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Accounting Policies of Butterfly Gandhimathi Appliances Ltd. Company

Mar 31, 2015

(i) Basis for Preparation of accounts:

The Financial Statements have been prepared on the historical cost convention in accordance with the Generally Accepted Account- ing Principles in India, to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(ii) Fixed Assets and Depreciation:

a. Fixed Assets are Capitalised at acquisition cost, including directly attributable cost of bringing the assets to their working condition for the intended use, less CENVAT and VAT Credits and as reduced by accumulated depreciation.

b. Depreciation on tangible fixed assets is charged over the estimated useful life on straight line method, in accordance with Part A of Schedule II to the Companies Act 2013.

c. The estimated useful life of the tangible fixed assets followed by the Company is given below:

Description Years

Factory building and other buildings 5 to 60

Plant and machinery 15

Electrical equipments 10

Office equipment 5

Furniture and Fittings 10

Vehicles 8 to 10

Computers and information systems 3 to 6

d. Dies and Tools are depreciated at the rate of 11.88 percent.

e. In respect of additions/deductions made during the year, depreciation is charged on pro-rata basis from the date of addition/ till the date of disposal.

f. Intangible assets in the form of Software are amortised over their useful life of 10 years and in the form of Usage Right of Trade Mark/Trade Mark and Licence are amortised over the period of Usage of 20 - 25 years.

(iii) Inventories:

Inventories are stated at lower of cost (net of CENVAT and VAT credits) or net realisable value. Cost includes all direct costs and other applicable manufacturing overheads and in ascertaining the cost, Moving Weighted Average Method is adopted. In the case of work- in-progress and finished goods, cost represents materials (net of CENVAT and VAT credits) direct labour and appropriate portion of factory overheads. Adequate provision for defective, slow/non moving, obsolete stocks are made on the basis of technical evaluation.

(iv) Revenue recognition:

Revenue in respect of sale of products is recognised at the point of despatch to customers. Sales also includes products which are manufactured through third party on contract basis, which represents invoiced value of goods including excise duty and are net of sales tax, returns and inter-branch transfers. The excise duty is separately disclosed and deducted from sales. Export sales are accounted at the prevailing rate of exchange as on the date of invoicing. The difference in the rate of exchange, if any, is accounted at the time of realization if it is made within the same financial year.

(v) Impairment of Assets:

As on the Balance sheet date, the Company's assets net of accumulated depreciation/amortization is not less than the recoverable amount of those assets. Hence, there is no impairment loss on the assets of the Company. Any such impairment loss is recognized by charging it to the profit and loss statement.

(vi) Research & Development Expenditure:

Revenue Expenditure on Research & Development is charged off to the Profit and Loss Statement in the period in which it is incurred.

(vii) Staff Terminal Benefits:

a) Accrued Liability for gratuity and superannuation has been provided in the accounts in accordance with the provisions of the Payment of Gratuity Act, 1972, calculated on the basis of Actuarial Valuation in accordance with the guidelines of the Institute of Chartered Accountants of India under Accounting Standard (AS15) for employees who are eligible for gratuity and super- annuation funded by Life Insurance Corporation (LIC). For a few employees who are in service even after Superannuation age as per LIC norms, gratuity and superannuation is calculated manually and necessary provision is made in the books of account.

The Company contributes to the said superannuation fund covering specified employees. The contributions are by way of annual premium payable on such superannuation policy issued by the LIC of India, which confers benefits to those specified employees based on policy norms.

b) Contribution to Provident fund are accounted at the applicable rates and paid over to the Government authorities.

c) Accrued liability for encashment of leave to employees is accounted on calendar year basis, in accordance with the Company's Rules and paid to the employees after the end of calendar year.


Mar 31, 2013

(i) Basis for Preparation of accounts:

The Accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standard notified under Section 211(3C) of the Companies Act, 1956 and the Financial Statements have been prepared on the historical cost convention and in accordance with normally accepted accounting principles in India.

(ii) Fixed Assets and Depreciation: ,

Fixed Assets are capitalised at acquisition cost, including directly attributable cost of bringing the assets to their working condition for the intended use less CENVAT Credits.

Depreciation on Fixed Assets has been provided on the basis of straight line method at the rates specified in Schedule XIV to the Companies Act, 1956. In respect of additions/deductions made during the year, depreciation is charged on pro-rata basis from the date of addition/upto the date of deletions in the financial year.

Usage Right of Trade Marks are amortised over the period of Usage.

(iii) Inventories :

Inventories are stated at lower of cost or net realisable value. Cost includes all direct costs and other applicable manufacturing overheads and in ascertaining the cost, FIFO method is adopted.

(iv) Revenue recognition:

Revenue in respect of sale of products is recognised at the point of despatch to customers. Sales also includes products which are manufactured through third party on Contract basis, which represents invoiced value of goods including excise duty and are net of sales tax, returns and inter-branch transfers. The excise duty is separately disclosed and deducted from sales. Export sales are accounted at the prevailing rate of exchange as on the date of invoicing. The difference in the rate of exchange, if any, is accounted at the time of realisation.

(v) Impairment of Assets:

As on the Balance sheet date, the Company''s assets net of accumulated depreciation is not less than the recoverable amount of those assets. Hence, there is no impairment loss on the assets of the Company.

(vi) Research & Development Expenditure:

Revenue Expenditure on Research & Development is charged off to the Profit and Loss statement in the period in which it is incurred.

(vii) Staff TerminalBenefits:

a) Accrued Liability for gratuity and superannuation has been provided in the accounts in accordance with the provisions of the Payment of Gratuity Act, 1972, calculated on the basis of Actuarial Valuation method in accordance with the guidelines of the Institute of Chartered Accountants of India under Accounting Standard (AS 15) for employees who are eligible for gratuity and superannuation funded by Life Insurance Corporation (LIC). For few employees who are in service even after Superannuation age, Gratuity and superannuation is calculated manually and necessary provision is made in the books of account.

The Company contributes to the said superannuation fund covering specified employees. The contributions are by way of annual premium payable in respect of superannuation policy issued by the LIC of India which confers benefits to those specified employees based on policy norms.

b) Contribution to Provident fund are accounted at the applicable rates and paid over to the appropriate Government authorities. .

c) Accrued liability for encashment of leave to employees is accounted on calendar year basis, in accordance with the Company''s Rules and paid to the employees after the year end.


Mar 31, 2012

1. Excise duty:

CENVAT credit/Service Tax credit for Excise Duty on inputs and other capital goods is accounted fully and to the extent the sum availed is adjusted towards payment of excise duty on dispatches leaving the unutilized balance being carried forward to subsequent year and kept under Loans and Advances

2. Trade Receivables and Loans and Advances:

Sundry Debtors and Loans and Advances are stated after making adequate provisions for doubtful balances. In the evaluation of the Managing Director, Sundry Debtors and Loans and Advances have the value on realization in the ordinary course of business at least equal to the amount at which they are stated.

3. Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006:

The particulars required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 relating to unpaid balances, interest payable thereon to such small scale industries as defined in the said Act could not be disclosed for want of information on the status of those sundry creditors.

4.Taxation:

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

Deferred tax is recognized, subject to the consideration of prudence, on timing difference, being the ' difference between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets in respect of unabsorbed depreciation and unabsorbed losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize such assets.

Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realize such assets.

5. Foreign Currency transactions:

Transactions in foreign currency are recorded at exchange rate prevailing at the time of the transactions and exchange difference arising from foreign currency transaction are dealt with in the Profit and Loss account and capitalized where they relate to the Fixed Assets. Current Assets and Liabilities at the yearend are being converted at closing rates and exchange gains / losses are dealt with in the Profit and Loss account, as per AS 11.

6. Merger with Gangadharam Appliances Limited

A proposal submitted by erstwhile Gangadharam Appliances Limited (GAL), an associate of the Company, for the merger of its entire undertaking with the Company has been approved by the Hon'ble Board for Industrial and Financial Reconstruction (BIFR) vide their order dated 17th August, 2011 with retrospective effect from 1st January, 2009. The Transactions, Assets and Liabilities of GAL has been incorporated in the books of the Company keeping into account the terms of the BIFR Order (supra) and reflected appropriately in the account of the Company as at 31st March, 2012. In terms of the said BIFR Order, one share of the Company was issued for every two shares held by the shareholders of GAL and as a consequence, the paid up share capital of the Company has been increased by Rs. 579.39 Lakhs.

7. During the financial year 2010-11, there was a Fire accident in the factory, and Inventory of approx Rs. 1.18 Cr got damaged. The necessary claim with the Insurance Company which was made and shown in the 'Profit and Loss account' of 2010-11 as extraordinary item and as 'Claim Receivable' under Loans and Advances in the Balance Sheet as on 31.3.2011, But subsequently the Insurance Company has indicated a lesser value of the claim and hence the excess claim of Rs. 0.49 cr. accounted as "extra-ordinary item" in the previous year is now reversed and shown under exceptional item during the year.

8. Subsequent to the date of the Balance Sheet, the Company with necessary statutory approvals raised Share Capital on preferential basis from Reliance Alternative Investments Fund - Private Equity Scheme-I (Acting through Reliance Alternative Investments Services Private Limited) and issued 24,51,000 equity shares of Rs.10/- each at a premium of Rs.398 per share aggregating Rs.100 Crores and eight thousand.

9. The figures of the current year includes the figures of Gangadharam Appliances Ltd merged with the Company during the year. Therefore, the figures of the current year are not comparable with those of the previous period. Also, the accounts of the Company for the previous financial year has been for a period of nine months.

10. The Figures for the period ended on 31.03.2011 have been re-grouped and re-arranged to conform with the current year's classification.


Mar 31, 2011

The Financial Statements have been prepared on the historical cost convention and in accordance with normally accepted accounting principles.

(i) Fixed Assets and Depreciation :

Fixed Assets are capitalised at acquisition cost, including directly attributable cost of bringing the assets to their working condition for the intended use less CENVAT Credits.

Depreciation on Fixed Assets has been provided on the basis of straight line method at the rates specified in Schedule XIV to the Companies Act, 1956. In respect of additions/deletions made during the period, depreciation is charged on pro-rata basis from the day or upto the date of addition/deletions.

Leasehold properties and Usage Right of Trade Marks are amortised over the period of Lease/Usage.

(ii) Inventories :

Inventories are stated at lower of cost/net realisable value. Cost includes all direct costs and other applicable manufacturing overheads and in ascertaining the cost, FIFO method is adopted.

(iii) Revenue recognition :

Revenue in respect of sale of products is recognised at the point of despatch to customers. Sales also includes products which are manufactured through third party on Contract basis, which represents invoiced value of goods including excise duty and are net of sales tax, returns and inter-branch transfers. Export sales are accounted at the prevailing rate of exchange as on the date of invoicing. The difference in the rate of exchange, if any, is accounted at the time of realisation.

(iv) Research & Development Expenditure :

Revenue Expenditure on Research & Development is charged off to the Profit and Loss account in the period in which it is incurred.

(v) Retirement Benefits :

a) Accrued Liability for gratuity is provided in the accounts in accordance with the provisions of the Payment of Gratuity Act, 1972, calculated on the basis of Actuarial Valuation method in accordance with the guidelines of the Institute of Chartered Accountants of India under Accounting Standard. (AS 15).

b) Contribution to Provident Fund & ESI Fund are accounted at the applicable rates on accrual basis and are charged against revenue.

c) Accrued liability for encashment of leave to employees is accounted on calendar year basis, in accordance with the Company's Rules.


Jun 30, 2010

The Financial Statements have been prepared on the historical cost convention and in accordance with normally accepted accounting principles.

(i) Fixed Assets and Depreciation:

Fixed Assets are capitalised at acquisition cost, including directly attributable cost of bringing the assets to their working condition for the intended use less CENVAT Credits.

Depreciation on Fixed Assets has been provided on the basis of straight line method at the rates specified in Schedule XIV to the Companies Act, 1956. In respect of additions/deductions made during the period, depreciation is charged on pro-rata basis from the day or upto the date of addition/deletions.

Leasehold properties and Usage Right of Trade Marks are amortised over the period of Lease/Usage.(ii)

(ii) Inventories:

Inventories are stated at lower of cost/net realisable value. Cost includes all direct costs and other applicable manufacturing overheads and in ascertaining the cost, FIFO method is adopted.

(iii) Revenue recognition:

Revenue in respect of sale of products is recognised at the point of despatch to customers. Sales also includes products which are manufactured through third party on Contract basis, which represents invoiced value of goods including excise duty and are net of sales tax, returns and inter-branch transfers. Export sales are accounted at the prevailing rate of exchange as on the date of invoicing. The difference in the ratetrf exchange, if any, is accounted at the time of realisation.

(iv) Research & Development Expenditure:

Revenue Expenditure on Research & Development is charged off to the Profit and Loss account in the period in which it is incurred.

(v) Retirement Benefits:

a) Accrued Liability for gratuity is provided in the accounts in accordance with the provisions of the Payment of Gratuity Act, 1972, calculated on the basis of Actuarial Valuation method in accordance with the guidelines of the Institute of Chartered Accountants of India under Accounting Standard. (AS 15).

b) Contribution to Provident Fund & ESI Fund are accounted at the applicable rates on accrual basis and are charged against revenue.

C) Accrued liability for encashment of leave to employees is accounted on calendar year basis, in accordance, with the Companys Rules.

2. Excise duty:

CENVAT credit for Excise Duty on inputs and other capital goods is accounted fully and to the extent the sum availed off is adjusted towards payment of excise duty on despatches leaving the unutilised balance being carried forward to subsequent year and kept in Advances recoverable in cash or in kind or for value to be received shown under Loans and Advances

3. In the evaluation of the Managing Director, Sundry Debtors and Loans and Advances have the value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

4. The particulars required to be disclosed under the Micro Small and Medium Enterprises Development Act, 2006 relating to unpaid balances, interest payable thereon to such small scale industries as defined in the said Act could not be disclosed for want of information on the status of those sundry creditors.

5. Proposed merger with Gangadharam Appliances Limited

A proposal submitted by Gangadharam Appliances Limited (GAL), an associate of the Company, which is also in the same segment of business as the Company, viz., domestic appliances, for the merger of its entire undertaking with the Company has been approved in principle by the Honble Board for Industrial and Financial Reconstruction (BIFR). The draft Scheme for the said merger as of 1 st January, 2009 (approved date) is submitted by GAL to BIFR. An extraordinary General Meeting of the Company seeking approval of the shareholders of the Company for the proposed merger was convened on 9th September, 2010 at which the share holders unanimously approved through a Special Resolution, the proposed merger and the draft Scheme therefor subject to approval of the same by Honble BIFR. The approval of BIFR has not been received till date. The results now provided are therefor of the Company only and on the proposed merger being approved by Honble BIFR, the Transaction, Assets and Liabilities of GAL will be incorporated as part of the Transaction, Assets and Liabilities of the Company and will be reflected appropriately in the accounts of the Company to be made after such approval is received.

6. Unsecured Loan

During the period, the Company has raised a loan of Rs.21.50 Crores (balance outstanding is Rs.20.54 Crores) from Dewan Housing Finance Corporation Limited (DHFL) classified as Unsecured Loan repayable over a period of seven years for which the securities have been provided by an associate Company, Promoter Directors and their relatives. At the extraordinary General Meeting of the Company held on 29th June 2010, shareholders have unanimously approved availing the said loan through a Special Resolution.

In view of proposed merger of Gangadharam Appliances Limited with Gandhimathi Appliances Limited, for which the Honble BIFR has granted in-principle approval, the Company has advanced a sum of Rs.15 crores to one of the Associate Companies against the security of pledge of certain shares and Demand Promissory Note and another sum of Rs.6.50 crores to Gangadharam Appliances Limited against the second charge of its immovable property, to settle their liabilities out of the loan availed from DHFL as stated above, which will get relinquished once the merger proposal is approved by Honble BIFR and necessary entries are effected in the books of the Transferor and Transferee Companies. The interest on the loan from DHFL is borne by GAL and the Associate | Company. I

7. In terms of the Memorandum of Compromise executed on 1.11.2000 by the Company and M/s L.G Varadarajulu & others, Coimbatore in the matter of patents/designs dispute in the manufacture of Table top wet grinders, the Company is liable to pay to the latter such damages as may be determined by the Court, in the event of the suit C.S. No.613 of 1999, pending in the High Court of Judicature at Chennai being decreed in their favour. In the mean while a Patent has been duly granted under Patents Act, 1970 by Government of India in respect of those Table Top Wet Grinders, which has been duly renewed and in force. This Patent right remains unchallenged as of now.

8. Provision for Taxation charged to the Profit and Loss account for the current period of eighteen months amounting to Rs.10,19,87,384, interalia includes a sum of Rs.3,44,01,285 towards Minimum Alternate Tax (MAT) provided under section 115JB of the Income Tax Act, 1961 treating the said MAT as the current tax liability of the Company. In the year in which the MAT credit becomes eligible to be recognised as an asset, the same will be taken as credit to the Profit and Loss account of that year.

 
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