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Accounting Policies of Chase Bright Steel Ltd. Company

Mar 31, 2014

I) Basis for preparation of Financial Statements :

The Financial Statements have been prepared on the going concern under historical convention as also accrual basis and in accordance with the Accounting Standards referred to in section 211(3C) of the Companies Act, 1956 which have been prescribed by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

ii) Use of Estimates :

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amount of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts / advances, deferred tax etc. Actual results could differ from those estimates. Such difference is recognised in the period(s) in which the results are known / materialised.

iii) Tangible Fixed Assets and Capital Work in Progress :

a) Fixed Assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

Such Fixed Assets except leasehold land have been valued at cost less depreciation. Leasehold Land has been shown at its Original Cost.

b) Impairment Loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.

iv) Depreciation / Amortisation :

Except for items on which 100% depreciation rates are applicable, depreciation is provided using Written down method as per the useful lives of the assets estimated by the management or at the rates prescribed in Schedule XIV of the Companies Act, 1956. Assets valuing less than Rs. 5,000/- are depreciated at the rate of 100% in the year of acquisition. Depreciation in respect of addition to / deletion from the Fixed Assets, provided on the pro-rata basis with reference to the date of additions to / deletion from the assets.

v) Excise Duty :

a) The excise duty is paid / provided on Bright Steel Bars manufactured during the year. The same has been included in the valuation of closing inventory of finished goods.

b) Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and capital goods and Service Tax credits on services availed are accounted for by reducing purchase cost of the related materials or the expenses respectively.

vi) Investments :

a) Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments.

b) Current Investments are carried at lower of the cost and fair value determined on an individual investment basis.

c) Long Term Investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

vii) Inventories :

Inventories are valued at Lower of the Cost and estimated Net Realisable Value. Cost comprises of all costs of purchases including transport and other charges, if any including the excise duty incurred in bringing the inventories to their present location and condition. The Cost is arrived at on weighted average cost basis. Due allowance is estimated and made for defective and obsolete items, wherever considered necessary.

viii) Revenue Recognition :

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

b) Revenue from Sale of Goods is recognised when the significant risks and rewards of ownership of the good have passed to the buyer. Sales are net of Excise Duty / Sales Tax / Value Added Tax.

c) Export incentives under "Duty Entitlement Pass Book Scheme" and "Duty Drawback Scheme" are accounted in the year of export.

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

ix) Foreign Currency Transactions

a) Transactions in foreign currencies are recorded, on initial recognition in the reporting currency, by applying the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transactions.

b) Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit / loss on translation is credited / charged to the Statement of Profit and Loss.

c) In respect of forward exchange contracts entered into towards hedge of foreign currency risks, the difference between the forward rates and the exchange rate at the inception of the contract is recognised as income or expenditure over the life of the contract. Further, the exchange differences arising on such contracts are recognised as income or expenditure along with exchange difference on the underlying assets / liabilities. Profit or loss on cancellation / renewals of forward contracts is recognised for during the year.

x) Employees Benefits :

a) A retirement benefit in form of Provident Fund is a defined contribution scheme and the contributions are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

b) The Company has defined benefit gratuity plan. Every employee who has completed five years or more of services get gratuity on post employment at 15 days salary (last drawn salary) for each completed year of service as per the rules of the Company. The aforesaid liability is provided for on the basis of detailed actuarial report.

xi) Borrowing Costs

Borrowing costs, attributable to the acquisition or construction of qualifying assets, are capitalised as part of the cost of such assets upto the date when the asset is ready for its intended use. Other borrowing costs are charged as an expense in the period in which the same are incurred. Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

xii) Taxation :

a) Tax expense comprises current and deferred taxes. Current Income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961 enacted in India.

b) Deferred income taxes reflects the impact of current year timing difference between the taxable income and accounting income for the year and reversal of timing difference of earlier years.

c) Deferred tax is measured based on the tax rates and the tax laws enacted or subsidiary enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to taxes on income levied by same governing taxation law. In situation where the company has unabsorbed depreciation or carried forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

d) At each balance sheet date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.

e) Provision for current income-tax / wealth-tax is computed as per ''Total Income'' returnable under the Income-tax Act, 1961 taking into account available deductions and exemptions.

xiii) Provisions and contingent liabilities and contingent assets :

a) A provision is recognised when an enterprise has a present obligation as result of past event. It is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimates require to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the best current estimates.

b) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may or may not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements

xiv) Earnings per share :

a) Basic earnings per share are calculated by dividing the net profit and loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of any equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period.

b) 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 are adjusted for the effects of all dilutive potential equity shares.


Mar 31, 2011

01 Basis for preparation of Financial Statements:

The Financial Statements are prepared in accordance with the Accounting Principles generally accepted in India and comply with the Accounting Standards specified by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act. 1956.

02 Method of Accounting:

The Financial Statements are based on historical costs and are prepared on Accrual basis except where impairment is made.

03 Fixed Assets:

a) All Fixed Assets are capitalised at costs of acquisition which includes taxes, duties (net of tax credits as applicable) and other identifiable direct expenses. Interest on borrowed funds attributable to the qualifying asset upto the date the asset is put to use is included in the cost.

b) Impairment Loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.

04 Depreciation:

Except for items on which 100% depreciation rates are applicable, depreciation is provided on Written Down Value Method for the period of use of the assets in the manner and at the rates prescribed in Schedule XIV of the Companies Act, 1956.

05 Investments:

a) Investments, being long term, are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is not temporary in the opinion of the management.

b) Investments are capitalized at cost plus expenses by applying specific identification method.

06 Valuation of Inventories :

Inventories are valued at Lower of Cost and Net Realisable Value except scrap and rejected duty paid goods which are valued at net realizable value. Cost comprises all cost of purchase and all other costs incurred in bringing the inventories to their present location and condition. The cost is arrived at on First In First Out (FIFO) basis. Due allowance is estimated and made for defective and obsolete items, wherever considered necessary.

07 Excise Duty:

a) The excise duty is paid / provided on Bright Steel Bars manufactured during the year. The same has been included in the valuation of closing inventory of finished goods.

b) Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and capital goods and Service Tax credits on services availed are accounted for by reducing purchase cost of the related materials or the expenses respectively.

08 Foreign Currency Transactions:

a) Income and expenses in foreign currencies are recorded at the exchange rates prevailing on the date of the transactions.

b) Foreign Currency monetary assets and liabilities are translated at the exchange rates prevailing on the Balance Sheet date.

c) In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate on the date of the transaction is recognised as income or expense over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or expense for the year.

d) Transactions not covered by forward contracts and outstanding at the year end are translated at exchange rates prevailing at the year end and the profit / loss so determined is recognized in the Profit and Loss Account.

09 Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to the Profit and Loss Account in the year in which they are incurred.

10 Employee Benefits:

a) The Company's Contribution in respect of Provident and other Funds is charged to the Profit and Loss Account on accrual basis.

b) Provision for Gratuity to Employees is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method. Actuarial gains and losses which comprises experience adjustment and the effect of changes in actuarial assumptions are recoginsed in the Profit and Loss Account.

c) The Employees of the Company are entitled to leave as the leave policy of the Company. The liability in respect of unutilized leave balances is provided on actual basis at the year end and charged to the Profit and Loss Account.

11 Taxation:

a) Provision for current income-tax / wealth-tax / Fringe Benefit Tax is computed as per 'Total Income' returnable under the Income-tax Act, 1961 taking into account available deductions and exemptions.

b) In accordance with Accounting Standard 22 - Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India, the deferred tax for timing difference is accounted for, using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

c) Deferred Tax Assets arising from timing difference are recognised only on the consideration of prudence.

12 Treatment of Goodwill arising on Amalgamation :

The Goodwill arising on Amalgamation of Chase Atherton Steel Pvt. Ltd. with the Company is treated as an asset and amortised over a period of five years commencing from 6 months period ended March 31, 2006.


Mar 31, 2010

01 Basis for preparation of Financial Statements:

The Financial Statements are prepared in accordance with the Accounting Principles generally accepted in India and comply with the Accounting Standards specified by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

02 Method of Accounting:

The Financial Statements are based on historical costs and are prepared on Accrual basis except where impairment is made.

03 Fixed Assets:

a) All Fixed Assets are capitalised at costs of acquisition which includes taxes, duties (net of tax credits as applicable) and other identifiable direct expenses. Interest on borrowed funds attributable to the qualifying asset upto the date the asset is put to use is included in the cost.

b) Impairment Loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arms length transaction between knowledgeable, willing parties, less the costs of disposal.

04 Depreciation:

Except for items on which 100% depreciation rates are applicable, depreciation is provided on Written Down Value Method for the period of use of the assets in the manner and at the rates prescribed in Schedule XIV of the Companies Act, 1956.

05 Investments:

a) Investments, being long term, are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is not temporary in the opinion of the management.

b) Investments are capitalized at cost plus expenses by applying specific identification method.

06 Valuation of Inventories:

Inventories are valued at Lower of Cost and Net Realisable Value except scrap and rejected duty paid goods which are valued at net realizable value. Cost comprises all cost of purchase and all other costs incurred in bringing the inventories to their present location and condition. The cost is arrived at on First In first Out (FIFO) basis. Due allowance is estimated and made for defective and obsolete items, wherever considered necessary.

07 Excise Duty:

a) The excise duty is paid / provided on Bright Steel Bars manufactured during the year. The same has been included in the valuation of closing inventory of finished goods.

b) Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and capital goods and Service Tax credits on services availed are accounted for by reducing purchase cost of the related materials or the expenses respectively.

08 Foreign Currency Transactions :

a) Income and expenses in foreign currencies are recorded at the exchange rates prevailing on the date of the transactions.

b) Foreign Currency monetary assets and liabilities are translated at the exchange rates prevailing on the Balance Sheet date.

c) In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate on the date of the transaction is recognised as income or expense over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or expense for the year.

d) Transactions not covered by forward contracts and outstanding at the year end are translated at exchange rates prevailing at the year end and the profit / loss so determined is recognized in the Profit and Loss Account.

09 Borrowing Cosls:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to the Profit and Loss Account in the year in which they are incurred.

10 Employee Benefits:

a) The Companys Contribution in respect of Provident and other Funds is charged to the Profit and Loss Account on accrual basis.

b) Provision for Gratuity to Employees is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method. Actuarial gains and losses which comprises experience adjustment and the effect of changes in actuarial assumptions are recoginsed in the Profit and Loss Account.

c) The Employees of the Company are entitled to leave as the leave policy of the Company. The liability in respect of unutilized leave balances is provided on actual basis at the year end and charged to the Profit and Loss Account.

11 Taxation:

a) Provision for current income-tax / wealth-tax / Fringe Benefit Tax is computed as per Total Income returnable under the Income-tax Act, 1961 taking into account available deductions and exemptions.

b) In accordance with Accounting Standard 22 - Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India, the deferred tax for timing difference is accounted for, using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

c) Deferred Tax Assets arising from timing difference are recognised only on the consideration of prudence.

12 Treatment of Goodwill arising on Amalgamation:

The Goodwill arising on Amalgamation of Chase Atherton Steel Pvt. Ltd. with the Company is treated as an asset and amortised over a period of five years commencing from 6 months period ended March 31,2006.

 
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