint venture is carried at cost after providing for any permanent diminution in value.


Mar 31, 2010

1. Basis of Preparation of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention and comply in all material aspects with the generally accepted accounting principles in India, the Accounting Standards prescribed under section 211(3C) of the Companies Act, 1956 and the applicable provisions thereof.

2. Use of estimates:

The preparation of financial statements is in conformity with generally accepted accounting principles ("GAAP") which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3. Significant accounting policies:

A) Fixed assets. Depreciation and Amortization:

i) Fixed assets are stated at cost of acquisition / construction (net of CENVAT) less accumulated depreciation. Cost includes purchase price and other costs attributable to acquisition / construction of fixed assets.

ii) Depreciation on assets is provided at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956 (except as stated in (iii) below):

a) On written down value method except in respect of building and plant and machinery purchased after 30.4.1987, which are depreciated on straight line method.

b) Capital Expenditure in respect of which ownership does not vest with the Company is amortized over a period of five years. Leasehold land is amortized over the period of lease.

c) Certain items of plant and machinery which have been considered to be continuous process plant by the management are depreciated at the prescribed rates.

iii) In the cases where the estimated useful life of the asset is less as compared to useful life estimated in Schedule XIV of

the Companies Act, 1956, such assets are depreciated at rates higher than those prescribed under Schedule XIV of the

Companies Act, 1956.

Asset Rate

Factory building at Nalagarh Over the lease period of 8 years

iv) In respect of assets costing less than Rs.5,000 each and temporary structures, 100% depreciation is provided in the year

of addition. v) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the accounting

standard 16 on "borrowing costs" are capitalised as a part of the cost of fixed assets. vi) Pre-operation expenses including trial run expenses (net of revenue) are capitalized.

B) Impairment of assets:

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Companys assets. An impairment loss is recognized in the profit and loss account wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognized in the profit and loss account. The impairment loss recognized in prior accounting period is reversed if there has been change in recoverable amount.

C) Investments:

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

D) Inventories:

Inventories are valued at lower of standard cost or net realizable value. Cost includes material cost, cost of labour and attributable manufacturing overheads. Cost of materials is arrived at on weighted average basis. Inventory of scrap is valued at estimated realisable value. Inventories of Finished Goods include excise duty as applicable.

E) Government Grants:

i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance

that the Company will comply with the conditions attached to them. ii) Government grants, which are in the nature of refundable interest free loans received from government/semi-government

authorities, are credited to secured/unsecured loans. iii) Government grants which are in the nature of subsidies received from government/semi-government authorities and

which are non-refundable are credited to reserves.

F) Employee stock options:

In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognized

as deferred compensation cost amortized over vesting period. G) Voluntary Retirement Schemes:

Compensations paid under voluntary retirement schemes are amortized over a period not exceeding 5 years, up to 31st March,2010.

H) Enterprise Resource Planning Cost:

Cost of implementation of ERP Software including all related direct expenditure is amortized over a period of 5 years on successful implementation.

I) Share Issue Expenses:

Share issue expenses are written off against share premium account, if any, or amortized over a period of 5 years.

i) Revenue recognition:

i) Sale of goods is recognised on despatch to customers and on date of shipment in case of exports. Sales exclude amounts

recovered towards sales tax and excise duty and is net of returns. ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers. iii) Dividend income on investment is recognised when the right to receive payment is established. iv) In respect of service activities, income is recognised as and when services are rendered. v) Lease rental on operating lease is accounted on accrual basis.

K) Post-employment benefits:

Defined Contribution Plans: In respect of the Companys provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate. In respect of the Companys approved superannuation scheme, the Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Companys contribution paid/payable under these schemes is recognized as expense in the profit and loss account during the period in which the employee renders the related service.

Defined Benefit Plans: In respect of the Companys gratuity and leave wages schemes, the present value of the obligation under such scheme is determined based on actuarial valuation using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Profit & Loss Account. Long term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

L) Translation of foreign currency:

i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction

dates. ii) Monetary items remaining unsettled at the year end are translated / reported at the year end rate. Exchange differences

arising on such revaluation are recognised in the Profit and Loss Account. iii) Non-Monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted. iv) In case of forward contracts, premium on the forward contracts is recognized as income or expense over the life of the

contract.

M) Hedging transactions (Metals):

All gains or losses in respect of hedging transactions are recognised in the financial statements on settlement/squaring off. Commission etc. in respect of such transactions is accounted on accrual basis.

N) Export benefits/Incentives:

The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and Focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to Advance Licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made.

O) Claims against the Company not acknowledged as debts:

The demands under disputed showcause notices / orders of statutory authorities are provided in the accounts on the basis of managements estimate and the balance, if any, are included in contingent liability.

P) Taxes on income:

Provision for taxation is made for both current and deferred taxes. Provision for current tax is made, at current rate of tax, based on assessable income. Deferred tax resulting from timing differences between the book profits and the tax profits is accounted for to the extent that the timing differences are expected to crystallize.

Deferred tax assets are not recognised on unabsorbed depreciation and carry forward losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized.

Q) Provision for contingencies:

A provision is recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of contingent liability is made when there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities, etc. is made when the Company, based on legal advise wherever necessary, estimates that the liability has been incurred and the amount can be reasonably estimated.

 
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