Mar 31, 2015
A) Nature Of Security
i) Term Loan from RIICO
The company has availed project terms loan of Rs. 3800.00 lacs from
RIICO i.e. 828.95 lacs against Land and 281.25 lacs swapping of term
loan from Axis Bank & balance Rs. 2689.80 lacs for building and Plant &
Machinery stands. Disbursed Rs.3513.16 Lacs upto 31.03.2013. Secured by
way of equitable mortgage / hypothecation of fixed assets present &
future of the company by pari-passu first charge (in terms of
Intercreditor and Security Sharing Agreement executed with DEG, Germany
on 19.12.2008) & guaranteed by Managing Director and secured by
pari-passu second charge on current assets present & future.
ii) External Commercial Borrowing (ECB) from DEG, Germany
The Company has executed ECB Loan Agreements viz Loan Agreement - I dt.
18.12.2007 for US $ 8 Mn. [FC Expenditure] and other Loan Agreement Â
II dt. 07.07.2008 for US $ 4 Mn. (stands disbursed on 11.02.2009)
[Rupee Expenditure] with M/s. Deutsche Infestations- und
Entwicklungsgesellschaft mbh, Federal Republic of Germany, for capacity
expansion & modernization. The above Loan is secured by first ranking
mortgage on the present and future immovable assets and first ranking
hypothecation on all present and future movable assets (other than
current assets and stocks).
iii) Term Loan from ICICI Bank Ltd.
Secured by hypothecation of specific assets purchased there against and
guaranteed by Managing Director. Secured by an exclusive charge by way
of hypothecation on all movable properties under the Sponsored Research
& Development program of World Bank (SPREAD) under the agreement dated
6th August, 2003.
iv) Working Capital Loans from banks
Secured by hypothecation of stock of finished goods, semi finished
goods raw material, consumable stores and book debts of the company.
These securities rank pari-passu in favour of various banks viz. State
Bank of Travancore, Canara Bank, Central Bank of India, State Bank of
India, DBS Bank & Exim Bank. Secured by second charge by way of
equitable mortgage of fixed assets and guaranteed by Managing Director.
b) Non fund based limits Assets charged with Bank also cover security
for these limits.
II. UNSECURED LOANS
a) Ministry of Science and Technology under the aegis of CSIR, has
approved a Project under 'NMITLI' scheme on 30.03.2008 and had
sanctioned unsecured soft loan of Rs. 1503.55 lacs @ 3% rate of
interest out of which Rs. 1493.35 lacs stands disbursed.
The company has complied with the requirement of accounting standard Â
15 on "Employees Benefits" as issued by ICAI, by making a provision for
the post-retirement benefits (i.e. Gratuity and leave encashment)
taking into consideration the provision of the payment of Gratuity Act,
1972 and the age & other terms and conditions of employment. However,
the actuarial valuation for the same has not been done.
III. CURRENT ASSETS, LOANS AND ADVANCES
i) Basis of quantitative particulars given below under item XIV is as
under;
1) Production figures have been ascertained on the basis of production
report summaries. The opening and closing balances of finished goods
are based on stock records and physically verified inventories. Sales
quantities have been furnished on the basis of sales invoices.
2) The quantities of different classes of raw materials and components
consumed have been derived by posting in a separate ledger, the opening
quantities & purchases and deducting there from the closing stock. The
quantities for different items have not been ascertained from stock
cards. The Company is still to introduce a procedure for correlation of
materials consumed with production.
3) Stock of semi - finished, raw material and finished goods includes
slow moving and non-moving stock of Rs. 1.0 - lacs (1.85 lacs). In the
opinion of the Management, no reduction is considered necessary in the
value of the stocks.
4) Semi - finished goods have been ascertained on the basis of physical
verification.
5) Finished Goods comprise of varied specifications and include a
number of components. In the absence of a scientific system of costing
in vogue, value of closing stock is worked out, as in the past, by
reducing from the selling price, an appropriate margin towards profit &
selling expenses.
6) In the opinion of the Board and to the best of their knowledge and
belief, Value of realization of current assets, loans and advances in
the ordinary course of business would not be less than the amount at
which they are stated in the balance sheet. Balance of personal
accounts are subject to confirmation for the respective parties.
7) The Balances of Sundry Creditors and Sundry Debtors are subject to
confirmation.
8) Materials which were re-shipped to India related to consignment
supplied to CAPSI USA for Navistar Inc, USA left unattended due to
non-payment of duty and other 'charges. There are also losses due to
discernment of OIB Bank USA. The Company Could not arrange funds from
Banks as per Restructuring package to lift these Materials which
subsequently got auctioned or damaged. The Company has suffered huge
Losses to the extent of Rs. 26.54 Crore on this account.
9) Company has incurred huge expenditure in developing frictionless
Clutches with the help of leading Technology institutions of the
Country under the aegis of CSIR. But due to shifting of existing R & D
facility and still construction and other allied works at Bhiwadi and
it is not possible for the Company to re-establish or replicate the old
set-up of Research and product development facilities at Biwadi so
easily seeing the current financial health of the Company as hiring of
Competent professionals, retrieval of data for research Work and to
start each activity pursuant to research & development will be a
onerous task. The Company at present is not in a position to harness
these benefits which might otherwise have been beneficial for the
Company in long run. As such keeping the Current capitalized value of
Research & Development expenditure in the form of intangible assets
does not make any sense and need to be suitably written off . The total
amount comes to Rs. 16.58 Crore
10)The Company has been able to deposit current deducted Provident Fund
Dues/ESI with respect to employees of the Company.
Mar 31, 2014
I. SECURED LOANS
a) Nature Of Security
i) Term Loan from RIICO
The company has availed project terms loan of Rs 3800 00 lacs from
RIICO I e 828 95 lacs against l and 281 25 lacs swapping of term
loan from Axis 3ank & balance Rs. 2689.60 lacs fur building and Plan! S
Machinery stands. Disbursed Rs.3513.16 Lacs upto 31.03.2013. Secured by
way of equitable mortgage / hypothecation of all the fixed assets
present 8 nature of the company by pari-passu first charge (in terms of
Inter creditor and Security Sharing Agreement executed with DEG. Germany
on 19.12.2008).
ii) External Commercial Borrowing (ECB) from DEG, Germany
The Company has executed ECB Loan Agreements viz Loan Agreement -1 date.
18.12.2007 for LS S 8 Month.(FC Expenditure] and other Loan Agreement- II
date. 07.07.2006 for US$4 Mn. (stands soured on 11.02.2009) [Rupee
Expenditure] with M/s. Deutsche Infestations- und
Entwicklungsgosoflschaft mbh. Federal Republic of Germany, for capacity
expansion & modernization. The above Loan is secured by first ranking
mortgage on all the present and future immovable assets and first
ranking hypothecation on all present and future movable assets (other
than current assets and stocks).
iii) Term Loans from Technology Development Board I ICICI Bank Ltd.
Secured by Hypothecation of specific assets purchased there against and
guaranteed by Managing Director. Secured by an exclusive charge by way
of hypothecation on all movable properties under the Sponsored Research
& Development program of World Bank (SPREAD) under the agreement dated
6thAugjst. 20C3.
iv) Term Loans from Religare Finvest Ltd.
The Company has been sanctioned loan of Rs. 350. lacs (Out of which Rs.
50 Lacs is Unsecured) from Religare Finvest Limited for purchase of
Plant & Machinery out of which only Rs. 276.57 lacs was disbursed. This
loan is secured by hypothecation of specific assets purchased out of
the loan only.
v) Working Capital Loans from banks
Secured by hypothecation of stock of finished goods, semi fin shed
goods raw material, consumable stores and book debts of the company.
These securities rank pari-passu in favor of various banks viz. State
Bank of Travancore, Canara Bank, Central Bank of India. State Bank of
India. DBS Bank & Exim Bank. Further. secured by second charge by way
of equitable mortgage affixed assets Situated at Faridabad.
b) Non fund based limits
Assets charged with Bank also cover security for these limits.
c) During the year under report. Company's Rank account were
restructured and additional Working Capital loan of Rs.16.10 Crore was
sanctioned by State Bank of Travancore. State Bank of India arid Canara
Bank. DBS bank. Central Bank of India and Exim Bank didn't participate
in the Restructuring process as finalised by State Bank of Travancore,
lead Bark and State Bank of Indio 2nd Lead Bank. Additional Central
Security was also offered by the Promoters to secure these Limits made
available to the Company pursuant to The Sanction of the Restructuring
scheme. But due to non-disbursement of the due amount, banks disbursed
Rs. 2.34 Crore to the Company by the Bankers. Company couldn't execute
the orders in time resulting in more losses/defaults in payments.
II. UNSECURED LOANS
a) Ministry of Science and Technology under the aegis of CSIR, has
approved a Project under 'NMITLI' scheme on 30.03.2008 and had
sanctioned unsecured soft loan of Rs. 1503.55 lacs @ 3% rate of
interest out of which Rs. 1493.35 lacs stands disbursed.
b) I end ng from LTO Mutual Fund amounting to Rs 21 90 Crores. secured
by way of issuance of 217 No.s Unsecured Redeemable Non- Convert able
debentures of Rs. 10 Lacs each. This was pronounced surplus on
objective. being attained front internal accruals and other sources. In
order to save the interest cost to profitability, lending was assigned,
who took over the said debt and indemnified repayment along with
interest accruing.
III. RE-LOCATION PROGRAMME
The company has acquired _ease Hold Industrial Plot measuring 50,300
sq.mt from Rajasthan State industrial Development & Investment
Corporation Ltd. (RIICO), Jaipur vide Plot No. 3P2 - 173 & 174, at
Industrial Area Kahrani (Bhiwadi Extn.) Dist. Alwar (Rajasthan) for
relocation of its existing manufacturing unit. The Plant has been made
operational from November. 2012.
Mar 31, 2013
(I). ACCOUNTING CONCEPTS:
The amount are prepared on historical cost; corner, en a going
concern basis in accordance with the general y accepted accounting
principles and accenting standards applicable in India, and conform to
the statutory requirements and other relevant provision often Indian
Companies Act, 1956. read with The Companies (Accounting Standard)
Rules, 2006, except where otherwise stated.
(I I), FIXE D AS S ETS AN D DEPRE CIATIO N
a} Fixed Assets are stated at their original cost {net of MOD VAT where
applicable) including fright, nixies, customs and other incidental
expenses relating to acquisition and installation. Interest and other
finance charges paid on loans turn the acquisition of fixed assets are
apportioned to the cost of fixed assets till they are "ready fur use.
b) Expenditure incurred during the period of consumption is carried
forward as capital work-in-progress, and on completion the mats are nil
neater! to the respective fixed assets.
c) For New Projects, all dent expenses and direct overheads
(excluding services provided by employee''s regular payroll} are
capitalized.
d) Depreciation has been provided on straight-line method at the rates
and in the manner specified under Schedule XIV of that Companies Act.
1356. except for the following:
i) On assets added up to 30th June 1987 on the basis of rates derived
from income tax rules at the time of acquisition
ii) On assets added after 30th June, that at the rates given (tor
double shifts) in Schedule XIV to the Timpanist Act:,
1356. It is calculated on prorate basis on additions during that year.
iii). Assets costing up to Rs.5000 are fully depreciated in the year
of purchase.
iv). Intangible assets are written off over a period of 10 years.
(III). VALUATION OF INVENTORIES
Inventories are valued at cost: except for finished goods and scrap.
Finished goods are valued at lower of cost or net realizable value and
scraps are valued at etiolated realizable value. Raw materials and
consumables are valued by excluding recoverable taxes and duties. Cost
is determined using we shed average method. Cost of in house
manufactured Raw material is taken at standard rate.
(IV). EXCISE DUTY
Excise Duty in respect of goods manufactured by the Company is
accounted on accrual bas s.
(V). EMPLOYEE BENEFITS
In the financial year ended March 31st 200E, the Company has adopted
Accounting Standard 15 (Revised 2QD5) issued by Institute of Chartered
Accountants of India (ICAI) en ''Accounting for Retirement Benefits in
Financial Statements of Employers1. Accordingly the Company has
provided for liability on accent of all following employees benefits
available to the employees in accordance with the applicable rules,
regulations, laws are employee benefit policy of the Company, a). The
company as. Merest of a Provident Fund Scheme under the Employees
Provident Fund and Miscellaneous Provisions Act.
1952. This is a defined contribution scheme and that contributions are
charged to the Profit &. Loss Account of that year when that
contributions to the government funds are due. b). Gratuity liability
is defend benefit Date ligations and Provided for on the Das is at an
actuarial valuation as per projected unit credit:
method, made at the end of each financial year. The difference between
the actuarial valuation of the gratuity liability of the employees at
the year end and the balance of provisioning made is provided for as
liability in the books.
c). Employees are entitled for leave encashment which are provided for
on the basis of actuarial valuations.
(VI). MISCELLANEOUS EXPENDITURE
Product development and (raining expenditure/Brand development father
miscellaneous expenditure are amortized over a period of six years'' five
years respectively.
(VII) REVENUE RECOGNITION
Sales arc accounted for inclusive of excise duty and exclusive of sales
tax.
b. In respect of exports made under Duty Entitlement Pass Book Scheme
(DEPBI, the benefit is accounted for on receipt basis.
this is subject to realization to export dues, tiling and acceptance of
claims auditor transfer of license tar consideration. c) Doubtful
debts & doubtful advance are recoverable or the settlement of pending
warranties aid settlement clothe-issues in the coming years.
(VIII).BORROWING COST
Borrowing Costa that are directly attributable to the acquisition,
construction or production of qualifying assets are capsized till
the month h which the asset is ready to use as part of the cost of that
asset Interest on working capital is chafed to revenue accoun.1,
(IX).LEASES
Lands RS to Moral assents whom the Company assumes substantially all the
honest and risks crowners are classified as finance leases.
Finance leases are capitalized at to fiesta mated present value of the
underlying lease payees. Each lease payment is allocated between the
liability and finance charges so as to achieve a. constant rate on the
finance balance outstanding. The corresponding rental obligations, net
of finance chairman; arc included in payables. The interest clement of
the finance charge in charged to the Profit and Loss Account over the
lease period.
Loan rental s in respect of assets taken on "Operating Lease" are
charged to the Profit and Loss Account on straight fine basis over tie
lease term,
(X). WARRANTY
Provision for warranty is mass on trend determined by that Company, as
parochial evaluation.
(XI). RESEARCH AND DEVELOPMENT
Revenue expenditure R&C is taxed after as expenses in the year in
which it is incurred under the respective rapture heads on account.
Expenditure results in creation on capital assets were taken to fixed
assets and depreciation has ceer provided on such attest over ties
estimated useful as determined by the management. Capital expenditure
on scientific research product under development is taker as management
(including Patents. Trade Marks, Brands Developments, Specialized
software, Technical know-how. etc) sublevel to amortization in future.
(XII). FOREIGN CURRENCY TRANSACTIONS
Transactions dominated in foreign currency arc recorded at the
exchange rates prevailing on the dale of ".therefore. Exchange
difference arising on foreign exchange ''transactions settled during .he
you''re recognized in the Profit and Loss Account of the year that
exchange referent- of related to acquisition affixed assets, fame a
country outside India are adjusted in the carrying amount of the
related fixed assets.
Monetary assets and liabilities in foreign currency art: liaised al
the year end at the destiny exchange late and the lealer exchange
differences arc recognized in the Profit and 0SS Account. Non monetary
foreign agency items arc carried at cost on the- :rarefaction date. The
premium or discount on forward exchange contracts is amortized as
income or expense ever the life of the cortical.
(XIII). ACCOUNTING FOR TAXES
a), Provision for current tax is recognized based on tie tax payable
for the year under the Income Tax Act. 1951.
b}. Deferred tax on timing differences between taxable income and
accounting income is accounted for. using the tax rates add the tax
laws enacted or substantially enacted as on the balance sheet data.
Deferred tax assets, other than on unabsorbed tax depreciation and
Un absolved tax losses, are recognized only to the extent that there is
a reasonable certainty of their realization.
Deferred tax assets on unabsorbed tax depreciation and unabsorbed tax.
losses are recognized only to the extent that there is virtual
certainty of their realization supported by convincing evidence. c).
Minimum Alternate Tax is paid in accordance with the tax laws, which
give rise to future economic benefits in the form of a distrust of
future nice lax Inability, is considered as an asset when''ll is
probable that that future economic benefit associated with it will flow
to tie company and the asset can be measured reliably.
(XIV). PROVISIONS
The company makes a provision where there is a present obligator as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made,
(XV). EARNING PER SHARE
Basic earnings per share is calculated by dividing :he net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period, or the
purpose o'' calculating diluted earnings per share the ne: profit or
loss for the period attributable to equity shareholders and weighted
average number of equity shares nil. [standing during the period are
adjusted for the effect of all d outlive potential equity shares.
[XVI). SEGMENT REPORTING
Tic accounting policy adoptee for Significant-. Reporting is in line with
the accounting policy of the Company with the two lowing additional
policy for Segment Re porting -
Revenue and expenses have been identified to segments on the basis of
their relationship to the pointing activates of the segment. Revenue
and expenses, which relate to the enterprise as a whole and are no:
allocable to the segments on a reasonable basis, have been included
under "Unallocated Expenses. Inter Segment transfers arc at cost.
Mar 31, 2012
(I). ACCOUNTING CONCEPTS:
The accounts are prepared on historical cost convention, on a going
concern basis in accordance with the generally accepted accounting
principles and accounting standards applicable in India, and conform to
the statutory requirements and other relevant provision of the Indian
Companies Act, 1956, read with The Companies (Accounting Standard)
Rules, 2006, except where otherwise stated.
(II). FIXED ASSETS AND DEPRECIATION
a) Fixed Assets are stated at their original cost (net of MODVAT where
applicable) including freight, duties, customs and other incidental
expenses relating to acquisition and installation. Interest and other
finance charges paid on loans for the acquisition of fixed assets are
apportioned to the cost of fixed assets till they are ready for use.
b) Expenditure incurred during the period of construction is carried
forward as capital work-in-progress, and on completion the costs are
allocated to the respective fixed assets.
c) For New Projects, all direct expenses and direct overheads
(excluding services provided by employee's regular payroll) are
capitalized.
d) Depreciation has been provided on straight-line method at the rates
and in the manner specified under Schedule XIV of the Companies Act,
1956, except for the following:
i) On assets added up to 30th June 1987 on the basis of rates derived
from income tax rules at the time of acquisition
ii) On assets added after 30th June, 1987 at the rates given (for
double shifts) in Schedule XIV of the Companies Act, 1956. It is
calculated on prorata basis on additions during the year.
iii). Assets costing up to Rs.5000 are fully depreciated in the year
of purchase.
iv). Intangible assets are written off over a period of 10 years.
(III). VALUATION OF INVENTORIES
Inventories are valued at cost except for finished goods and scrap.
Finished goods are valued at lower of cost or net realizable value and
scraps are valued at estimated realizable value. Raw materials and
consumables are valued by excluding recoverable taxes and duties. Cost
is determined using weighted average method. Cost of in house
manufactured Raw material is taken at standard rate.
(IV). EXCISE DUTY
Excise Duty in respect of goods manufactured by the Company is
accounted on accrual basis.
(V). EMPLOYEE BENEFITS
In the financial year ended March 31st 2008, the Company has adopted
Accounting Standard 15 (Revised 2005) issued by Institute of Chartered
Accountants of India (ICAI) on 'Accounting for Retirement Benefits in
Financial Statements of Employers'. Accordingly the Company has
provided for liability on account of all following employees benefits
available to the employees in accordance with the applicable rules,
regulations, laws and employee benefit policy of the Company.
a). The company is a member of a Provident Fund Scheme under the
Employees Provident Fund and Miscellaneous Provisions Act, 1952. This
is a defined contribution scheme and the contributions are charged to
the Profit & Loss Account of the year when the contributions to the
government funds are due.
b). Gratuity liability is defined benefit obligations and provided for
on the basis of an actuarial valuation as per projected unit credit
method, made at the end of each financial year. The difference between
the actuarial valuation of the gratuity liability of the employees at
the year end and the balance of provisioning made is provided for as
liability in the books.
c). Employees are entitled for leave encashment which are provided for
on the basis of actuarial valuations.
(VI). MISCELLANEOUS EXPENDITURE
Product development and training expenditure/Brand development /other
miscellaneous expenditure are amortized over a period of six years/five
years respectively.
(VII). REVENUE RECOGNITION
a). Sales are accounted for inclusive of excise duty and exclusive of
sales tax.
b). In respect of exports made under Duty Entitlement Pass Book Scheme
(DEPB), the benefit is accounted for on receipt basis. This is subject
to realization of export dues, filing and acceptance of claims and/or
transfer of license for consideration.
c) Doubtful debts & doubtful advance are recoverable on the settlement
of pending warranties and settlement of other issues in the coming
years.
(VIII). BORROWING COST
Borrowing Costs that are directly attributable to the acquisition,
construction or production of qualifying assets are capitalized till
the month in which the asset is ready to use as part of the cost of
that asset. Interest on working capital is charged to revenue account.
(IX).LEASES
Leases of fixed assets where the Company assumes substantially all the
benefits and risks of ownership are classified as finance leases.
Finance leases are capitalized at the estimated present value of the
underlying lease payments. Each lease payment is allocated between the
liability and finance charges so as to achieve a constant rate on the
finance balance outstanding. The corresponding rental obligations, net
of finance charges, are included in payables. The interest element of
the finance charge is charged to the Profit and Loss Account over the
lease period.
Lease rentals in respect of assets taken on "Operating Lease" are
charged to the Profit and Loss Account on straight line basis over the
lease term.
(X). WARRANTY
Provision for warranty is made on trend determined by the Company, as
per technical evaluation.
(XI). RESEARCH AND DEVELOPMENT
Revenue expenditure R&D is charged after as expenses in the year in
which it is incurred under the respective nature heads on account.
Expenditure results in creation on capital assets are taken to fixed
assets and depreciation has been provided on such assets over the
estimated useful as determined by the management. Capital expenditure
on scientific research product under development is taken as intangible
assets (including Patents, Trade Marks, Brands Developments,
Specialized software, Technical know-how, etc) subject to amortization
in future.
(XII). FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign currency are recorded at the
exchange rates prevailing on the date of the transaction. Exchange
difference arising on foreign exchange transactions settled during the
year are recognized in the Profit and Loss Account of the year except
that exchange difference related to acquisition of fixed assets from a
country outside India are adjusted in the carrying amount of the
related fixed assets.
Monetary assets and liabilities in foreign currency are translated at
the year end at the closing exchange rate and the resultant exchange
differences are recognized in the Profit and Loss Account. Non monetary
foreign currency items are carried at cost on the transaction date.
The premium or discount on forward exchange contracts is amortized as
income or expense over the life of the contract.
(XIII). ACCOUNTING FOR TAXES
a). Provision for current tax is recognized based on the tax payable
for the year under the Income Tax Act, 1961.
b). Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets, other than on unabsorbed tax depreciation and
unabsorbed tax losses, are recognized only to the extent that there is
a reasonable certainty of their realization. Deferred tax assets on
unabsorbed tax depreciation and unabsorbed tax losses are recognized
only to the extent that there is virtual certainty of their realization
supported by convincing evidence.
c). Minimum Alternate Tax is paid in accordance with the tax laws,
which give rise to future economic benefits in the form of adjustment
of future income tax liability, is considered as an asset when it is
probable that the future economic benefit associated with it will flow
to the company and the asset can be measured reliably.
(XIV). PROVISIONS
The company makes a provision where there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made.
(XV). EARNING PER SHARE
Basic earning 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.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
are adjusted for the effect of all dilutive potential equity shares.
(XVI). SEGMENT REPORTING
The accounting policy adopted for Segment Reporting is in line with the
accounting policy of the Company with the following additional policy
for Segment Reporting:-
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 enterprise as a whole and are not
allocable to the segments on a reasonable basis, have been included
under "Unallocated Expenses. Inter Segment transfers are at cost.
Mar 31, 2010
1. ACCOUNTING CONCEPTS:
The accounts are prepared on historical cost convention, on a going
concern basis in accordance with the generally accepted accounting
principles and accounting standards applicable in India, and conform to
the statutory requirements and other relevant provision of the Indian
Companies Act, 1956, read with The Companies (Accounting Standard)
Rules, 2006, except where otherwise stated.
2. FIXED ASSETS AND DEPRECIATION
a) Fixed Assets are stated at their original cost (net of MODVAT where
applicable) including freight, duties, customs and other incidental
expenses relating to acquisition and installation. Interest and other
finance charges paid on loans for the acquisition of fixed assets are
apportioned to the cost of fixed assets till they are ready for use.
b) Expenditure incurred during the period of construction is carried
forward as capital work-in-progress, and on completion the costs are
allocated to the respective fixed assets.
c) Foreign exchange fluctuation on payment/restatement of long term
liabilities related to fixed assets are charged to the profit and loss
Account.
d) Depreciation has been provided on straight-line method at the rates
and in the manner specified under Schedule XIV of the Companies Act,
1956, except for the following:
i) Oil assets added up to 30th June 1987 on the basis of rates derived
from income tax rules at the time of acquisition
ii) On assets added after 30th June, 1987 at the rates given (for
double shifts) in Schedule XIV of the Companies Act, 1956. It is
calculated on pro-rata basis on additions during the year.
iii) Assets costing up to Rs.5000 are fully depreciated in the year of
purchase.
iv) Intangible assets are written off over a period of 10 years.
3. VALUATION OF INVENTORIES
Inventories are valued at cost except for finished goods and scrap.
Finished goods are valued at lower of cost or net realizable value and
scraps are valued at estimated realizable value. Raw materials and
consumables are valued by excluding recoverable taxes and duties. Cost
is determined using weighted average method. Cost of in house
manufactured Raw material is taken at standard rate.
4. EXCISE DUTY
Excise Duty in respect of goods manufactured by the Company is
accounted on accrual basis.
5. EMPLOYEE BENEFITS
In the financial year ended March 31st 2008, the Company has adopted
Accounting Standard 15 (Revised 2005) issued by Institute of Chartered
Accountants of India (ICAI) on Accounting for Retirement Benefits in
Financial Statements of Employers. Accordingly the Company has
provided for liability on account of all following employees benefits
available to the employees in accordance with the applicable rules,
regulations, laws and employee benefit policy of the Company.
a). The company is a member of a Provident Fund Scheme under the
Employees Provident Fund and Miscellaneous Provisions Act, 1952. This
is a defined contribution scheme and the contributions are charged to
the Profit & Loss Account of the year when the contributions to the
government funds are due.
b). Gratuity liability is defined benefit obligations and provided for
on the basis of an actuarial valuation as per projected unit credit
method, made at the end of each financial year. The difference between
the actuarial valuation of the gratuity liability of the employees at
the year end and the balance of provisioning made is provided for as
liability in the books.
c). Employees are entitled for leave encashment which are provided for
on the basis of actuarial valuations.
6. MISCELLANEOUS EXPENDITURE
Product development and training expenditure/Brand development /other
miscellaneous expenditure are amortized over a period of six years/five
years respectively.
7. REVENUE RECOGNITION
a). Sales are accounted for inclusive of excise duty and exclusive of
sales tax.
b). In respect of exports made under Duty Entitlement Pass Book Scheme
(DEPB), the benefit is accounted for on receipt basis. This is subject
to realization of export dues, filing and acceptance of claims and/or
transfer of license for consideration.
c). Doubtful debts & doubtful advance are recoverable on the settlement
of pending warranties and settlement of other issues in the coming
years.
8. BORROWING COST
Borrowing Costs that are directly attributable to the acquisition,
construction or production of qualifying assets are capitalized till
the month in which the asset is ready to use as part of the cost of
that asset. Interest on working capital is charged to revenue account.
9. LEASES
Leases of fixed assets where the Company assumes substantially all the
benefits and risks of ownership are classified as finance leases.
Finance leases are capitalized at the estimated present value of the
underlying lease payments. Each lease payment is allocated between the
liability and finance charges so as to achieve a constant rate on the
finance balance outstanding. The corresponding rental obligations, net
of finance charges, are included in payables. The interest element of
the finance charge is charged to the Profit and Loss Account over the
lease period.
Lease rentals in respect of assets taken on "Operating Lease" are
charged to the Profit and Loss Account on straight line basis over the
lease term.
10. WARRANTY
Provision for warranty is made on trend determined by the Company, as
per technical evaluation.
11. RESEARCH AND DEVELOPMENT
Revenue expenditure R&D is charged after as expenses in the year in
which it is incurred under the respective nature heads on account.
Expenditure results in creation on capital assets are taken to fixed
assets and depreciation has been provided on such assets over the
estimated useful as determined by the management. Capital expenditure
on scientific research product under development is taken as intangible
assets ( including Patents, Trade Marks, Brands Developments,
Specialized software, Technical know- how, etc) subject to amortization
in future.
12. FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign currency are recorded at the
exchange rates prevailing on the date of the transaction. Exchange
difference arising on foreign exchange transactions settled during the
year are recognized in the Profit and Loss Account of the year except
that exchange difference related to acquisition of fixed assets from a
country outside India are adjusted in the carrying amount of the
related fixed assets.
Monetary assets and liabilities in foreign currency are translated at
the year end at the closing exchange rate and the resultant exchange
differences are recognized in the Profit and Loss Account. Non monetary
foreign currency items are carried at cost on the transaction date.
The premium or discount on forward exchange contracts is amortized as
income or expense over the life of the contract.
13. ACCOUNTING FOR TAXES
a). Provision for current tax is recognized based on the tax payable
for the year under the Income Tax Act, 1961.
b). Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets, other than on unabsorbed tax depreciation and
unabsorbed tax losses, are recognized only to the extent that there is
a reasonable certainty of their realization. Deferred tax assets on
unabsorbed tax depreciation and unabsorbed tax losses are recognized
only to the extent that there is virtual certainty of their realization
supported by convincing evidence.
c). Minimum Alternate Tax is paid in accordance with the tax laws,
which give rise to future economic benefits in the form of adjustment
of future income tax liability, is considered as an asset when it is
probable that the future economic benefit associated with it will flow
to the company and the asset can be measured reliably.
14. PROVISIONS
The company makes a provision where there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made.
15. EARNING PER SHARE
Basic earning 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.
16. SEGMENT REPORTING
The accounting policy adopted for Segment Reporting is in line with the
accounting policy of the Company with the following additional policy
for Segment Reporting:-
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 enterprise as a whole and are not
allocable to the segments on a reasonable basis, have been included
under "Unallocated Expenses. Inter Segment transfers are at cost.
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