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Accounting Policies of Bimetal Bearings Ltd. Company

Mar 31, 2014

1.1 Basis of preparation of Financial statements

These financial statements have been prepared in accordance with generally accepted accounting principles in India under the historical cost convention on accrual basis, except for certain tangible assets which are being carried at revalued amounts. Pursuant to circular 15/2013 dated 13.09.2013 read with circular 08/2014 dated 04.04.2014, till the Standards of Accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended ] and other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Company''s operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.

2.2 Use of estimates

The preparation of financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as of the date of the financial statements. The estimates and assumptions used in the accompanying financial statements are based upon the management''s evaluations of the relevant facts and circumstances as of the date of the financial statements. Actual results could differ from these estimates.

2.3 Tangible assets

The revalued Plant and Machinery, Equipment etc. are stated at their respective replacement values after considering depreciation upto the date of revaluation. All other tangible assets are stated at cost. Cost includes related taxes, duties, freight etc. and interest on borrowed funds attributable to acquisition / construction of qualifying fixed assets and is net of CENVAT and VAT credits.

Depreciation on Tangible assets (other than revalued assets which have been fully depreciated) is provided on straight line method over the useful life of the asset or at the rates specified in Schedule XIV to the Companies Act, 1956, whichever is higher. Depreciation on additions is restricted to the period of use and no depreciation is provided in the year of sale. Assets costing individually upto Rs.5,000/- are fully depreciated in the year of purchase.

2.4 Intangible assets

Intangible assets are stated at actual cost less accumulated amortisation and accumulated impairment losses, if any. Technical knowhow and software is amortised on a straight line basis over a period of 5 years and 6 years respectively.

2.5 Impairment

Consideration is given at each Balance Sheet date to determine whether there is any modification or impairment of the carrying amount of the fixed assets. If any condition exists, an asset''s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of any asset exceeds recoverable amount.

2.6 Investments

Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments, such reduction being determined and made for each investment individually.

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2.7 Inventories

Inventories are valued at cost or net realisable value, whichever is low. Costs is determined using weighted average method. Cost includes cost of purchase excluding credits availed under CENVAT and VAT scheme, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Provision is made for slow moving and obsolete items of inventories.

2.8 Revenue recognition

Revenue from sale of goods is recognised when the significant risks and rewards of ownership in the goods are transferred to the

buyer.

Dividend income is recognised when right to receive dividend is established.

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

Income from duty drawback is recognised on an accrual basis.

2.9 Foreign currency transactions

Foreign Currency transactions are recorded at the exchange rates prevailing on the date of the transactions. At the year end all monetary assets and liabilities denominated in foreign currency are restated at the closing exchange rate. Exchange differences arising out of actual payments / realisations and from the year end restatement are recognised in the statement of profit and loss.

The premium or discount arising at the inception of forward exchange contracts entered into to hedge an existing asset/liability, is amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract are recognised as income or as expense for the period.

Forward exchange contracts outstanding as at the year end on account of firm commitment / highly probable forecast transactions are marked to market and the losses, if any, are recognised in the Statement of Profit and Loss and gains are ignored in accordance with the Announcement of Institute of Chartered Accountants of India on ''Accounting for Derivatives'' issued in March 2008.

2.10 Employee benefits

Short term:

Short term employee benefits represents compensated absences which are expected to be availed or encashed within 12 months from the end of the year and are recognised as expense as per the Company''s Scheme based on expected obligation.

Post Retirement :

Post Retirement Benefits comprise of Provident Fund, Gratuity and Superannuation fund which are accounted as follows:

(i) Provident fund

This is a defined contribution plan. Contributions made towards provident fund, in accordance with applicable rules/statutes, is charged to revenue. The Company has no further obligations for future provident fund benefits other than the contributions made to the fund.

(ii) Gratuity

This is a defined benefit plan. Contributions are made to the fund administered by Life Insurance Corporation of India (LIC). Gratuity liability is charged to the statement of profit and Loss based on actuarial valuation using Projected Unit Credit Method as at the balance sheet date. Actuarial gains/ losses comprising of experience adjustments and the effects of changes in actuarial assumptions, are recognised immediately in the Statement of Profit and Loss in the year in which they arise.

(iii) Superannuation

This is a defined contribution plan. Contributions in accordance with the company''s scheme are made to the fund administered by LIC and charged to Statement of Profit and Loss. The Company has no further obligations for future superannuation fund benefits other than the contributions made to the fund.

Termination benefits:

Termination benefits represent compensation towards Voluntary Retirement Scheme which is expensed as incurred.

Long term:

Long Term employee benefits represent compensated absences which are expected to be availed or encashed beyond 12 months from the end of the year and are provided based on actuarial valuation using Projected Unit Credit Method as at the balance sheet date. Actuarial gain/losses are recognised in the Statement of Profit and Loss.

2.11 Current and Deferred Tax

Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing in the respective jurisdictions.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable /virtual certainty, as applicable, that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company reassesses unrecognised deferred tax assets, if any.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

2.12 Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period attributable to equity shareholders.

The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

2.13 Provision and contingent liabilities

Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

2.14 Cash and Cash equivalents

In the cash flow statement, cash and cash equivalents includes cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.


Mar 31, 2013

1.1 Basis of preparation of Financial statements

The financial statements are prepared under historical cost convention on accrual basis, except so far as they relate to revaluation of Plant and Machinery, Equipment etc., This financial statement have been prepared to comply with in all material aspects the accounting standards notified under Section 211(3C) and Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of operations, the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.

1.2 Use of estimates

The preparation of financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as of the date of the financial statements. The estimates and assumptions used in the accompanying financial statements are based upon the management''s evaluations of the relevant facts and circumstances as of the date of the financial statements. Actual results could differ from these estimates.

1.3 Tangible assets

The revalued Plant and Machinery, Equipment etc. are stated at their respective replacement values after considering depreciation upto the date of revaluation. All other tangible assets are stated at cost. Cost includes related taxes, duties, freight etc. and interest on borrowed funds attributable to acquisition / construction of qualifying fixed assets and is net of Cenvat and VAT credits.

Depreciation on Tangible assets (other than revalued assets which have been fully depreciated) is provided on straight line method over the useful life of the asset or at the rates specified in Schedule XIV to the Companies Act, 1956, whichever is higher. Depreciation on additions is restricted to the period of use and no depreciation is provided in the year of sale. Assets costing individually upto Rs. 5,000/- are fully depreciated in the year of purchase.

1.4. Intangible assets

Intangible assets are stated at actual cost less accumulated amortisation and accumulated impairment losses, if any. Technical know how and software is amortised on a straight line basis over a period of 5 years and 6 years respectively.

1.5 Impairment

Consideration is given at each Balance Sheet date to determine whether there is any modification or impairment of the carrying amount of the fixed assets. If any condition exists, an asset''s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of any asset exceeds recoverable amount.

1.6 Investments

Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments, such reduction being determined and made for each investment individually.

1.7 Inventories

Inventories are valued at cost or net realisable value, whichever is low. Cost is determined using weighted average method. Cost includes cost of purchase excluding credits availed under Cenvat and VAT scheme, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Provision is made for slow moving and obsolete items of inventories.

1.8 Revenue recognition

Revenue from sale of goods is recognised when substantial risk and rewards are transferred to the buyer.

Dividend income is recognised when right to receive dividend is established.

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

Income from duty drawback is recognised on an accrual basis.

1.9 Foreign currency transactions

Foreign Currency transactions are recorded at the exchange rates prevailing on the date of the transactions. At the year end all monetary assets and liabilities denominated in foreign currency are restated at the closing exchange rate. Exchange differences arising out of actual payments / realisations and from the year end restatement are recognised in the statement of profit and loss.

The premium or discount arising at the inception of forward exchange contracts entered into to hedge an existing asset/liability, is amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract are recognised as income or as expense for the period.

Forward exchange contracts outstanding as at the year end on account of firm commitment / highly probable forecast transactions are marked to market and the losses, if any, are recognised in the Statement of Profit and Loss and gains are ignored in accordance with the Announcement of Institute of Chartered Accountants of India on ''Accounting for Derivatives'' issued in March 2008.

1.10 Employee benefits

Short term:

Short term employee benefits represents compensated absences which are expected to be availed or encashed within 12 months from the end of the year and are recognised as expense as per the Company''s Scheme based on expected obligation.

Post Retirement:

Post Retirement Benefits comprise of Provident Fund, Gratuity and Superannuation fund which are accounted as follows:

(i) Provident fund :

This is a defined contribution plan. Contributions made towards provident fund, in accordance with applicable rules/statutes, is charged to revenue. The Company has no further obligations for future provident fund benefits other than the contributions made to the fund.

(ii) Gratuity:

This is a defined benefit plan. Contributions are made to the fund administered by Life Insurance Corporation of India (LIC). Gratuity liability is charged to the statement of profit and Loss based on actuarial valuation using Projected Unit Credit Method. Actuarial gains/ losses comprising of experience adjustments and the effects of changes in actuarial assumptions, are recognised immediately in the Statement of Profit and Loss in the year in which they arise.

(iii) Superannuation :

This is a defined contribution plan. Contributions in accordance with the company''s scheme are made to the fund administered by LIC and charged to Statement of Profit and Loss. The Company has no further obligations for future superannuation fund benefits other than the contributions made to the fund.

Termination benefits:

Termination benefits represent compensation towards Voluntary Retirement Scheme which is expensed as incurred.

Long term:

Long Term employee benefits represent compensated absences which are expected to be availed or encashed beyond 12 months from the end of the year and are provided based on actuarial valuation using Projected Unit Credit Method. Actuarial gain/losses are recognised in the Statement of Profit and Loss.

1.11 Current and Deferred Tax

Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing in the respective jurisdictions.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets and liabilities are measured using the tax rate^ and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company reassesses unrecognised deferred tax assets, if any.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

1.12 Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period attributable to equity shareholders.

The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

1.13 Provision and contingent liabilities

Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

1.14 Segment reporting

The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Further, inter-segment revenue have been accounted for based on the transaction price agreed to between segments which is primarily market based. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis, have been included under "Unallocated corporate expenses".

1.15 Cash and Cash equivalents

In the cash flow statement, cash and cash equivalents includes cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.


Mar 31, 2012

1.1 Basis of preparation of Financial Statements

The financial statements are prepared under historical cost convention on accrual basis, except so far as they relate to revaluation of Plant and Machinery, Equipment etc., This financial statement has been prepared to comply with all material aspects the accounting standards had notified under Section 211 (3C) and Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of operations, the Company has ascertained its operating cycle as 12 months for the purpose of current / non current classification of assets and liabilities.

1.2 Use of Estimates

The preparation of financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as of the date of the financial statements. The estimates and assumptions used in the accompanying financial statements are based upon the management's evaluations of the relevant facts and circumstances as of the date of the financial statements. Actual results could differ from these estimates.

1.3 Tangible Assets

The revalued Plant and Machinery, Equipment etc. are stated at their respective replacement values after considering depreciation upto the date of revaluation. All other tangible assets are stated at cost. Cost includes related taxes, duties, freight etc. and interest on borrowed funds attributable to acquisition / construction of qualifying fixed assets and is net of Cenvat and VAT credits.

Depreciation on Tangible assets (other than revalued assets which have been fully depreciated) is provided on straight line method over the useful life of the asset or at the rates specified in Schedule XIV to the Companies Act, 1956. whichever is higher. Depreciation on additions is restricted to the period of use and no depreciation is provided in the year of sale. Assets costing individually upto Rs.5,000/- are fully depreciated in the year of purchase.

1.4 Intangible Assets

Intangible assets are stated at actual cost less accumulated amortisation and accumulated impairment losses, if any. Intangible asset (technical know how) is amortised on a straight line basis over a period of 5 years.

1.5 Impairment

Consideration is given at each Balance Sheet date to determine whether there is any modification or impairment of the carrying amount of the fixed assets. If any condition exists, an asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of any asset exceeds the recoverable amount.

1.6 Investments

Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments, such reduction being determined and made for each investment individually.

1.7 Inventories

Inventories are valued at cost or net realisable value, whichever is low. Cost is determined using weighted average method. Cost includes cost of purchase excluding credits availed under Cenvat and VAT scheme, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Provision is made for slow moving and obsolete items of inventories.

1.8 Revenue Recognition

Revenue from sale of goods is recognised when substantial risk and rewards are transferred to the buyer.

Dividend income is recognised when right to receive dividend is established. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

Income from duty drawback is recognised on accrual basis.

1.9 Foreign Currency Transactions

Foreign Currency transactions are recorded at the exchange rates prevailing on the date of the transactions. At the year end all monetary assets and liabilities denominated in foreign currency are restated at the closing exchange rate. Exchange differences arising out of actual payments / realisations and from the year end restatement are recognised in the statement of profit and loss.

1.10 Employee Benefits Short term:

Short term employee benefits represent compensated absences which are expected to be availed or encashed within 12 months from the end of the year and are recognised as expense as per the Company's Scheme based on expected obligation.

Post Retirement:

Post Retirement Benefits comprise of Provident Fund, Gratuity and Superannuation fund which are accounted as follows:

(i) Provident Fund:

This is a defined contribution plan. Contributions made towards Provident Fund, in accordance with applicable rules/statutes, is charged to revenue. The Company has no further obligations for future provident fund benefits other than the contributions made to the fund.

(ii) Gratuity

This is a defined benefit plan. Contributions are made to the fund administered by Life Insurance Corporation of India (LIC). Gratuity liability is charged to the statement of Profit and Loss based on actuarial valuation using Projected Unit Credit Method. Actuarial gains/ losses comprising of experience adjustments and the effects of changes in actuarial assumptions are recognised immediately in the Statement of Profit and Loss in the year in which they arise.

(iii) Superannuation

This is a defined contribution plan. Contributions in accordance with the company's scheme are made to the fund administered by LIC and charged to Statement of Profit and Loss. The Company has no further obligations for future superannuation fund benefits other than the contributions made to the fund.

Termination benefits:

Termination benefits represent compensation towards Voluntary Retirement Scheme which is expensed as incurred.

Long term:

Long Term employee benefits represent compensated absences which are expected to be availed or encashed beyond 12 months from the end of the year and are provided based on actuarial valuation using Projected Unit Credit Method. Actuarial gain/losses are recognised in the Statement of Profit and Loss.

1.11 Current and Deferred Tax

Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing in the respective jurisdictions.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company reassesses unrecognised deferred tax assets, if any.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

1.12 Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company's earnings per share is the net profit for the period attributable to equity shareholders.

The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

1.13 Provision and Contingent liabilities

Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

1.14 Cash and Cash Equivalents

In the cash flow statement, cash and cash equivalents includes cash and cheques in hand, demand deposits with banks, other short- term highly liquid investments with original maturities of three months or less.


Mar 31, 2010

1.1. Accounting Convention

The financial statements are prepared under historical cost convention, except so far as they relate to revaluation of Plant and Machinery, Equipment etc., on accrual basis of accounting to comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956.

1.2. Use of Estimates

The preparation of financial statements in conformity with the generally accepted accounting principles requires trie management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as of the date of the financial statements. The estimates and assumptions used in the accompanying financial statements are based upon the managements evaluations of the relevant facts and circumstances as of the date of the financial statements. Actual results could differ from these estimates.

1.3. Fixed Assets

The revalued Plant and Machinery, Equipment etc. are stated at their respective replacement values after considering depreciation upto the date of revaluation. All other fixed assets are stated at cost. Cost includes related taxes, duties, freight etc. and interest on borrowed funds attributable to acquisition / construction of qualifying fixed assets and is net of Cenvat and VAT credits. In the case of assets taken on lease (no new leases after March 31,2001), the rentals are charged to Profit and Loss Account when due.

1.4. Depreciation

Depreciation on fixed assets (other than revalued assets which have been fully depreciated and technical knowhow) is provided on straight line method at the applicable rates specified in Schedule XIV to the Companies Act, 1956. Technical Knowhow Fee included under Plant and Machinery is amortised over a period of five years. Depreciation on additions is restricted to the period of use and no depreciation is provided in the year of sale. All assets costing individually Rs.5,000 and below are fully depreciated in the year of addition.

1.5. Impairment

Consideration is given at each Balance Sheet date to determine whether there is any modification or impairment of the carrying amount of the fixed assets. If any condition exists, an assets recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of any asset exceeds recoverable amount.

1.6. Investments

Long Term Investments are stated at cost with necessary provision for diminution, other than temporary, in the value of investments. Current Investments are stated at the lower of cost and fair value.

1.7. Inventories

Raw materials and stores and spares are valued at cost or below and costs are ascertained on weighted average basis. Inventories of work in progress and finished goods are valued at lower of cost and net realisable value. Cost includes cost of purchase excluding credits availed under Cenvat and VAT scheme, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Adequate provisioning is made for slow moving and obsolete items of inventories.

1.8. Revenue Recognition

Revenue for sales is recognised on shipment of goods to customers. Dividend income is recognized when right to receive such dividend is established. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Revenue in respect of export benefits is recognised when the certainty of realization of the benefit is established.

1.9. Foreign Currency Transactions ,

Foreign Currency transactions are accounted at the exchange rates ruling on the date of the transactions. At the year end all monetary assets and liabilities denominated in foreign currency are restated at the closing exchange rate. Exchange differences arising out of actual payments / realisations and from the year end restatement referred to above are dealt with in the Profit &Loss Account.

1.10. Research and Development

Revenue expenditure on account of Research and Development is charged off to the Profit and Loss account in the year in which it is incurred. Capital expenditure on Research and Development is shown as addition to Fixed assets and depreciated accordingly.

1.11. Employee Benefits

(a) Short Term

Short term employee benefits are recognized as expense as per the Companys Scheme based on expected obligation.

(b) Post Retirement

Post Retirement Benefits comprise of Provident Fund, Gratuity and Superannuation which are accounted as follows:

(i) Provident Fund

This is a defined contribution plan and contributions made to the fund, in accordance with the applicable rules / statutes, are charged to revenue. The Company has no further obligations for future provident fund benefits other than the contributions made to the fund.

(ii) Gratuity

This is a defined benefit plan. Contributions are made to the fund administered by Life Insurance Corporation of India (LIC). Gratuity liability is charged to the Profit and Loss account based on actuarial valuation using Projected Unit Credit Method. Actuarial Gains and Losses comprising of experience adjustments and the effects of changes in actuarial assumptions, are recognized immediately in the Profit and Loss account as income or expense.

(iii) Superannuation

This is a defined contribution plan and contributions in accordance with the companys scheme are made to the fund administered by LIC and charged to Profit and Loss account. The Company has no further obligations for future superannuation fund benefits other than the contributions made to the fund.

(c) Termination Benefits

Termination benefits represent compensation towards Voluntary Retirement Scheme which is expensed as incurred.

(d) Long Term

Long Term employee benefits represent compensated absences which is provided for based on actuarial valuation using Projected Unit Credit Method.

1.12. Taxation

Provision for current tax is made based on the liability computed in accordance with the relevant tax rates and tax laws. Provision for deferred tax is made for timing differences arising between the taxable income and accounting income computed at the tax rates enacted or substantially enacted by the Balance sheet date. Deferred Tax assets are recognised only if there is a virtual certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

1.13. Earnings / Loss per share

The earnings / loss considered in ascertaining the Companys Earnings / (Loss) per Share (EPS) comprises the Net Profit / (loss) after Tax. The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year. The number of shares used in computing Diluted EPS comprises of weighted average shares considered for deriving Basic EPS, and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date.

1.14. Cash and Cash equivalents consist of all the cash balances including Time Deposits with an original maturity of three months are less.



 
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