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Accounting Policies of Dalmia Refractories Ltd. Company

Mar 31, 2015

A. Basis of preparation of Financial Statements

The financial statements are prepared under the historical cost convention, on going concern basis, in terms of the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 in compliance of Section 133 read with Rule (7) of the Companies (Accounts) Rules, 2014 of the Companies Act, 2013. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realisation in respect of incomes. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India.

b. Use of Estimates

The preparation of financial statements requires estimates and assumptions that affect the reported amounts of income and expenses for the period, the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as on the date of financial statements and the results of operations during the reporting period. Although these estimates are based upon managements based knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognised in the period in which the results are known/materialized.

c. Fixed Assets and Depreciation

i) Fixed Assets are stated at cost of acquisition or construction and include interest on specific borrowings for new projects upto commissioning.

ii) Leasehold Land is being amortised over the lease period.

iii) Depreciation is provided on straight line method for the fixed assets at Dalmiapuram, Khambalia, and Katni Works considering the useful life prescribed in schedule II of the Companies Act, 2013 and written down value method for the fixed assets at New Delhi Office considering the useful life prescribed in schedule II of the Companies Act, 2013.

iv) Certain Plant & Machinery has been considered as continuous process plant on the basis of technical assessment and depreciation on the same is provided accordingly.

d. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

Previously recognised impairment losses are reversed to the extent the recoverable amount exceeds the carrying amount.

e. Intangible Assets

Capital Expenditure on purchase and development of identifiable non-monetary assets without physical substance is recognised as Intangible Assets in accordance with principles given under AS-26 Intangible Assets. These are grouped and separately shown under the schedule of Fixed Assets. These are amortized over their respective expected useful lives not exceeding 10 years.

f. Valuation of Inventories

(a) Inventories are valued at lower of historical cost or net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. Stock of Non Plant Grade Bauxite at Mines are valued at cost. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, when there has been a decline in the price of materials and it is estimated that the cost of the finished products will exceed net realizable value, the materials are written down to net realizable value. In such circumstances, the replacement cost of the material may be the best available measure of their net realizable value.

(b) Historical cost is determined on the basis of weighted average method.

(c) Excise duty is included in the valuation of finished goods and by-product inventory.

g. Investments

Long Term Investments are stated at cost. Provision for diminution in the value is made in accordance with AS-13 Accounting for Investments if the decline/diminution is other than temporary. Current Investments are stated at lower of cost or market/fair value.

h. Revenue Recognition

(a) Revenue from operations is recognised in respect of export sales on the basis of shipment of goods to customer and in respect of domestic sales on dispatch from factory. Quality rebates, claims and other discounts are disclosed separately.

(b) Domestic Sales includes excise duty. However, excise duty on sales is reduced from gross turnover for disclosing net turnover.

(c) Inter-divisional sales is reduced from gross turnover in deriving net turnover.

i. Other Income

a) Claims receivable

The quantum of accruals in respect of claims receivable such as from Railways, Insurance, Electricity, Customs Excise and the like are accounted for on receipt basis.

b) Income from Investment

Income from Investment is accounted for on accrual basis when the right to receive income is established.

j. Foreign Currency Conversion/Transaction

Foreign currency transactions are recorded on initial recognition atthe rate prevailing on the date of transaction. Where export bills are negotiated with the bank, the export sales are recorded at the rate on the date of negotiation as the said rate approximates the actual rate on the date of the transaction.

Exchange differences arising on settlement of monetary items or on reporting such monetary items of the Company at rates different from those at which they were initially recorded during the year or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

The premium or discount arising at the inception of forward exchange contract is amortised as an expense or income over the life of the contract.

k. Employee Benefits

(i) Defined Contribution Plan:

Employee benefits in the form of the Company's contribution to provident fund, pension scheme, superannuation fund and ESI are considered as defined contribution plan and charged to statement of profit and loss account of the year when the contribution to the respective funds are due.

(ii) Defined Benefit Plan:

Retirement benefits in the form of gratuity and leave encashment are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation as at the date of the balance sheet using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognised on a straight line basis over the average period until the amended benefits become vested. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(iii) The expenditure on voluntary retirement schemes is charged to statement of profit and loss account in the year in which it is incurred.

l. Segment Reporting

Segmental accounting policies are in line with the accounting policies of the company. However, the following specific accounting policies have been followed for segment reporting:

(a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter-segment revenue.

(b) Expenses that are directly identifiable with/allocable to segments are considered for determining the segment results. The expenses/incomes, not allocable to any segments, are included under "Unallocable items/others".

(c) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities not allocable to any segment.

m. Taxes on Income

(a) Provision for Current Tax is made in accordance with the provisions of Income Tax Act, 1961.

(b) In accordance with the Accounting Standard AS-22 'Accounting for Taxes on Income', Deferred Tax Liability/Asset arising from timing differences between book and income tax profits is accounted for at the tax rates which are enacted or substantively enacted at the Balance Sheet date to the extent these differences are expected to crystallize in later years. However, Deferred Tax Assets are recognised only if there is a reasonable/virtual certainty of realisation thereof.

n. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable. Contingent liabilities are shown by way of Notes to Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable. Contingent assets neither recognised in the Accounts nor disclosed in the notes to accounts.

o. Leases

Where the Company is lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss account on a straight-line basis over the lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in the statement of Profit and Loss Account on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Profit and Loss Account. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in statement of Profit and Loss. Account

p. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as a part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

q. Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and cash/cheques in hand and short term deposits with Banks less shortterm advances from Banks.

r. Government Grants and Subsidies

Government grants of the nature of promoters' contribution are credited to capital reserve and treated as a part of the shareholders' fund. Revenue subsidy has been credited in the statement of Profit & Loss Account on receipt basis.

The Company has taken on lease a refractory unit at Wankaner effective from 01.04.2011 for a period of 3 years at a lease rent of Rs.17.50 lacs per quarter with the right of purchasing the unit within a period of 3 years at Rs.450 lacs. The total lease rent charged to the Statement of Profit & Loss A/c for the year is Rs.17.50 lacs. The Company has discontinued the operations and vacated the premises on 30th June, 2013.


Mar 31, 2014

A. Basis of preparation of Financial Statements

The financial statements are prepared under the historical cost convention, ongoing concern basis, in terms of the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 and in compliance with Section 211(3Q of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realisation in respect of incomes. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India.

The Company has prepared its financial statements in accordance with Schedule VI as inserted by Notification-S.O. 4471 dated 28.02.2011 (As amended by Notification No. F.NO. 2/6/2008-CL-V, Dated 30.03.2011).

b. Use of Estimates

The preparation of financial statements requires estimates and assumptions that affect the reported amounts of income and expenses for the period, the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as on the date of financial statements. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialized.

c. Fixed As sets and Depreciation

i) Fixed Assets are stated at cost of acquisition or construction and include interest on specific borrowings for new projects upto commissioning.

ii) Leasehold Land is being amortised over the lease period.

iii) Depreciation is provided on straight line method for the fixed assets at Dalmiapuram, Khambalia, Wankaner and Katni Works and written down value method for the fixed assets at New Delhi Office atthe rates specified in ScheduleXIVto the Companies Act, 1956.

d. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to theirpresentvalueatthe weighted averagecost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

Previously recognised impairment losses are reversed to the extent the recoverable amount exceeds the carrying amount.

e. IntangibleAssets

Capital Expenditure on purchase and development of identifiable non-monetary assets without physical substance is recognised as Intangible Assets in accordance with principles given underAS- 26 Intangible Assets. These are grouped and separately shown under the schedule of Fixed Assets. These are amortized over their respective expected useful lives not exceeding lOyears.

f. Valuation of Inventories

(a) Inventories are valued at lower of historical cost or net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, when there has been a decline in the price of materials and it is estimated that the cost of the finished products will exceed net realizable value, the materials are written down to net realizable value. In such circumstances, the replacement cost of the material may be the best available measure of their net realizable value.

(b) Historical cost is determined on the basis of weighted average method.

Excise duty is included in the valuation of finished goods and by-product inventory.

g. Investments

Long Term Investments are stated at cost. Provision for diminution in the value is made in accordance with AS-13 Accounting for Investments if the decline/diminution is other than temporary. Current Investments are stated at lower of cost or market/fair value.

h. Revenue Recognition

(a) Revenue from operations is recognised in respect of export sales on the basis of shipment of goods to customer and in respect of domestic sales on dispatch from factory. Quality rebates, claims and other discounts are disclosed separately.

(b) Domestic Sales includes excise duty. However, excise duty on sales is reduced from gross turnoverfordisclosingnetturnover.

(c) Inter-divisional sales is reduced from gross turnover in deriving net turnover.

(d) Processing charges is accounted for, on the basis of certified production.

i. Other Income

a) Claims receivable

The quantum of accruals in respect of claims receivable such as from Railways, Insurance, Electricity, Customs Excise and the like are accounted for on receipt basis.

b) Income from Investment

Income from Investment is accounted for on accrual basis when the right to receive income is established.

j. Foreign Currency Conversion/Transaction

Foreign currency transactions are recorded on initial recognition at the rate prevailing on the date of transaction. Where export bills are negotiated with the bank, the export sales are recorded at the rate on the date of negotiation as the said rate approximates the actual rate on the date of the transaction.

Exchange differences arising on settlement of monetary items or on reporting such monetary items of the Company at rates different from those at which they were initially recorded during the year or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

The premium or discount arising at the inception of forward exchange contract is amortised as an expense or income over the life of the contract.

k. Employee Benefits

(i) Defined Contribution Plan:

Employee benefits in the form of the Company''s contribution to provident fund, pension scheme, superannuation fund and ESI are considered as defined contribution plan and charged to statement of profit and loss account of the year when the contribution to the respective funds are due.

(ii) Defined Benefit Plan:

Retirement benefits in the form of gratuity and leave encashment are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation as at the date of the balance sheet using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separatelyto build up the final obligation. Past services are recognised on a straight line basis over the average period until the amended benefits become vested. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(iii) The expenditure on voluntary retirement schemes is charged to statement of profit and loss accountintheyearin which it is incurred.

I. Segment Reporting

Segmental accounting policies are in line with the accounting policies of the company. However, the following specific accounting policies have been followed for segment reporting:

(a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter-segment revenue.

(b) Expenses that are directly identifiable with/ allocable to segments are considered for determining the segment results. The expenses/incomes, not allocable to any segments, are included under "Unallocable items/others".

(c) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable assetsand liabilities represent the assets and liabilities not allocable to any segment.

m. Taxes on Income

(a) Provision for Current Tax is made in accordance with the provisions of Income Tax Act,1961.

(b) In accordance with the Accounting Standard AS-22 ''Accounting for Taxes on Income'', Deferred Tax Liability/Asset arising from timing differences between book and income tax profits is accounted for at the tax rates which are enacted or substantively enacted at the Balance Sheet date to the extent these differences are expected to crystallize in lateryears. However, Deferred Tax Assets are recognised only if there is a reasonable/virtual certainty of realisation thereof.

n. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable. Contingent liabilities are shown by way of Notes to Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable. Contingent assets neither recognised in the Accounts nor disclosed in the notes to accounts.

o. Leases

Where the Company is lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss on a straight-line basis overthe lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in the statement of Profit and Loss Account on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Profit and Loss Account. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in statement of Profit and Loss. Account

p. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an assets that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as a part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

q. Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and cash/cheques in hand and short term deposits with Banks less short term advances from Banks.

r. Government Grants and Subsidies

Government grants of the nature of promoters'' contribution are credited to capital reserve and treated as a part of the shareholders'' fund. Revenue subsidy has been credited in the statement of Profit & Loss Account on receipt basis.

a) Terms/rights attached to equity shares. The Company has only one class of equity shares having parvalueofRs.10/-per share. Each holderof equity share is entitled to one vote pershare. In the event of liquidation of the Company the holders of equity shares will be entitled to receive assets of the Company. The distribution will be in proportion the number of equity shares held by the shareholders.

During the year ended 31* March, 2014 the amount of per share dividend recognize as distribution to equity shareholders was Rs.1.00 (previous year Rs.1.50). The Company declares Dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

b) Aggregate number of shares issued during the period of five years immediately preceding the reporting date.

During the financial year 2010-11 the Board of Directors have exercised the call option in respect of detachable warrants as attached with 6% NCDs as per the terms of issue and called upon all the existing warrant holders to submit their applications for conversion of the warrants held by them into equity shares of the Company. Warrant holders holding 23,52,084 warrants exercised the options and consequently the company allotted 23,52,084 equity shares of Rs.10 each fully paid up. The funds have been utilized for long term working capital and general corporate purposes as defined intheLetterof Offer.

1) Debentures

i) 6% Non Convertible Debentures to be redeemed at the face value of Rs.10 each at the end of seven years or earlier as decided by the Board from the date of issue i.e. 14.08.2009.

ii) 6% Non Convertible Debentures are Secured by Hypothecation and Pari Passu charge on Company''s moveable and fixed assets at its Dalmiapuram Unit. 2) Terms Loans

i) Loans of Rs.148.00 lacs (Previous Year Rs.390.50 lacs) as shown in long term borrowings and current maturities of long term debts in Note-10 are secured by equitable mortgage of Factory Land and Building at Dalmiapuram, Khambalia and Katni Units of the Company. In addition to that secured by first charge over moveable fixed assets and hypothecation of Stocks and other current assets as collateral extension.


Mar 31, 2013

A. Basis of preparation of Financial Statements

The financial statements are prepared under the historical cost convention, on going concern basis, in terms of the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 and in compliance with Section 211 (3C) of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realisation in respect of incomes. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India.

The Company has prepared its financial statements in accordance with Schedule VI as inserted by Notification-S.O. 4471 dated 28.02.2011 (As amended by Notification No. F.NO. 2/6/2008-CL-V, Dated 30.03.2011).

b. Use of Estimates

The preparation of financial statements requires estimates and assumptions that affect the reported amounts of income and expenses for the period, the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as on the date of financial statements. Difference between the actual results and estimates are recognised in the period in which the results are known / materialized.

c. Fixed Assets and Depreciation

i) Fixed Assets are stated at cost of acquisition or construction and include interest on specific borrowings for new projects upto commissioning.

ii) Leasehold Land is being amortised over the lease period.

iii) Depreciation is provided on straight line method for the fixed assets at Dalmiapuram, Khambalia, Wankaner and Katni Works and written down value method for the fixed assets at New Delhi Office at the rates specified in Schedule XIV to the Companies Act, 1956.

d. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any''indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining''useful life.

Previously recognised impairment losses are reversed to the extent the recoverable amount exceeds the carrying amount.

e. Intangible Assets

Capital Expenditure on purchase and development of identifiable non-monetary assets without physical substance is recognised as Intangible Assets in accordance with principles given under AS- 26 Intangible Assets. These are grouped and separately shown under the schedule of Fixed Assets. These are amortized over their respective expected useful lives not exceeding 10 years.

f. Valuation of Inventories

(a) Inventories are valued at lower of historical cost or net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they willbe incorporated are expected to be sold at or above cost. However, when there has been a decline in the price of materials and it is estimated that the cost of the finished products will exceed net realizable value, the materials are written down to net realizable value. In such circumstances, the replacement cost of the material may be the best available measure of their net realizable value.

(b) Historical cost is determined on the basis of weighted average method.

Excise duty is included in the valuation of finished goods and by-product inventory.

g. Investments

Long Term Investments are stated at cost. Provision for diminution in the value is made in accordance with AS-13 Accounting for Investments if the decline/diminution is other than temporary. Current Investments are stated at lower of cost or market/fair value.

h. Revenue Recognition

(a) Revenue from operations is recognised in respect of export sales on the basis of shipment of goods to customer and in respect of domestic sales on dispatch from factory. Quality rebates, claims and other discounts are disclosed separately.

(b) Domestic Sales includes excise duty. However, excise duty on sales is reduced from gross turnover for disclosing net turnover.

(c) Inter-divisional sales is reduced from gross turnover in deriving net turnover.

(d) Processing charges is accounted for, on the basis of certified production.

i. Other Income

a) Claims receivable

The quantum of accruals in respect of claims receivable such as from Railways, Insurance, Electricity, Customs Excise and the like are accounted for on receipt basis.

b) Income from Investment

Income from Investment is accounted for on accrual basis when the right to receive income is established.

j. Foreign Currency Conversion/Transaction

Foreign currency transactions are recorded on initial recognition at the rate prevailing on the date of transaction. Where export bills are negotiated with the bank, the export sales are recorded at the rate on the date of negotiation as the said rate approximates the actual rate on the date of the transaction. Exchange differences arising on settlement of monetary items or on reporting such monetary items of the Company at rates different from those at which they were initially recorded during the year or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

The premium or discount arising at the inception of forward exchange contract is amortised as an expense or income overthe life of the contract.

k. Employee Benefits

(i) Defined Contribution Plan:

Employee benefits in the form of the Company''s contribution to provident fund, pension scheme, superannuation fund and ESI are considered as defined contribution plan and charged to statement of profit and loss account of the year when the contribution to the respective funds are due.

(ii) Defined Benefit Plan:

Retirement benefits in the form of gratuity and leave encashment are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation as at the date of the balance sheet using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognised on a straight line basis over the average period until the amended benefits become vested. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(Hi) The expenditure on voluntary retirement schemes is charged to statement of profit and loss account in the year in which it is incurred.

I. Segment Reporting

Segmental accounting policies are in line with the accounting policies of the company. However, the following specific accounting policies have been followed for segment reporting:

(a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter-segment revenue.

(b) Expenses that are directly identifiable with/allocable to segments are considered for determining the segment results. The expenses/incomes, not allocable to any segments, are included under "Unallocable items/others".

(c) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities not allocable to any segment.

m. Taxes on Income

(a) Provision for Current Tax is made in accordance with the provisions of Income Tax Act, 1961.

(b) In accordance with the Accounting Standard AS-22 ''Accounting for Taxes on Income'', Deferred Tax Liability/Asset arising from timing differences between book and income tax profits is accounted for at the tax rates which are enacted or substantively enacted at the Balance Sheet date to the extent these differences are expected to crystallize in later years. However, Deferred Tax Assets are recognised only if there is a reasonable/virtual certainty of realisation thereof.

n. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable. Contingent liabilities are shown by way of Notes to Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable. Contingent assets neither recognised in the Accounts nor disclosed in the notes to accounts.

o. Leases

Where the Company is lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of Profit and Loss on a straight-line basis over the lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in the statement of Profit and Loss on a straight-line basis over the. lease term. Costs, including '' depreciation are recognised as an expense in the statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in statement of Profit and Loss.

p. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an assets that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as a part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

q. Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and cash/cheques in hand and short term deposits with Banks less short term advances from Banks.

r. Government Grants and Subsidies

Government grants of the nature of promoters'' contribution are credited to capital reserve and treated as a part of the shareholders'' fund.


Mar 31, 2012

A. Basis of preparation of Financial Statements

The financial statements are prepared under the historical cost convention, on going concern basis, in terms of the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 and in compliance with Section 211 (3C) of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realisation in respect of incomes. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India.

The Company has prepared its financial statements in accordance with Schedule VI as inserted by Notification-S.O. 4471 dated 28.02.2011 (As amended by Notification No.F.NO.2/6/2008-CL-V, Dated 30.03.2011). The Schedule does not impact recognition and measurement principle followed for the preparation of financial statements. However it has necessitated significant changes in the presentation of and disclosures in financial statements. The company has reclassified its previous year figures to confirm to the classification as per the aforesaid schedule.

b. Use of Estimates

The preparation of financial statements requires estimates and assumptions that affect the reported amounts of income and expenses for the period, the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as on the date of financial statements. Difference between the actual results and estimates are recognised in the period in which the results are known / materialized.

c. Fixed Assets and Depreciation

i) Fixed Assets are stated at cost of acquisition or construction and include interest on specific borrowings for new projects upto commissioning.

ii) Leasehold Land is being amortised over the lease period.

iii) Depreciation is provided on straight line method for the fixed assets at Dalmiapuram, Khambalia, Wankaner and Katni Works and written down value method for the fixed assets at New Delhi Office at the rates specified in Schedule XIV to the Companies Act, 1956.

d. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. -

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

Previously recognised impairment losses are reversed to the extent the recoverable amount exceeds the carrying amount.

e. Intangible Assets

Capital Expenditure on purchase and development of identifiable non-montary assets without physical substance is recognised as Intangible Assets in accordance with principles given under AS- 26 Intangible Assets. These are grouped and separately shown under the schedule of Fixed Assets. These are amortized over their respective expected useful lives not exceeding 10 years.

f. Valuation of Inventories

(a) Inventories are valued at lower of historical cost or net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, when there has been a decline in the price of materials and it is estimated that the cost of the finished products will exceed net realizable value, the materials are written down to net realizable value. In such circumstances, the replacement cost of the material may be the best available measure of their net realizable value.

(b) Historical cost is determined on the basis of weighted average method.

Excise duty is included in the valuation of finished goods and by-product inventory.

g. Investments

Long Term Investments are stated at cost. Provision for diminution in the value is made in accordance with AS-13 Accounting for Investments if the decline/diminution is other than temporary. Current Investments are stated at lower of cost or market/fair value.

h. Revenue Recognition

(a) Revenue from operations is recognised in respect of export sales on the basis of shipment of goods to customer and in respect of domestic sales on dispatch from factory. Quality rebates, claims and other discounts are disclosed separately.

(b) Domestic Sales includes excise duty. However, excise duty on sales is reduced from gross turnover for disclosing net turnover.

(c) Inter-divisional sales is reduced from gross turnover in deriving net turnover.

i. Other Income

a) Claims receivable

The quantum of accruals in respect of claims receivable such as from Railways, Insurance, Electricity, Customs Excise and the like are accounted for on receipt basis.

b) Income from Investment

Income from Investment is accounted for on accrual basis when the right to receive income is established.

j. Foreign Currency Conversion/Transaction

Foreign currency transactions are recorded on initial recognition at the rate prevailing on the date of transaction. Where export bills are negotiated with the bank, the export sales are recorded at the rate on the date of negotiation as the said rate approximates the actual rate on the date of the transaction. Exchange differences arising on settlement of monetary items or on reporting such monetary items of the Company at rates different from those at which they were initially recorded during the year or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

The premium or discount arising at the inception of forward exchange contract is amortised as an expense or income over the life of the contract.

k. Employee Benefits

(i) Defined Contribution Plan:

Employee benefits in the form of the Company's contribution to provident fund, pension scheme, superannuation fund and ESI are considered as defined contribution plan and charged to statement of profit and loss account of the year when the contribution to the respective funds are due.

(ii) Defined Benefit Plan:

Retirement benefits in the form of gratuity and leave encashment are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation as at the date of the balance sheet using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognised on a straight line basis over the average period until the amended benefits become vested. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(iii) The expenditure on voluntary retirement schemes is charged to statement of profit and loss account in the year in which it is incurred.

I. Segment Reporting

Segmental accounting policies are in line with the accounting policies of the company. However, the following specific accounting policies have been followed for segment reporting:

(a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter-segment revenue,

(b) Expenses that are directly identifiable with/allocable to segments are considered for determining the segment results. The expenses/incomes, not allocable to any segments, are included under "Unallocable items/others".

(c) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities not allocable to any segment.

m. Taxes on Income

(a) Provision for Current Tax is made in accordance with the provisions of Income Tax Act, 1961.

(b) In accordance with the Accounting Standard AS-22 'Accounting for Taxes on Income', Deferred Tax Liability/Asset arising from timing differences between book and income tax profits is accounted for at the tax rates which are enacted or substantively enacted at the Balance Sheet date to the extent these differences are expected to crystallize in later years. However, Deferred Tax Assets are recognised only if there is a reasonable/virtual certainty of realisation thereof.

n. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable. Contingent liabilities are shown by way of Notes to Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable. Contingent assets nether recognised in the Accounts nor disclosed in the notes to accounts.

o. Leases

Where the Company is lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of Profit and Loss account on a straight-line basis over the lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in statement of Profit and Loss Account on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the statement of Profit and Loss Account. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in statement of Profit and Loss Account.

p. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an assets that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as a part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

q. Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and cash/cheques in hand and short term deposits with Banks less short term advances from Banks.

r. Government Grants and Subsidies

Government grants of the nature of promoters' contribution are credited to capital reserve and treated as a part of the shareholders' fund.


Mar 31, 2011

1. Basis of preparation of Financial Statements

The financial statements are prepared under the historical cost convention, on going concern basis, in terms of the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 and in compliance with Section 211 (3C) of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realisation in respect of incomes. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India.

2. Use of Estimates

The preparation of financial statements requires estimates and assumptions that affect the reported amounts of income and expenses for the period, the reported amounts of assets and liabilities and , disclosures relating to contingent liabilities as on the date of financial statements. Difference between the actual results and estimates are recognised in the period in which the results are known /materialized.

3. Fixed Assets and Depreciation

i) Fixed Assets are stated at cost of acquisition or construction and include interest on specific borrowings for new projects upto commissioning.

ii) Leasehold Land is being amortised over the lease period.

iii) Depreciation is provided on straight line method for the fixed assets at Dalmiapuram, Khambalia, Wankaner and Katni Works and written down value method for the fixed assets at New Delhi Office at the rates specified in Schedule XIV to the Companies Act, 1956.

4. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

Previously recognised impairment losses are reversed to the extent the recoverable amount exceeds the carrying amount.

5. Intangible Assets

Capital Expenditure on purchase and development of identifiable non-monetary assets without physical substance is recognised as Intangible Assets in accordance with principles given under AS-26 Intangible Assets, these are grouped and separately shown under the schedule of Fixed Assets. These are amortized over their respective expected useful lives not exceeding 10 years.

6. Valuation of Inventories

(a) Inventories are valued at lower of historical cost or net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, when there has been a decline in the price of materials and it is estimated that the cost of the finished products will exceed net realizable value, the materials are written down to net realizable value. In such circumstances, the replacement cost of the material may be the best available measure of their net realizable value.

(b) Historical cost is determined on the basis of weighted average method.

(c) Excise duty is included in the valuation of finished goods and by-product inventory.

7. Investments

Long Term Investments are stated at cost. Provision for diminution in the value is made in accordance with AS-13 Accounting for Investments if the decline/ diminution is other than temporary. Current investments are stated at lower of cost or market/fair value.

8. Revenue Recognition

(a) Revenue is recognised in respect of export sales on the basis of shipment of goods to customer and in respect of domestic sales on dispatch from factory. Quality rebates, claims and other discounts are disclosed separately.

(b) Domestic Sales includes excise duty. However, excise duty on sales is reduced from gross turnover for disclosing net turnover.

(c) Inter-divisional sales is reduced from gross turnover in deriving net turnover.

9. Foreign Currency Conversion/Transaction

Foreign currency transactions are recorded on initial recognition at the rate prevailing on the date of transaction. Where export bills are negotiated with the bank, the export sales are recorded at the rate on the date of negotiation as the said rate approximates the actual rate on the date of the transaction.

Exchange differences arising on settlement of monetary items or on reporting such monetary items of the Company at rates different from those at which they were initially recorded during the year or reported in previous financial statements, are recognised as income or as expense in the year in which they arise. The premium or discount arising at the inception of forward exchange contract is amortised as an expense or income over the life of the contract.

10. Employee Benefits

(i) Defined Contribution Plan:

Employee benefits in the form of the Company's contribution to provident fund, pension scheme, superannuation fund and ESI are considered as defined contribution plan and charged to the profit and loss account of the year when the contribution to the respective funds are due.

(ii) Defined Benefit Plan:

Retirement benefits in the form of gratuity and leave encashment are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation as at the date of the balance sheet using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognised on a straight line basis over the average . period until the amended benefits become vested. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the ; Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(iii) The expenditure on voluntary retirement schemes is charged to the profit and loss account in the year in which it is incurred.

11. Segment Reporting

Segmental accounting policies are in line with the accounting policies of the company. However, the following specific accounting policies have been followed for segment reporting:

(a) Segment revenue includes sales and other income directly identifiable with / allocable to the segment including inter-segment revenue.

(b) Expenses that are directly identifiable with / allocable to segments are considered for determining the segment results. The expenses / incomes, not allocable to any segments, are included under "Unallowable items/others".

(c) Segment assets and liabilities include those directly identifiable with the respective segments. Unallowable assets and liabilities represent the assets and liabilities not allocable to any segment.

12. Taxes on Income

(a) Provision for Current Tax is made in accordance with the provisions of Income Tax Act, 1961.

(b) In accordance with the Accounting Standard AS-22 'Accounting for Taxes on Income', Deferred Tax Liability / Asset arising from timing differences between book and income tax profits is accounted for at the tax rates which are enacted or substantively enacted at the Balance Sheet date to the extent these differences are expected to crystallize in later years. However, Deferred Tax Assets are recognised only if there is a reasonable / virtual certainty of realisation thereof.

13. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable. Contingent liabilities are shown by way of Notes to Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable. Contingent assets are not recognised in the Accounts.

14. Leases

Where the Company is lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss account on a straight-line basis over the lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Profit and Loss Account on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Profit and Loss Account. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Profit and Loss Account.

15. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an assets that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as a part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

16. Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and cash/ cheques in hand and short term deposits with Banks less short term advances from Banks.

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