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Accounting Policies of Chemtech Industrial Valves Ltd. Company

Mar 31, 2015

I. BASIS OF PREPARATION

a) These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical coat convention on accrual basis. Pursuant to section 133 of the Companies Act. 2013 read with Rule 7 of the Companies (Accounts) Rule, 2014, till the standards of accounting or any addendum thereto arc 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 aspect with the Accounting Standards notified under Section 211(3C) of Companies Act, 1956 [Companies ( Accounting Standards), 2006 as amended and other relevant provisions of the Companies Act, 2013.

b) 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 - III to the Companies Act, 2013, Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as up to twelve months for the purposed current / non-client classification of assets and liabilities.

c) Accounting policies not specifically referred in otherwise are consistent with the generally accepted accounting principles followed by the Company.

d) The preparation of financial statements requires estimates and assumption to be made that effect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period .The Difference between the actual and estimate are recognized in the period in which results are known/materialized.

II. TANGIBLE FIXED ASSETS AND DEPRECIATION

a) Tangible Fixed Assets are stated at cost of acquisition or construction except assets which has been revalued, at its revalued amount, less accumulated depreciation and impairment loss, if any. Coal comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Temporary constructions/alterations arc charged off to Profit and Loss Account.

b) Depreciation has beer, provided as under:

(i) For assets existing on 1st April 2014 the carrying amount will be amortized over the remaining useful valves on straight line method as prescribed in the schedule II of the Companies Act, 2013.

(ii) For the assets added after the 1st April 2014 :- On straight line method at the useful standard Lives prescribed in Schedule II to the Companies Act, 13.

[iii] On the revalued assct3 the additional charge of depreciation on account of revaluation is withdrawn from revaluation reserve and credited to the retained surplus/deficit in profit and loss.

[iv] Depreciation on assets sold during the year is provided on prorate basis.

III. INTANGIBLEASSETS AND AMORTISATION

a) Intangible Assets are stated at acquisition of cost, net of accumulated amortization and accumulated impairment losses, if any.

b) Intangible assets include Cost of software capitalized is amortized over a period of 5 years.

IV. IMPAIRMENT OF ASSETS

Assessment is done at each Balance heat date as to whether there is any indication that a tangible asset may be impaired. For the purpose of assessing impairment, the smallest identifiable group of asset A at generates cash inflows from continuing use that are largely independent of the cash inflow from other assets or groups of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset/cash, generating unit is made.

Assets whose carrying rally exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is higher of an asset's or cash generating unit's ne* 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 assets and from its disposal at the end of its useful life. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting orchids may no longer exist or may have decreased.

V. BORROWING COST

Borrowing Costs attributable to acquisition aid canal recon of qualifying assets are capitalized as a part of the cost of such assets up to the date when such assets are ready for its intended use.

Other borrowing costs are charged to the Statement of Profit Hnd Loss in the period in which they are incurred.

VI. INVESTMENTS

Investments, which are readily realizable and intended to be; held for not more than one year from the date or which such investments are made, arc classified as current investments. All other investments are classified as long-term investments.

Investments arc recorded at cost on the date o: purchase, which includes acquisition charges such as brokerage, stamp duty, taxes, etc. Current Investments are stated at Lower of cost and net realizable value. Long-term investments are stated at cost after deducting provisions made, if any, for other than temporary diminution in the value.

VII. INVENTORIES

Haw materials, components, stores and spares, and packing material are valued are lower of color net reliable value. However, these items are considered to be realizable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Cost of inventories is computed on a weighted average basis.

Work-in-progress, finished goods and Stock-in-trade art valued at lower of cost or net realizable value. Cost of Finished goods and work-in-progress comprises raw material, direct labor, other direct costs and other related unction overheads up to the stage of bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sales.

VIII. TRANSLATION OF FOREIGN CURRENCY ITEMS

Transaction a in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Expediency monetary assets and liabilities are converted in Indian currency at the rate reviling at the end of the year. Resultant gain or loss is recognized in the Staten profit and loss for the year.

IX. REVENUE RECOGNITION

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

b) Revenue from sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, Sale of goods and services are recorded net of trued discounts, rebates, Excise duty, service Tax but include Sales Tax and Value Added Tax.

c) Revenue from services tire recognized as they are rendered based on agreements / arrangements with the concerned parties and recognized net of Service Tax.

d) Interest Income is recognized on a time proportion ba3is taking into account the amount outstanding and applicable interest rate.

e) Dividend income on investments accounted for when the right to receive the payment is established.

X. PURCHASES & INDIRECT TAXES

a] Purchases are accounted net of excise duty paid but including the VAT/CST. However at th-1 end of year unadjusted VAT against VAT liability on sale is reduced from the Purchase Cost.

b} VAT/ CST Transactions: VAT, CST paid [after taking credit for taxed paid on inputs is directly charged to statement of Profit and Loss.

XI. RETIREMENT AND OTHER EMPLYEE BENEFITS

(a) Defined Contribution Plan

The Company makes defined contribution to Government Employee Provident Fund, which are recognized in the Statement of Profit and Loss un accrual basis. The company has no further obligation beyond its contribution.

(n) Defined Benefit Plan

i) The Company's liabilities under Payment of Gratuity Act are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method. Actuarial gains and lasses are recognized immediately in the Statement of Profit and Loss as income or expenses. Obligation is measured at the present value of estimated future cash flow using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government bonds where the terms of the Government bonds are consistent with the estimated terms of the defined benefit obligation.

ii) Leave Salary: Leave Salary for accumulated compensated absences that are expected to be availed or enchased by eligible employees within 12 months from the end of the year are treated as short term employees benefits, which is provided at the expected cost.

XII. TAXATION

Tax expense for the period, comprising Current tax and Deferred Tax arc included in the determination of 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 India.

Deferred Tax recognized for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets, Deferred tax assets are recognized and carried forward only to the extent that there is are reasonable certainty that sufficient future Taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets on unabsorbed carry forward losses are recognized only upon definite virtual certainty of future taxable income is available and not otherwise.

Deferred Tax assets arid liabilities are measured using the tax rates and tax laws that have been enacted and substantively enacted by the Balance Sheet date. At each Balance Sheet dale, the company re-assesses unrecognized deferred tax assets, if any.

XIII. OPERATING LEASES

Asa Lessee : Leases, where significant portion of risk and reward of ownership are retained by the Lesser, are classified as Operating Leases and lease rentals thereon arc charged to the Statement of Pupil and Loss on a straight-line basis over the lease term.

XIV. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during tho period. The weighted-average number of equity shares outstanding during the period and for all periods presented is adjusted fur events, such as bonus shares,

XV. CONTINGENT LIABILITIES AND PROVISIONS

Provision:-

provision are recognized when there is a present obligation as a result of a. past event and it is probable that an outflow of benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation.

Contingent liabilities:-

Contingent liabilities are disclosed when tiered is a possible obligation arising from, the past events, the existence of which will be confirmed only on 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 portable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

XVI. Cash and Cash Equivalents:

In the Cash flow statement, cash and cash equivalents include cash an hand, demand deposits with bank including short term margin money against bank guaranty issued.


Mar 31, 2014

A) Basis of Accounting

The Company is following accrual basis of accounting as prescribed by Companies (Amendment) Act of 1988 on a ongoing concern basis.

Use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions that may affect the reported amount of assets and liabilities and disclosures relating to contingent liability as at the date of financial statements and the reported amount of income and expenses during the reporting period. Although these estimates are based upon management best knowledge of current events and actions, actual result could differ from these estimates.

b) Revenue Recognition

The revenue comprises of sales, services, interest, and rent.

1, Revenue is recognized to the extent it is probable those economic benefits will flow to the company and that the revenue can be reliably measured.

2. Sales of goods & services include applicable Excise duty, sales tax and service tax respectively.

3. Sales of Traded goods are recognized upon goods being dispatched and the ownership of the goods passes to buyer.

4, Sales of Services and commission are recognized on accrual basis upon the completion of performance as per agreed terms with the buyer.

c) Purchases:

Purchases are accounted including excise duty and unutilized Excise Modvat as at the end of the Financial year is reduced from Raw Material Consumed in the Profit & Loss account.

Purchases are accounted including the VAT/CST, However at the end of year unadjusted VAT against VAT liability on sale is reduced from the Purchase Cost.

d) Excise / VAT/ CST Transactions

Excise duty, VAT, CST paid (after taking credit for taxed paid on inputs) is directly charged to Profit and Loss Account.

e) Fixed Assets

Fixed Assets are stated at cost less Depreciation. The cost of acquisition or construction includes direct expenditure incurred up to the date the asset is put to use. Temporary constructions/alterations are charged off to Profit and Loss Account.

f) Depreciation

Depreciation is charged at the rate provided in Schedule XIV of the Companies Act, 1956 on straight fine method basis.

g) Investment:

Investments are stated at cost.

h) Valuation of inventories

Raw materials and components and unfinished goods are valued at cost. Finished Goods are valued at cost or Market Value, whichever is lower.

i) Employee Benefits

1) Defined benefit plans

i) Gratuity: Gratuity liability for the year has been provided as per actuarial valuation certified by the approved valuer. However, at the earlier year the company has provided for the Gratuity Liabilities based on estimate received form LIC under group gratuity scheme in respect of employees as at 31/03/2013.

ii) Leave Salary: Leave Salary encashment of eligible employees is provided on the credit leave as on the end of the balance sheet date.

2) Defined Contribution plans.

Provident Fund liability contributed by the company is provided and recognized as expenditure on the basis of actual liability accrued and paid to the trust/authority,

j) Foreign Currency transactions:

Transaction in foreign currency for purchase and sales are accounted at the rate prevailing on the date of transaction. The difference arising on the date of actual receipt or payment is accounted as exchange fluctuation profit or loss as the case may be. Year ended balance in foreign currency valued at the exchange rate prevailing on the balance sheet date.

k) Lease Rentals:

Lease Rentals for assets taken on operating lease are recognized as on expenses in Profit and Loss Account over the lease term on accrual basis.

l) Provision for Current fie Deferred Tax

Provision for Current Tax is made after taking into Consideration benefits admissible under the provisions of the Income Tax Act, 1961.

Deferred tax resulting from ''timing difference between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted on balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is reasonably certainty that the assets will be realized in future

m) Borrowing Cost

Borrowing Cost in relation to the acquisition construction of Assets are capitalized as the part of cost of such assets up to date which such assets are ready for intended use. Other Borrowing cost are charge as an expense in the year in which they are incurred.

n) Impairment of Assets

An Asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account. In the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

 
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