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Accounting Policies of DCW Ltd. Company

Mar 31, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Property, plant & equipment

a) The cost of an item of property, plant and equipment is
recognized as an asset only if it is probable that future
economic benefits associated with the item will flow to
the entity and the cost of the item can be measured
reliably.

b) An item of property, plant and equipment that qualifies
as an asset is measured on initial recognition at cost.
Following initial recognition, items of property, plant
and equipment are carried at its cost less accumulated
depreciation and accumulated impairment loss.

The company identifies and determines cost of each
part of an item of property, plant and equipment

separately, if the part has a cost which is significant
to the total cost of that item of property, plant and
equipment and has useful life that is materially different
from that of the remaining item.

c) Property, plant and equipment are stated at cost net of
tax / duty credit availed, less accumulated depreciation
and accumulated impairment loss, if any.

d) The initial cost of an asset comprises its purchase price
or construction cost (including import duties and
non-refundable taxes), any costs directly attributable
to bringing the asset into the location and condition
necessary for it to be capable of operating in the
manner intended by management, the initial estimate
of any decommissioning obligation (if any) and the
applicable borrowing cost till the asset is ready for its
intended use.

e) Subsequent expenditure is capitalised only if it is
probable that the future economic benefits associated
with the expenditure will flow to the Company.

f) Items such as spare parts, stand-by equipment and
servicing equipment that meet the definition of
property plant and equipment are capitalized as
property, plant and equipment. In other cases, the spare
parts are inventorised on procurement and charged to
Statement of Profit & Loss on issue/consumption.

g) When significant parts of property, plant and
equipment are required to be replaced at intervals,
the company derecognises the replaced part and
recognises the new part with its own associated useful
life and it is depreciated accordingly. All other repair
and maintenance cost are recognised in the Statement
of Profit and Loss as and when incurred.

h) An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected from its use. Any gain
or loss arising on de-recognition of the asset (calculated
as the difference between the net disposal proceeds if
any and the carrying amount of the asset) is included
in the Statement of Profit and Loss when the asset is
derecognised.

i) The company has elected to consider the carrying
value of all its property, plant and equipment appearing
in the financial statements prepared in accordance with
Accounting Standards notified under the section 133
of the Companies Act 2013, revised together with Rule
7 of the Companies (Accounts) and used the same
as deemed cost in the opening Ind As Balance Sheet
prepared on 1st April, 2015.

B. Capital Work In Progress and Capital Advances

Cost of assets not ready for intended use, as on the balance
sheet date, is shown as capital work in progress.

C. Depreciation

a) Depreciation on property, plant and equipment is
provided on the straight line basis, over the useful lives
of assets (after retaining the residual value of up to 5%).
Residual values of the fixed assets are held at 5% except
that of Furniture and fixtures and Office equipment at
Re. 1 as estimated by the Chartered Engineer & Valuer.
The useful lives determined are in line with the useful
lives as prescribed in the Schedule II of the Act except
in case of following assets which are depreciated over
their useful life as determined by a Chartered Engineer
and Valuer.

b) The residual values and useful lives of property, plant
and equipment are reviewed at each financial year
end and changes, if any, are accounted in the period
in which the estimates are revised and in any future
periods affected.

c) Items of property, plant and equipment costing not
more than '' 5,000 each are depreciated at 100 percent
in the year in which they are capitalised.

d) The Company depreciates components of the main
asset that are significant in value and have different
useful lives as compared to the main asset separately.

e) The spare parts are depreciated over the estimated
useful life based on internal technical assessment.

f) Expenditure on major repairs and overhauls which
qualify for recognition in the item of Property, Plant and
Equipment and which result in additional useful life is
depreciated over the extended useful life of the asset as
determined by technical evaluation.

g) Depreciation is charged on additions / deletions on
pro-rata monthly basis including the month of addition
/ deletion.

D. Leases

The Company assesses whether a contract contains a lease,
at the inception of the contract. A Contract is or contains
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right
to control the use of an identified asset, the Company assesses
whether (i) the contract involves the use of identified asset;
(ii) the Company has substantially all of economic benefits
from the use of asset through a period of lease and (iii) the
Company has the right to direct the use of the asset.

The Company as Lessee

The Company recognises the right-of-use asset and lease
liability at the commencement of date. The right of use
asset is initially measured at cost, which comprises the initial
amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial
direct costs incurred and estimate of costs to dismantle and
remove underlying asset or to restore the site on which it is
located less any lease incentives received.

Certain lease arrangements include the option to extend
or terminate the lease before the end of the lease term. The
right-of-use asset and lease liabilities include these options
when it is reasonably certain that option will be exercised.
The right-of-use asset is subsequently depreciated using
the straight line method from commencement date to
the earlier of the end of useful life of the right-of-use asset
or the end of the lease term. In addition, the right-of-use
asset is periodically reduced by impairment losses if any and
adjusted for certain re-measurements of the lease liability.

The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, company''s
incremental borrowing rate. Generally, the company uses its
incremental borrowing rate as the discount rate.

The lease liability is subsequently measured at amortised
cost using the effective interest method. It is remeasured
when there is a change in future lease payments arising
from a change in an index or rate, if there is a change in the
company''s estimate of the amount expected to be payable
under a residual value guarantee, or if company changes its
assessment of whether it will exercise a purchase, extension
or termination option.

When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced
to zero.

Lease payments have been considered as financing activities
in the Statement of Cash Flow.

Short-term leases and leases of low-value
assets

The company has elected not to recognise right-of-use
assets and lease liabilities for short term leases that have a
lease term of 12 months. The company recognises the lease
payments associated with these leases as an expense on a
straight-line basis over the lease term.

E. Investment Property

Investment properties are properties that are held to earn
rentals and/or for capital appreciation (including property
under construction for such purposes) and not occupied by
the Company for its own use.

Investment properties are initially recognised at cost.

Though the Company measures investment property using
cost based measurement, the fair value of investment
property is disclosed in the notes. Fair values are determined
based on an annual evaluation performed by an accredited
external independent valuer applying a valuation model
recommended by the International Valuation Standards
Committee.

Investment properties are derecognised when either they
have been disposed of or when the investment property is
permanently withdrawn from use and no future economic
benefit is expected from its disposal.

The difference between the net disposal proceeds and the
carrying amount of the asset is recognised in the statement
of profit and loss in the period of de-recognition.

F. Non-Current Assets Held For Sale

The Company classifies non-current assets held for sale if
their carrying amounts will be recovered principally through
a sale (rather than through continuing use of assets) and
actions required to complete such sale indicate that it is
unlikely that significant changes to the plan to sell will be
withdrawn. Also, such assets are classified as held for sale only
if the management expects that the sale is highly probable
and is expected to complete the sale within one year from
the date of classification.

Non-current assets classified as held for sale are measured at
lower of their carrying amount and fair value less costs to sell.

G. Inventories

Raw-materials, work-in-process, finished goods, packing
materials, stores, spares, components, consumables and
stock-in-trade are carried at lower of cost and net realizable
value. However, materials and other items held for use in
production of inventories are not written down below cost
if the finished goods in which they will be incorporated are
expected to be sold at or above cost. The comparison of cost
and net realizable value is made on item-to- item basis.

Cost of inventories comprises all costs of purchases, duties,
taxes (other than those subsequently recoverable from tax
authorities) and all the other costs incurred in the normal
course of business in bringing inventories to their present
location, including appropriate overheads apportioned on
a reasonable and consistent basis and is determined on the
following basis:

a) Raw materials and finished goods on weighted average
basis.

b) Work in process at raw material cost plus cost of
conversion.

c) Stores and spares on weighted average basis.

Customs duty on raw materials / finished goods lying in
bonded warehouse is provided for at the applicable rates.
Obsolete, slow moving, surplus and defective stocks are
identified and where necessary, provision is made for such
stocks.

H. Revenue Recognition

Revenue is recognized when it''s probable that economic
benefits associated with a transaction will flow to the
Company in the ordinary course of its activities and the
amount of revenue can be measured reliably. Revenue is
measured at the fair value of the consideration received
or receivable, net of returns, trade discounts and volume
rebates allowed by the company.

Revenue is recognized upon transfer of control of promised
products and services to customers in an amount that reflects
the consideration expected to be received in exchange for
those products or services.

Revenue includes only the gross inflows of economic benefits
received and receivable by the company, on its own account.
Amounts collected on behalf of third parties such as Goods &
Service Tax (GST) are excluded from revenue.

Sale of goods

Revenue from the sale of goods is recognised when the
significant risks and rewards of ownership of the goods have
passed to the buyer, the company retains neither continuing
managerial involvement to the degree usually associated

with ownership nor effective control over the goods sold,
revenue and the associated costs can be estimated reliably
and it is probable that economic benefits associated with the
transaction will flow to the company. Sale value of goods is
measured at the fair value of the consideration received or
receivable, net of returns and applicable trade discounts or
rebates. It excludes Goods & Service Tax (GST)

Sale of scrap / wastages, salvages and sweepings are
accounted for on delivery / realisation.

Sale of Services

Revenue from sale of services is recognized when the stage
of completion can be measured reliably. Stage of completion
is measured by the services performed till balance sheet date
as percentage of total services contracted.

Other claims are booked when there is a reasonable certainty
of recovery. Claims are reviewed on a periodic basis and if
recovery becomes uncertain, provision is made in the
accounts.

Interest Income

Interest income is recognised using Effective Interest Rate
(EIR) method.

I. Employee Benefits

Short term employee benefits

All employee benefits payable wholly within twelve months
of rendering the service are classified as short term employee
benefits and they are recognized as an expense at an
undiscounted amount in the Statement of Profit & Loss for
the year/period in which the related services are rendered.

Post employment Benefits:

The Company''s post-employment benefit consists of
provident fund, gratuity and superannuation fund. The
Company also provides for leave encashment which is in the
nature of long term benefit.

? Defined Contribution Plans:

Defined Contribution plans are Employee State
Insurance Scheme and government administered
Pension Fund Scheme for all applicable employees and
Superannuation Fund Scheme for eligible employees.

The Superannuation Fund is a Defined Contribution
Scheme managed by LIC and SBI Life Insurance
Company and contributions made to these funds are
charged to the Statement of Profit and Loss.
Recognition and Measurement of Defined
Contribution Plans:

The company recognizes contribution payable to a
defined contribution plan as an expense in Statement

of profit and Loss when employee renders services
to the Company during the reporting period. If the
contributions payable for services received from
employees before the reporting date exceeds the
contributions already paid, the deficit payable is
recognized as liability after deducting the contribution
already paid. If the contribution already paid exceeds
the contribution due for services received before
reporting date, the excess is recognized as an asset to
the extent that prepayment will lead to, for example, a
reduction in future payments or cash refund.

? Defined Benefit Plans:

i. Provident Fund scheme:

The company makes specified monthly contributions
towards Employee Provident Fund scheme to a separate
trust administered by the company. The minimum
interest payable by the trust to the beneficiaries is
being notified by the government every year. The
company has an obligation to make good the shortfall,
if any, between the return on investments of the trust
and the notified interest rate.

ii. Gratuity Scheme:

The Company operates defined benefit plan for Gratuity.
The company contributes to a separate entity (a fund),
towards meeting the Gratuity obligation. The Company
has created an Employees Group Gratuity Fund which
has taken a Group Gratuity Assurance Scheme with the
Life Insurance Corporation of India.

Recognition and measurement of defined benefit
plans:

The cost of providing such defined benefit is
determined using the projected unit credit method
of actuarial valuation made at the end of the year. The
defined benefit obligations recognized in the balance
sheet represent the present value of the defined benefit
obligations as reduced by the fair value of pan assets, if
applicable. Any defined benefit asset (negative defined
benefit obligations resulting from this calculation) is
recognized representing the present value of available
refunds and reductions in future contributions to the
plan.

Actuarial gains and losses are recognised in other
comprehensive income for gratuity and recognised in
the Statement of Profit & Loss for leave encashment.

Re-measurements, comprising of actuarial gains
and losses, the effect of the asset ceiling, excluding
amounts included in net interest on the net defined
benefit liability and the return on plan assets (excluding
amounts included in net interest on the net defined

benefit liability), are recognised immediately in the
balance sheet with a corresponding debit or credit to
retained earnings through OCI in the period in which
they occur. Re-measurements are not reclassified to
Statement of profit or loss in subsequent periods.

Past service costs are recognised in Statement of profit
or loss on the earlier of:

• The date of the plan amendment or curtailment,
and

• The date that the Company recognises related
restructuring costs

Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset. The
Company recognises the following changes in the
net defined benefit obligation as an expense in the
statement of profit and loss:

• Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements; and

• Net interest expense or income

J. Borrowing costs

Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds.
Borrowing cost also includes exchange differences in relation
to borrowings denominated in foreign currency to the extent
regarded as an adjustment to the borrowing costs.

Exchange differences are regarded as an adjustment to
borrowing costs for an amount equivalent to the extent
to which an exchange loss does not exceed the difference
between the cost of borrowing in functional currency when
compared to the cost of borrowing in a foreign currency
and the amount of gain in relation to any settlement or
translation of a borrowing, to the extent of any unrealised
loss in respect of the same borrowing, previously recognised
as an adjustment to such borrowing cost.

Borrowing costs that are attributable to the acquisition or
construction of qualifying assets (i.e. an asset that necessarily
takes a substantial period of time to get ready for its intended
use) are capitalized as a part of the cost of such assets till the
month in which the asset is ready for use. All other borrowing
costs are charged to the Statement of Profit & Loss.

K. Segment Accounting

The Managing Directors monitor the operating results of the
business Segments separately for the purpose of making
decisions about resource allocation and performance

assessment. Segment performance is evaluated based on
profit or loss and is measured consistently with profit or loss
in the financial statements.

The Operating segments have been identified on the basis of
the nature of products / services.

Segment revenue includes sales and other income directly
identifiable with / allocable to the segment including inter¬
segment revenue.

Expenses that are directly identifiable with / allocable to
segments are considered for determining the segment
result. Expenses which relate to the Company as a whole and
not allocable to segments are included under unallowable
expenditure.

Income which relates to the Company as a whole and not
allocable to segments is included in un-allocable income.

Segment result includes margins on inter-segment and sales
which are reduced in arriving at the profit before tax of the
Company.

Segment assets and liabilities include those directly
identifiable with the respective segments. Un-allocable
assets and liabilities represent the assets and liabilities that
relate to the Company as a whole and not allocable to any
segment.

Inter-Segment transfer pricing

Segment revenue resulting from transactions with other
business segments is accounted for at actual cost incurred
for producing the goods or at market prices of the products
transferred as the case may be and as agreed to by the
respective segments.

L. Foreign Currency Transactions

Monetary items:

Initial Recognition

On initial recognition, transactions in foreign currencies are
entered into by the Company are recorded in the functional
currency (i.e. Indian Rupees), by applying to the foreign
currency amount, the spot exchange rate between the
functional currency and foreign currency at the same date of
transaction.

Measurement of foreign currency items at
reporting date

Foreign currency monetary items of the company are
translated at the closing rates.

Exchange differences arising on settlement or translation of
monetary items are recognised in Statement of Profit & Loss
either as profit or loss on foreign currency transaction and

translation or as borrowing costs to the extent regarded as
an adjustment to borrowing costs.

Non - Monetary items:

Non-monetary items that are measured in terms of historical
cost are recorded at the exchange rates at the dates of the
initial transactions.


Mar 31, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

A. Property, plant & equipment

a) The cost of an item of property, plant and equipment is recognized as an asset only if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably.

b) An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost. Following initial recognition, items of property, plant and equipment are carried at its cost less accumulated depreciation and accumulated impairment loss.

The company identifies and determines cost of each part of an item of property, plant and equipment separately, if the part has a cost which is significant to the total cost of that item of property, plant and equipment and has useful life that is materially different from that of the remaining item.

c) Property, plant and equipment are stated at cost net of tax / duty credit availed, less accumulated depreciation and accumulated impairment loss, if any.

d) The initial cost of an asset comprises its purchase price or construction cost (including import duties and non-refundable taxes), any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation (if any) and the applicable borrowing cost till the asset is ready for its intended use.

e) Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

f) Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of property plant and equipment are capitalized as property, plant and equipment. In other cases, the spare parts are inventorised on procurement and charged to Statement of Profit & Loss on issue/consumption.

g) When significant parts of property, plant and equipment are required to be replaced at intervals, the Company derecognises the replaced part and recognises the new part with its own associated useful life and it is depreciated accordingly. All other repair and maintenance cost are recognised in the Statement of Profit and Loss as and when incurred.

h) An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds if any and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.

i) The company has elected to consider the carrying value of all its property, plant and equipment appearing in the financial statements prepared in accordance with Accounting Standards notified under the section 133 of the Companies Act 2013, revised together with Rule 7 of the Companies (Accounts) and used the same as deemed cost in the opening Ind As Balance Sheet prepared on 1st April, 2015.

B. Capital Work In Progress and Capital Advances

Cost of assets not ready for intended use, as on the balance sheet date, is shown as capital work in progress.

C. Depreciation

a) Depreciation on property, plant and equipment is provided on the straight line basis, over the useful lives of assets (after retaining the residual value of up to 5%). Residual values of the fixed assets are held at 5% except that of Furniture and fixtures and Office equipment at Re. 1 as estimated by the Chartered Engineer & Valuer. The useful lives determined are in line with the useful lives as prescribed in the Schedule II of the Act except in case of following assets which are depreciated over their useful life as determined by a Chartered Engineer and Valuer

b) The residual values and useful lives of property, plant and equipment are reviewed at each financial year end and changes, if any, are accounted in the period in which the estimates are revised and in any future periods affected.

c) Items of property, plant and equipment costing not more than Rs.5,000 each are depreciated at 100 percent in the year in which they are capitalised.

d) The Company depreciates components of the main asset that are significant in value and have different useful lives as compared to the main asset separately.

e) The spare parts are depreciated over the estimated useful life based on internal technical assessment.

f) Expenditure on major repairs and overhauls which qualify for recognition in the item of Property, Plant and Equipment and which result in additional useful life is depreciated over the extended useful life of the asset as determined by technical evaluation.

g) Depreciation is charged on additions / deletions on pro-rata monthly basis including the month of addition / deletion.

D. Accounting for Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease and whether it is a finance lease or an operating lease.

If substantially all the risks and rewards incidental to ownership of the leased asset are transferred to the Company as lessee the arrangement is treated as a finance lease otherwise it is considered as an operating lease.

The Company which has an operating lease (as a lessee) recognises the lease rentals as expense in the statement of Profit & Loss on a straight line basis with reference to lease terms and other considerations.

E. Investment Property

Investment properties comprise portions of freehold land that are held for long-term rental yields and/or for capital appreciation. Investment properties are initially recognised at cost.

Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal.

The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the statement of profit and loss in the period of de-recognition

F. Non-Current Assets Held For Sale

The Company classifies non-current assets held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use of assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one year from the date of classification.

G. Inventories

Raw-materials, work-in-process, finished goods, packing materials, stores, spares, components, consumables and stock-in-trade are carried at lower of cost and net realizable value. However, materials and other items held for use in production of inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost. The comparison of cost and net realizable value is made on item-to- item basis.

Cost of inventories comprises all costs of purchases, duties, taxes (other than those subsequently recoverable from tax authorities) and all the other costs incurred in the normal course of business in bringing inventories to their present location, including appropriate overheads apportioned on a reasonable and consistent basis and is determined on the following basis:

a) Raw materials and finished goods on weighted average basis.

b) Work in process at raw material cost plus cost of conversion.

c) Stores and spares on weighted average basis.

Customs duty on raw materials / finished goods lying in bonded warehouse is provided for at the applicable rates. Excise duty on finished stocks lying in bond is provided for at the applicable assessable value.

Obsolete, slow moving, surplus and defective stocks are identified and where necessary, provision is made for such stocks.

H. Revenue Recognition

Revenue is recognized when it’s probable that economic benefits associated with a transaction flows to the Company in the ordinary course of its activities and the amount of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates allowed by the company.

Revenue includes only the gross inflows of economic benefits, including excise duty, received and receivable by the company, on its own account. Amounts collected on behalf of third parties such as sales tax, value added tax and goods and service tax are excluded from revenue.

Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, revenue and the associated costs can be estimated reliably and it is probable that economic benefits associated with the transaction will flow to the company. Sale value of goods is measured at the fair value of the consideration received or receivable, net of returns and applicable trade discounts or rebates. It includes applicable excise duty and surcharge but excludes sales tax and Goods & Service Tax (GST)

Sale of Services

Revenue from sale of services is recognized when the stage of completion can be measured reliably. Stage of completion is measured by the services performed till balance sheet date as percentage of total services contracted.

Other claims are booked when there is a reasonable certainty of recovery. Claims are reviewed on a periodic basis and if recovery becomes uncertain, provision is made in the accounts.

Interest Income

Interest income is recognised using Effective Interest Rate (EIR) method.

I. Employee Benefits

Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized as an expense at an undiscounted amount in the Statement of Profit & Loss for the year/period in which the related services are rendered.

Post employment Benefits:

The Company’s post-employment benefit consists of provident fund, gratuity and superannuation fund. The Company also provides for leave encashment which is in the nature of long term benefit.

I. Defined Contribution Plans:

Defined Contribution plans are employee state insurance scheme and government administered pension fund scheme for all applicable employees and superannuation scheme for eligible employees.

The Superannuation Fund is a Defined Contribution Scheme managed by LIC and SBI Life Insurance Company and contributions are made to the funds is charged to the Statement of Profit and Loss.

Recognition and Measurement of Defined Contribution Plans:

The company recognizes contribution payable to a defined contribution plan as an expense in Statement of profit and Loss when employee render services to the Company during the reporting period. If the contributions payable for services received from employees before the reporting date exceeds the contributions already paid, the deficit payable is recognized as liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before reporting date, the excess is recognized as an asset to the extent that prepayment will lead to, for example, a reduction in future payments or cash refund.

II. Defined Benefit Plans:

i. Provident Fund scheme:

The company makes specified monthly contributions towards Employee Provident Fund scheme to a separate trust administered by the company. The minimum interest payable by the trust to the beneficiaries is being notified by the government every year. The company has an obligation to make good the shortfall, if any, between the return on investments of the trust and the notified interest rate.

ii. Gratuity Scheme:

The Company operates defined benefit plan for Gratuity. The company contributes to a separate entity (a fund), towards meeting the Gratuity obligation. The Company has created an Employees Group Gratuity Fund which has taken a Group Gratuity Assurance Scheme with the Life Insurance Corporation of India.

Recognition and measurement of defined benefit plans:

The cost of providing such defined benefit is determined using the projected unit credit method of actuarial valuation made at the end of the year .The defined benefit obligations recognized in the balance sheet represent the present value of the defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognized representing the present value of available refunds and reductions in future contributions to the plan.

Actuarial gains and losses are recognised in other comprehensive income for gratuity and recognised in the Statement of Profit & Loss for leave encashment.

Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

- The date of the plan amendment or curtailment, and

- The date that the Company recognises related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability / asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:

- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and

- Net interest expense or income J. Borrowing costs

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences in relation to borrowings denominated in foreign currency to the extent regarded as an adjustment to the borrowing costs.

Exchange differences are regarded as an adjustment to borrowing costs for an amount equivalent to the extent to which an exchange loss does not exceed the difference between the cost of borrowing in functional currency when compared to the cost of borrowing in a foreign currency and the amount of gain in relation to any settlement or translation of a borrowing, to the extent of any unrealised loss in respect of the same borrowing, previously recognised as an adjustment to such borrowing cost.

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use) are capitalized as a part of the cost of such assets till the month in which the asset is ready for use. All other borrowing costs are charged to the Statement of Profit & Loss.

K. Segment Accounting

The Managing Directors monitor the operating results of the business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.

The Operating segments have been identified on the basis of the nature of products / services.

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

Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under unallowable expenditure.

Income which relates to the Company as a whole and not allocable to segments is included in un-allocable income.

Segment result includes margins on inter-segment and sales which are reduced in arriving at the profit before tax of the Company.

Segment assets and liabilities include those directly identifiable with the respective segments. Un-allocable assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

Inter-Segment transfer pricing

Segment revenue resulting from transactions with other business segments is accounted for at actual cost incurred for producing the goods or at market prices of the products transferred as the case may be and as agreed to by the respective segments.

L. Foreign Currency Transactions Monetary items:

Initial Recognition

On initial recognition, transactions in foreign currencies are entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate between the functional currency and foreign currency at the same date of transaction.

Measurement of foreign currency items at reporting date

Foreign currency monetary items of the company are translated at the closing rates.

Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit & Loss either as profit or loss on foreign currency transaction and translation or as borrowing costs to the extent regarded as an adjustment to borrowing costs.

Non - Monetary items:

Non-monetary items that are measured in terms of historical cost are recorded at the exchange rates at the dates of the initial transactions.

M. Provisions, Contingent Liabilities and Contingent Assets

a) Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expenses relating to a provision are recognised in the Statement of Profit & Loss net of any reimbursement.

b) If the effect of time value of money is material, provisions are shown at present value of expenditure expected to be required to settle the obligation, by discounting using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

c) Contingent liabilities are possible obligations arising from past events and whose existence will only be confirmed by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.

d) Show-cause notices issued by various Government Authorities are not considered as obligation. When the demand notices are raised against such show cause notices and are disputed by the Company, these are classified as disputed obligations.

e) Contingent Assets are not recognised but reviewed at each balance sheet date and disclosure is made in the Notes in respect of possible effects that arise from past events and whose existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company and where inflow of economic benefit is probable.

N. Fair Value measurement

a) The Company measures financial instruments i.e. derivative contracts at fair value at each balance sheet date.

b) Fair value is the price that would be received on selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Company has access at that date.

c) While measuring the fair value of an asset or liability, the Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure the fair value using observable market data as far as possible and minimising the use of unobservable inputs. Fair values are categorised into 3 levels as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices that are observable for the assets or liability, either directly (i.e. as prices for similar item) or indirectly (i.e. derived from prices)

Level 3: inputs that are not based on observable market data (unobservable inputs)

O. Financial Instruments

i. Financial Assets other than derivatives

All financial assets are recognised initially at fair values including transaction costs that are attributable to the acquisition of the financial asset.

A financial asset is measured (subsequent measurement) at the amortised cost if the asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and the contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Amortised cost is net of any write down for impairment loss (if any) using the effective interest rate (EIR) method taking into account any discount or premium and fees or costs that are an integral part of the EIR.

A financial asset is derecognised either partly or fully to the extent the rights to receive cash flows from the asset have expired and / or the control on the asset has been transferred to a third party. On derecognition, any gains or losses are recognised in the Statement of Profit & Loss.

ii. Financial Liabilities other than derivatives

All financial liabilities are recognised initially at fair value net of transaction costs that are attributable to the respective liabilities.

After initial recognition, financial liabilities are subsequently measured at amortised cost using the effective interest rate method (“EIR”). Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit & Loss.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit & Loss.

iii. Derivative financial instruments

The Company uses derivative financial instruments, such as foreign exchange forward contracts to manage its exposure to foreign exchange risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value with the changes being recognised in the Statement of Profit & Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

iv. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

P. Classification of Assets and Liabilities as Current and Non-Current:

All assets and liabilities are classified as current if they are expected to be realised / settled within twelve months after the reporting period. All other assets and liabilities are considered as non-current.

Q. Impairment

Non-financial Assets

At each Balance Sheet date, an assessment is made of whether there is any indication of impairment. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of the asset’s or Cash-Generating Unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Financial Assets

The Company applies Expected Credit Loss (“ECL”) model for measurement and recognition of impairment loss on the financial assets measured at amortised cost.

Loss allowances on trade receivables are measured following the ‘simplified approach’ at an amount equal to the lifetime ECL at each reporting date right from initial recognition. In respect of other financial assets measured at amortised cost, the loss allowance is measured at 12 month ECL for financial assets with low credit risk at the reporting date. Where there is a significant deterioration in the credit risk, the loss allowance is measured since initial recognition of the financial asset.

R. Taxes on Income

Current Tax

Income-tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the end of reporting period.

Deferred tax

Deferred tax (both assets and liabilities) is calculated using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The amount of deferred tax assets is reviewed at each reporting date.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Current tax and Deferred Tax items are recognised in correlation to the underlying transaction either in the Statement of Profit & Loss, other comprehensive income or directly in equity.

S. Earnings per share

Basic earnings per share are 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.

Diluted earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period, adjusted for the effect of all dilutive potential equity shares.

T. Cash and Cash equivalents

Cash and cash equivalents include cash at bank, cash, cheques and draft on hand. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

Cash Flows

Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.

U. Government Grants

Government grants are recognized to the extent they are received in cash or kind.

When the grant relates to an expense item, the same is deducted in reporting the related expense in the Statement of Profit or Loss for which it is intended to compensate.

Government grants relating to property, plant and equipment are presented as deferred income and are credited to the Statement of Profit & Loss on a systematic basis over the useful life of the asset and in the proportions in which depreciation expense on the assets is recognised.

Grants related to income are deducted in reporting the related expense.

V. Significant Accounting Judgements, Estimates and Assumptions

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Judgements, Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

W. Impairment of non-financial assets

At each Balance Sheet date, an assessment is made of whether there is any indication of impairment. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of the asset’s or Cash-Generating Unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.


Mar 31, 2016

1. SYSTEM OF ACCOUNTING :

a) The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis.

b) The financial statements have been prepared in all material respects with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

c) Financial statements are prepared on historical cost basis and as a going concern, adjusted for revaluation / diminution in value of certain fixed assets.

2. USE OF ESTIMATES.

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

3. FIXED ASSETS AND DEPRECIATION :

A) Fixed Assets

Fixed Assets are stated at their original cost, net of Cenvat Credit where applicable (including expenses related to acquisition and installation) except certain Fixed Assets which are adjusted for revaluation.

B) Depreciation and Amortization :

Depreciation is charged in the Accounts on straight line method as under:

a) On assets revalued at Sahupuram Unit on 31-3-93 @ 3 % on the revalued cost based on revision in useful life estimated by the valuer of 33.33 years (Refer Note 11.1).

c) On fixed assets costing less than Rs. 5000/- each, at 100%

d) On balance fixed assets of the company based on the useful life specified in Schedule II to the Companies Act, 2013.

e) On fixed assets added/disposed of during the year, on pro- rata basis with reference to the month of addition/disposal.

f) On Technical Know-how fees at 33.33%.

Residual values of the fixed assets are held at 5% except that of Furniture and fixtures and Office equipment at Re. 1 as estimated by the Chartered Engineer & Valuer.

4. REVENUE RECOGNITION :

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefit will follow to the company.

a) Sales: Revenue from sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of trade discounts, excise duty, sales returns.

b) Interest: Revenue is recognized on time proportion basis taking into account the outstanding amount and the applicable rate of interest

c) Dividends: Revenue is recognized when the right to receive payment is established.

5. EXPENDITURE DURING CONSTRUCTION AND ON NEW PROJECTS :

In the case of new projects and in the case of modernization/expansion of existing units, interest on borrowings for the same and all pre-operative expenditure, incurred during implementation up to the date of installation are included under Capital Work in Progress and capitalized by adding pro-rata to the cost of the assets.

6. INVESTMENTS :

The Company''s investments comprise long term and current investments. Long Term investments are stated at cost less permanent diminution, if any, in value. Current investments are stated at lower of cost or fair value.

7. INVENTORIES :

Inventories are valued at lower of cost and net realizable. Stores, spares and stock in process and fuel are valued at lower of cost less provision for slow and non-moving inventory, if any, and net realizable value. However, materials and other items 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. Scrap and by products which are valued at net realizable value. Cost is computed on weighted average basis and includes cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

8. ACCOUNTING FOR CENVAT AND SERVICE TAX CREDITS :

Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and Capital goods and Service tax credit on services availed are accounted for by reducing purchase cost of the related material or the expenses respectively and Cenvat Credit available on fixed assets is accounted by reducing the same from the cost of respective fixed assets.

9. FOREIGN CURRENCY TRANSACTIONS :

a) Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions.

b) Monetary items denominated in foreign currencies (such as cash receivables, payables, etc.) outstanding at the year end, are translated at exchange rate applicable as of that date.

c) Non-monetary items denominated in foreign currency (such as investments, fixed assets, etc.) are valued at the exchange rate prevailing on the date of transaction.

d) Any gains or losses arising due to exchange differences at the time of translation or settlement are accounted in the Profit & Loss Account, except as indicated in Note No 11.2 (Fixed Assets Schedule).

e) Premium/discounts on forward exchange contracts are amortized over the life of the contract and recognized in the Profit and Loss account, exchange differences on such contracts are recognized in the profit and loss account in the reporting period in which the exchange rates change.

10. RESEARCH & DEVELOPMENT EXPENDITURE :

Revenue Expenditure on Research & Development is charged to Statement of Profit and Loss. Capital expenditure on Research & Development is shown as an addition to fixed assets.

11. BORROWING COSTS :

Borrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

12. EMPLOYEE BENEFITS :

a) Contributions to Provident fund are made to recognized funds and are charged to Profit & Loss Account. The interest rate payable by recognized Provident Fund shall not be lower than the statutory rate of interest declared by Central Government and shortfall, if any, shall be made good by the company.

b) The Superannuation Fund is a Defined Contribution Scheme managed by LIC and SBI Life Insurance Company and contributions made to the fund are charged to Profit and Loss Account.

c) The company has created an Employees'' Group Gratuity Fund which has taken a Group Gratuity Assurance Scheme with the Life Insurance Corporation of India. The Gratuity liability is provided based on actuarial valuation arrived on the basis of projected unit credit method are determined at the end of each year.

d) Liabilities towards Leave Encashment Benefit are provided for based on actuarial valuation done at the year end.

e) Contribution to Employee Pension Scheme 1995, are accounted on accrual basis with corresponding remittance made to Government Provident Fund authority.

13. PROVISIONS & CONTINGENCIES :

a. Show cause notices of Government Authorities are not considered as obligation till demand notices are issued against such show cause notices. The demand notices when issued are considered as disputed obligations.

b. A provision arising out of a present obligation is recognized when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated.

c. Wherever there is a possible obligation that may, but probably will not require an outflow of resources, the same is disclosed by way of contingent liability.

14. TAXES ON INCOME :

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income tax Act, 1961. Deferred tax is recognized, subject to the consideration of prudence as per Accounting Standard-22 (Accounting for taxes on income) on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only to the extent that there is timing difference, the reversal of which will result in sufficient income. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future.

15. IMPAIRMENT OF ASSET :

The carrying amounts of assets are reviewed at each balance sheet date for indication of any impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognized by charging it to the profit and loss account. A previously recognized impairment loss is reversed where it no longer exists and the asset is restated to that effect.


Mar 31, 2015

1. SYSTEM OF ACCOUNTING:

a) The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis.

b) The financial statements have been prepared in all material respects with the Accounting Standards specified under Section 133 of the Co.'s Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

c) Financial statements are prepared on historical cost basis and as a going concern, adjusted for revaluation / diminution in value of certain fixed assets.

2. USE OF ESTIMATES.

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

3. FIXED ASSETS AND DEPRECIATION:

A) Fixed Assets

Fixed Assets are stated at their original cost, net of Cenvat Credit where applicable (including expenses related to acquisition and installation) except certain Fixed Assets which are adjusted for revaluation.

B) Depreciation and Amortization

Depreciation is charged in the Accounts on straight line method as under:

a) On assets revalued at Sahupuram Unit on 31-3-93 @ 3 % on the revalued cost based on revision in useful life estimated by the valuer of 33.33 years (Refer Note 11.1).

Assets Description Useful Life(Years)

Continuous Process Plant 20

Cogeneration Power Plant 25

Electrical Installation Other than in 15

Cogen Power Plant

Salt Works 1

Cars & Two Wheelers 5

as determined by a Chartered Engineer & Valuer.

c) On fixed assets costing less than Rs. 5000/- each, at 100%

d) On balance fixed assets of the company based on the useful life specified in Schedule II to the Companies Act, 2013.

e) On fixed assets added/disposed of during the year, on pro- rata basis with reference to the month of addition/disposal.

f) On Technical Know-how fees at 33.33%.

Residual value of the fixed assets are held at 5% except that of Furniture and fixtures and Office equipment at Re. 1 as estimated by the Chartered Engineer & Valuer.

4. REVENUE RECOGNITION:

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefit will follow to the company.

a) Sales: Revenue from sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of trade discounts, excise duty, sales returns.

b) Interest: Revenue is recognized on time proportion basis taking into account the outstanding amount and the applicable rate of interest

c) Dividends: Revenue is recognized when the right to receive payment is established.

5. EXPENDITURE DURING CONSTRUCTION AND ON NEW PROJECTS:

In the case of new projects and in the case of modernization/expansion of existing units, interest on borrowing for the same and all pre-operative expenditure, incurred during implementation up to the date of installation are included under Capital Work in Progress and capitalized by adding pro-rata to the cost of the assets.

6. INVESTMENTS:

The Company's investments comprise long term and current investments. Long Term investments are stated at cost less permanent diminution, if any, in value. Current investments are stated at lower of cost or fair value.

7. INVENTORIES:

Inventories are valued at lower of cost and net realizable. Stores, spares and stock in process and fuel are valued at lower of cost less provision for slow and non-moving inventory, if any, and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated

48 DCW Limited - Annual Report 2014-2015

are expected to be sold at or above cost. Scrap and by products which are valued at net realizable value. Cost is computed on weighted average basis and includes cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

8. ACCOUNTING FOR CENVAT AND SERVICE TAX CREDITS:

Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and Capital goods and Service tax credit on services availed are accounted for by reducing purchase cost of the related material or the expenses respectively and Cenvat Credit available on fixed assets is accounted by reducing the same from the cost of respective fixed assets.

9. FOREIGN CURRENCY TRANSACTIONS:

a) Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions.

b) Monetary items denominated in foreign currencies (such as cash receivables, payables, etc.) outstanding at the year end, are translated at exchange rate applicable as of that date.

c) Non-monetary items denominated in foreign currency (such as investments, fixed assets, etc.) are valued at the exchange rate prevailing on the date of transaction.

d) Any gains or losses arising due to exchange differences at the time of translation or settlement are accounted in the Profit & Loss Account, except as indicated in Note No 11.2 (Fixed Assets Schedule).

e) Premium/discounts on forward exchange contracts are amortized over the life of the contract and recognized in the Profit and Loss account, exchange differences on such contracts are recognized in the profit and loss account in the reporting period in which the exchange rates change.

10. RESEARCH & DEVELOPMENT EXPENDITURE:

Revenue Expenditure on Research & Development is charged to Statement of Profit and Loss. Capital expenditure on Research & Development is shown as an addition to fixed assets.

11. BORROWING COSTS:

Borrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

12. EMPLOYEE BENEFITS:

a) Contributions to Provident fund are made to recognized funds and are charged to Profit & Loss Account. The interest rate payable by recognized Provident Fund shall not be lower than the statutory rate of interest declared by Central Government and shortfall, if any, shall be made good by the company.

b) The Superannuation Fund is a Defined Contribution Scheme managed by LIC and SBI Life Insurance Company and contributions made to the fund are charged to Profit and Loss Account.

c) The company has created an Employees' Group Gratuity Fund which has taken a Group Gratuity Assurance Scheme with the Life Insurance Corporation of India. The Gratuity liability is provided based on actuarial valuation arrived on the basis of projected unit credit method are determined at the end of each year.

d) Liabilities towards Leave Encashment Benefit are provided for based on actuarial valuation done at the year end.

e) Contribution to Employee Pension Scheme 1995, are accounted on accrual basis with corresponding remittance made to Government Provident Fund authority.

13. PROVISIONS & CONTINGENCIES:

a. Show cause notices of Government Authorities are not considered as obligation till demand notices are issued against such show cause notices. The demand notices when issued are considered as disputed obligations.

b. A provision arising out of a present obligation is recognized when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated

c. Wherever there is a possible obligation that may, but probably will not require an outflow of resources, the same is disclosed by way of contingent liability.

14. TAXES ON INCOME:

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income tax Act, 1961. Deferred tax is recognized, subject to the consideration of prudence as per Accounting Standard-22 (Accounting for taxes on income) on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only to the extent that there is timing difference, the reversal of which will result in sufficient income. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future.

15. IMPAIRMENT OF ASSET:

The carrying amount of assets are reviewed at each balance sheet date for indication of any impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognized by charging it to the profit and loss account. A previously recognized impairment loss is reversed where it no longer exists and the asset is restated to that effect.


Mar 31, 2014

1. SYSTEM OF ACCOUNTING:

a. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis.

b. The financial statements have been prepared in all material respects with accounting standards as notified in the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.

c. Financial statements are prepared on historical cost basis and as a going concern, adjusted for revaluation / diminution in value of certain fixed assets.

2. USE OF ESTIMATES:

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

3. FIXED ASSETS AND DEPRECIATION:

A) Fixed Assets

Fixed Assets are stated at their original cost, net of Cenvat Credit where applicable (including expenses related to acquisition and installation) except certain Fixed Assets which are adjusted for revaluation.

B) Depreciation and Amortization:

Depreciation is charged in the Accounts on straight line method as under:

a) On assets revalued at Sahupuram Unit on 31–3–93 @ 3 % on the revalued cost based on revision in useful life estimated by the valuer (Refer Note 11.1).

b) On fixed assets added pursuant to the amalgamation of Pantape Magnetics Limited with the Company, at rates specified in Schedule XIV to the Companies Act, 1956 on the revalued cost.

c) On balance fixed assets of the company at rates specified in Schedule XIV to the Companies Act, 1956 on the original cost.

d) On fixed assets added/disposed of during the year, on pro– rata basis with reference to the month of addition/ disposal.

e) On Technical Know–how fees at 33.33%

4. REVENUE RECOGNITION:

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefit will follow to the company.

a) Sales: Revenue from sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of trade discounts, excise duty, sales returns.

b) Interest: Revenue is recognized on time proportion basis taking into account the outstanding amount and the applicable rate of interest

c) Dividends: Revenue is recognized when the right to receive payment is established.

5. EXPENDITURE DURING CONSTRUCTION AND ON NEW PROJECTS:

In the case of new projects and in the case of modernization/expansion of existing units, interest on borrowings for the same and all pre–operative expenditure, incurred during implementation up to the date of installation are included under Capital Work in Progress and capitalized by adding pro–rata to the cost of the assets.

6. INVESTMENTS:

The Company''s investments comprise long term and current investments. Long Term investments are stated at cost less permanent diminution, if any, in value. Current investments are stated at lower of cost or fair value.

7. INVENTORIES:

Inventories are valued at lower of cost and net realizable. Stores, spares and stock in process and fuel are valued at lower of cost less provision for slow and non-moving inventory, if any, and net realizable value. However, materials and other items 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. .Scrap and by products which are valued at net realizable value. Cost is computed on weighted average basis and includes cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

8. ACCOUNTING FOR CENVAT AND SERVICE TAX CREDITS

Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and Capital goods and Service tax credit on services availed are accounted for by reducing purchase cost of the related material or the expenses respectively and Cenvat Credit available on fixed assets is accounted by reducing the same from the cost of respective fixed assets.

9. FOREIGN CURRENCY TRANSACTIONS

a) Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions.

b) Monetary items denominated in foreign currencies (such as cash receivables, payables, etc.) outstanding at the year end, are translated at exchange rate applicable as of that date.

c) Non–monetary items denominated in foreign currency (such as investments, fixed assets, etc.) are valued at the exchange rate prevailing on the date of transaction.

d) Any gains or losses arising due to exchange differences at the time of translation or settlement are accounted in the Profit & Loss Account, except as indicated in Note No 11.2 (Fixed Assets Schedule)

e) Premium/discounts on forward exchange contracts are amortized over the life of the contract and recognized in the Profit and Loss account, exchange differences on such contracts are recognized in the profit and loss account in the reporting period in which the exchange rates change.

10.RESEARCH & DEVELOPMENT EXPENDITURE:

Revenue Expenditure on Research & Development is charged to Statement of Profit and Loss. Capital expenditure on Research & Development is shown as an addition to fixed assets.

11. BORROWING COSTS:

Borrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

12.EMPLOYEE BENEFITS:

a) Contributions to Provident fund are made to recognized funds and are charged to Profit & Loss Account. The interest rate payable by recognized Provident Fund shall not be lower than the statutory rate of interest declared by Central Government and shortfall, if any, shall be made good by the company.

b) The Superannuation Fund is a Defined Contribution Scheme managed by LIC and SBI Life Insurance Company and contributions made to the fund are charged to Profit and Loss Account.

c) The company has created an Employees'' Group Gratuity Fund which has taken a Group Gratuity Assurance Scheme with the Life Insurance Corporation of India. The Gratuity liability is provided based on actuarial valuation arrived on the basis of projected unit credit method are determined at the end of each year.

d) Liabilities towards Leave Encashment Benefit are provided for based on actuarial valuation done at the year end.

e) Contribution to Employee Pension Scheme 1995, are accounted on accrual basis with corresponding remittance made to Government Provident Fund authority.

13. PROVISIONS & CONTINGENCIES:

a. Show cause notices of Government Authorities are not considered as obligation till demand notices are issued against such show cause notices. The demand notices when issued are considered as disputed obligations.

b. A provision arising out of a present obligation is recognized when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated

c. Wherever there is a possible obligation that may, but probably will not require an outflow of resources, the same is disclosed by way of contingent liability.

14. TAXES ON INCOME

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income tax Act, 1961. Deferred tax is recognized, subject to the consideration of prudence as per Accounting Standard–22 (Accounting for taxes on income) on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only to the extent that there is timing difference, the reversal of which will result in sufficient income. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future.

15. IMPAIRMENT OF ASSET

The carrying amount of assets are reviewed at each balance sheet date for indication of any impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognized by charging it to the profit and loss account. A previously recognized impairment loss is reversed where it no longer exists and the asset is restated to that effect.

LOANS – Security : Banks/ Institutions

Term Loans and External Commercial Barrowings from Banks and Institutions are secured by a pari–passu first charge by way of hypothecation of movable fixed assets of the Company, including movable machinery spares, stores and further secured by mortgage on all the immovable properties of the Company situated in the states of Tamilnadu and Gujarat on first pari–passu charge basis and second charge on Current Assets.

Institutions:

The term loans from Institutions are secured by first charge on moveable properties and assets pertaining to windmill assets in the state of Rajasthan on specific charge basis.

NBFC:

Term loan from NBFC are secured by creation of charge on all the assets purchased under the loan.

LOANS – Security

Loans from Banks & Working Capital facilities are secured by a first charge by way of hypothecation and/or pledge of current assets, namely, stocks of materials and finished goods, consumable stores and spares including machinery spares not capitalized, bills receivable and book debts and further secured by a second charge by way of hypothecation over all of movable plant and machinery and by way of mortgage by deposit of title deeds over the immovable properties, both present and future, such mortgage to rank second to the mortgages created/to be created in favour of Term Loan Lenders viz., Banks / Financial Institutions.


Mar 31, 2013

1. SYSTEM OF ACCOUNTING

A. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis.

B. The financial statements have been prepared in all material respects with accounting standards as notified in the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.

C. Financial statements are prepared on historical cost basis and as a going concern, adjusted for revaluation / dimunition in value of certain fixed assets.

2. USE OF ESTIMATES.

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

3. FIXED ASSETS AND DEPRECIATION :

A) Fixed Assets

Fixed Assets are stated at their original cost, net of Cenvat Credit where applicable (including expenses related to acquisition and installation) except certain Fixed Assets which are adjusted for revaluation.

B) Depreciation and Amortisation

Depreciation is charged in the Accounts on straight line method as under:

a) On assets revalued at Sahupuram Unit on 31–3–93 @ 3 % on the revalued cost based on revision in useful life estimated by the valuer (Refer Note 11.1).

b) On fixed assets added pursuant to the amalgamation of Pantape Magnetics Limited with the Company, at rates specified in Schedule XIV to the Companies Act, 1956 on the revalued cost.

c) On balance fixed assets of the company at rates specified in Schedule XIV to the Companies Act, 1956 on the original cost.

d) On fixed assets added/disposed off during the year, on pro– rata basis with reference to the month of addition/ disposal.

e) On Technical Know–how fees at 33.33%

4. REVENUE RECOGNITION

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefit will follow to the company.

a) Sales: Revenue from sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of trade discounts, excise duty, sales returns and sales tax.

b) Interest: Revenue is recognized on time proportion basis taking into account the outstanding amount and the applicable rate of interest

c) Dividends: Revenue is recognized when the right to receive payment is established.

5. EXPENDITURE DURING CONSTRUCTION AND ON NEW PROJECTS

In the case of new projects and in the case of modernisation/expansion of existing units, interest on borrowings for the same and all pre–operative expenditure, incurred during implementation upto the date of installation are included under Capital Work in Progress and capitalised by adding pro–rata to the cost of the assets.

6. INVESTMENTS

The Company''s investments comprise long term and current investments. Long Term investments are stated at cost less permanent dimunition, if any, in value. Current investments are stated at lower of cost or market value.

7. INVENTORIES

Inventories are valued at lower of cost and net realisable value except stores, spares and stock in process and fuel which are valued at cost, packing materials which are valued at or below cost and scrap and by products which are valued at net realisable value. Cost is computed on weighted average basis and includes cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

8. ACCOUNTING FOR CENVAT AND SERVICE TAX CREDITS

Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and Capital goods and Service tax credit on services availed are accounted for by reducing purchase cost of the related material or the expenses respectively and Cenvat Credit available on fixed assets is accounted by reducing the same from the cost of respective fixed assets.

9. FOREIGN CURRENCY TRANSACTIONS

a) Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions.

b) Monetary items denominated in foreign currencies (such as cash receivables , payables, etc.) outstanding at the year end, are translated at exchange rate applicable as of that date.

c) Non–monetary items denominated in foreign currency (such as investments, fixed assets, etc.) are valued at the exchange rate prevailing on the date of transaction.

d) Any gains or losses arising due to exchange differences at the time of translation or settlement are accounted in the Profit & Loss Account, except as indicated in Note No 11.2.

e) Premium/discounts on forward exchange contracts are amortised over the life of the contract and recognised in the Profit and Loss account, exchange differences on such contracts are recognized in the profit and loss account in the reporting period in which the exchange rates change.

10. RESEARCH & DEVELOPMENT EXPENDITURE

Revenue Expenditure on Research & Development is charged against the Profit of the year in which it is incurred. Capital expenditure on Research & Development is shown as an addition to fixed assets.

11. BORROWING COSTS

Borrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

12. EMPLOYEE BENEFITS

a) Contributions to Provident fund are made to recognised funds and are charged to Profit & Loss Account. The interest rate payable by recognized Provident Fund shall not be lower than the statutory rate of interest declared by Central Government and shortfall, if any, shall be made good by the company.

b) The Superannuation Fund is a Defined Contribution Scheme managed by LIC and SBI Life Insurance Company and contributions made to the fund are charged to Profit and Loss Account.

c) The company has created an Employees'' Group Gratuity Fund which has taken a Group Gratuity Assurance Scheme with the Life Insurance Corporation of India. Premium charged by the Life Insurance Corporation of India, is debited to the Profit and Loss account. Company''s contributions based on actural valuation arrived on the basis of projected unit credit method are determined at the end of each year and charged to Profit and Loss Account.

d) Liabilities towards Leave Encashment Benefit are provided for based on actuarial valuation done at the year end.

e) Contribution to Employee Pension Scheme 1995, are accounted on accrual basis with corresponding remittance made to Government Provident Fund authority.

13. PROVISIONS & CONTINGENCIES

a) A provision arising out of a present obligation is recognized when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated

b) Wherever there is a possible obligation that may, but probably will not require an outflow of resources, the same is disclosed by way of contingent liability.

c) Show Cause Notices are not considered as Contingent Liabilities unless converted into demand.

14. TAXES ON INCOME

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income tax Act,1961. Deferred tax is recognized, subject to the consideration of prudence as per Accounting Standard–22 (Accounting for taxes on income) on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only to the extent that there is timing difference, the reversal of which will result in sufficient income. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future.

15. IMPAIRMENT OF ASSET

The carrying amount of assets are reviewed at each balance sheet date for indication of any impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognized by charging it to the profit and loss account. A previously recognized impairment loss is reversed where it no longer exists and the asset is restated to that effect.


Mar 31, 2012

1. SYSTEM OF ACCOUNTING

A. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis.

B. The financial statements have been prepared in all material respects with accounting standards as notified in the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.

C. Financial statements are prepared on historical cost basis and as a going concern, adjusted for revaluation / diminution in value of certain fixed assets.

2. USE OF ESTIMATES.

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

3. FIXED ASSETS AND DEPRECIATION :

A) Fixed Assets

Fixed Assets are stated at their original cost, net of Cenvat Credit where applicable (including expenses related to acquisition and installation) except certain Fixed Assets which are adjusted for revaluation.

B) Depreciation and Amortisation

Depreciation is charged in the Accounts on straight line method as under:

a) On assets revalued at Sahupuram Unit on 31–3–93 @ 3 % on the revalued cost based on revision in useful life estimated by the valuer (Refer Note 11.1).

b) On fixed assets added pursuant to the amalgamation of Pantape Magnetics Limited with the Company, at rates specified in Schedule XIV to the Companies Act, 1956 on the revalued cost.

On balance fixed assets of the company at rates specified in Schedule XIV to the Companies Act, 1956 on the original cost.

d) On fixed assets added/disposed of during the year, on pro– rata basis with reference to the month of addition/disposal.

e) On Technical Know–how fees at 33.33%

4. REVENUE RECOGNITION

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefit will follow to the company.

a) Sales: Revenue from sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of trade discounts, excise duty, sales returns and sales tax.

b) Interest: Revenue is recognized on time proportion basis taking into account the outstanding amount and the applicable rate of interest

c) Dividends: Revenue is recognized when the right to receive payment is established.

5. EXPENDITURE DURING CONSTRUCTION AND ON NEW PROJECTS

In the case of new projects and in the case of modernisation/expansion of existing units, interest on borrowings for the same and all pre–operative expenditure, incurred during implementation upto the date of installation are included under Capital Work in Progress and capitalised by adding pro–rata to the cost of the assets.

6. INVESTMENTS

The Company's investments comprise long term and current investments. Long Term investments are stated at cost less permanent diminution, if any, in value. Current investments are stated at lower of cost or market value.

7. INVENTORIES

Inventories are valued at lower of cost and net realisable value except stores, spares and stock in process and fuel which are valued at cost, packing materials which are valued at or below cost and scrap and by products which are valued at net realisable value. Cost is computed on weighted average basis and includes cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

8. ACCOUNTING FOR CENVAT AND SERVICE TAX CREDITS

Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and Capital goods and Service tax credit on services availed are accounted for by reducing purchase cost of the related material or the expenses respectively and Cenvat Credit available on fixed assets is accounted by reducing the same from the cost of respective fixed assets.

9. FOREIGN CURRENCY TRANSACTIONS

a) Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions.

b) Monetary items denominated in foreign currencies (such as cash receivables , payables, etc.) outstanding at the year end, are translated at exchange rate applicable as of that date.

c) Non–monetary items denominated in foreign currency (such as investments, fixed assets, etc) are valued at the exchange rate prevailing on the date of transaction.

d) Any gains or losses arising due to exchange differences at the time of translation or settlement are accounted in the Profit & Loss Account, except as indicated in Note No 11.2.

e) Premium/discounts on forward exchange contracts are amortised over the life of the contract and recognised in the Profit and Loss account, exchange differences on such contracts are recognized in the profit and loss account in the reporting period in which the exchange rates change.

10. RESEARCH & DEVELOPMENT EXPENDITURE

Revenue Expenditure on Research & Development is charged against the Profit of the year in which it is incurred. Capital expenditure on Research & Development is shown as an addition to fixed assets.

11. BORROWING COSTS

Borrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

12. EMPLOYEE BENEFITS

a) Contributions to Provident fund are made to recognised funds and are charged to Profit & Loss Account. The interest rate payable by recognized Provident Fund shall not be lower than the statutory rate of interest declared by Central Government and shortfall, if any, shall be made good by the company.

b) The Superannuation Fund is a Defined Contribution Scheme managed by LIC and SBI Life Insurance Company and contributions made to the fund are charged to Profit and Loss Account.

c) The company has created an Employees' Group Gratuity Fund which has taken a Group Gratuity Assurance Scheme with the Life Insurance Corporation of India. Premium charged by the Life Insurance Corporation of India, is debited to the Profit and Loss account. Company's contributions based on actural valuation arrived on the basis of projected unit credit method are determined at the end of each year and charged to Profit and Loss Account.

d) Liabilities towards Leave Encashment Benefit are provided for based on actuarial valuation done at the year end.

e) Contribution to Employee Pension Scheme 1995, are accounted on accrual basis with corresponding remittance made to Government Provident Fund authority.

13. PROVISIONS & CONTINGENCIES

a) A provision arising out of a present obligation is recognized when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated

b) Wherever there is a possible obligation that may, but probably will not require an outflow of resources, the same is disclosed by way of contingent liability.

c) Show Cause Notices are not considered as Contingent Liabilities unless converted into demand.

14. TAXES ON INCOME

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income tax Act,1961. Deferred tax is recognized, subject to the consideration of prudence as per Accounting Standard–22 (Accounting for taxes on income) on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only to the extent that there is timing difference, the reversal of which will result in sufficient income. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future.

15.IMPAIRMENT OF ASSET

The carrying amount of assets are reviewed at each balance sheet date for indication of any impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognized by charging it to the profit and loss account. A previously recognized impairment loss is reversed where it no longer exists and the asset is restated to that effect.


Mar 31, 2010

1. SYSTEM OF ACCOUNTING:

A. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis.

B. The financial statements have been prepared in all material respects with accounting standards as notified in the Companies (Accounting Standards) Rules, 2006 and relevant provisions of the Companies Act, 1956.

C. Financial statements are prepared on historical cost basis and as a going concern, adjusted for revaluation / dimunition in value of certain fixed assets.

2. USE OF ESTIMATES:

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

3. FIXED ASSETS AND DEPRECIATION:

A) Fixed Assets:

Fixed Assets are stated at their original cost net of Cenvat Credit where applicable (including expenses related to acquisition and installation except certain Fixed Assets which are adjusted for revaluation.

B) Depreciation and Amortisation:

Depreciation is charged in the Accounts on straight line method as under:

a) On assets revalued at Sahupuram Unit on 51-3-93 @ 3 % on the revalued cost based on revision in useful life estimated by the valuer (Refer Note B2).

b) On fixed assets added pursuant to the amalgamation of Pantape Magnetics Limited with the Company, at rates specified in Schedule XIV to the Companies Act, 1956 on the revalued cost.

c) On balance fixed assets of the company at rates specified in Schedule XIV to the Companies Act, 1956 on the original cost.

d) On fixed assets added/disposed off during the year, on pro- rata basis with reference to the month of addition/disposal. e) On Technical Know-how fees at 3 3.3 3%.

4. REVENUE RECOGNITION:

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefit will follow to the company.

a. Sales: Revenue from sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of trade discounts, excise duty, sales returns and sales tax.

b. Interest: Revenue is recognized on time proportion basis taking into account the outstanding amount and the applicable rate of interest.

c. Dividends: Revenue is recognized when the right to receive payment is established.

5. EXPENDITURE DURING CONSTRUCTION AND ON NEW PROJECTS:

In the case of new projects and in the case of modernisation/expansion of existing units, interest on borrowings for the same and all pre-operative expenditure, incurred during implementation upto the date of installation are included under Capital Work in Progress and capitalised by adding pro-rata to the cost of the assets.

6. INVESTMENTS:

The Companys investments comprise long term and current investments. Long Term investments are stated at cost less permanent dimunition, it any, in value. Current investments are stated at lower of cost or market value.

7. INVENTORIES:

Inventories are valued at lower of cost and net realisable value except stores, spares and stock in process and fuel which are valued at cost, packing materials which are valued at or below cost and scrap and by products which are valued at net realisable value. Cost is computed on weighted average basis and includes cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

8. ACCOUNTING FOR CENVAT AND SERVICE TAX CREDITS:

Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and Capital goods and Service tax credit on services availed are accounted for by reducing purchase cost of the related material or the expenses respectively and Cenvat Credit available on fixed assets is accounted by reducing the same from the cost of respective fixed assets.

9. FOREIGN CURRENCY TRANSACTIONS:

a) Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions.

b) Monetary items denominated in foreign currencies (such as cash receivables , payables, etc.) outstanding at the year end, are translated at exchange rale applicable as of that date.

c) Non-monetary items denominated in foreign currency (such as investments, fixed assets, etc) are valued at the exchange rate prevailing on the date of transaction.

d) Any gains or losses arising due to exchange differences at the time of translation or settlement are accounted in the Profit & Loss Account, except as indicated in Note B-10 below.

e) Premium/discounts on forward exchange contracts are amortised over the life of the contract and recognised in the Profit and Loss account, exchange differences on such contracts are recognized in the profit and loss account in the reporting period in which the exchange rates change.

10. RESEARCH & DEVELOPMENT EXPENDITURE:

Revenue Expenditure on Research & Development is charged against the Profit of the year in which it is incurred. Capital expenditure on Research & Development is shown as an addition to fixed assets.

11. BORROWING COSTS:

Borrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

12. EMPLOYEE BENEFITS:

a) Contributions to Provident and Superannuation Funds are made to recognised funds and are charged to Profit & Loss Account. The interest rate payable by recognized Provident Fund shall not be lower than the statutory rate of interest declared by Central Government and shortfall, if any, shall be made good by the company.

b) The company has created an Employees Group Gratuity Fund which has taken a Group Gratuity Assurance Scheme with the Lite Insurance Corporation of India. Premium charged by the Life Insurance Corporation of India, based on actuarial valuation is debited to the Profit and Loss account.

c) Liabilities towards Leave Encashment Benefit is provided for based on actuarial valuation done at the year end.

d) Contribution to Employee Pension Scheme 1995, are accounted on accrual basis with corresponding remittance made to Government Provident Fund authority.

13. PROVISIONS & CONTINGENCIES:

A. A provision arising out of a present obligation is recognized when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated

B. Wherever there is a possible obligation that may, but probably will not require an outflow of resources, the same is disclosed by way of contingent liability.

C. Show Cause Notices are not considered as Contingent Liabilities unless converted into demand.

14. TAXES ON INCOME:

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income tax Act,1961. Deferred tax is recognised for all timing differences, subject to consideration of prudence, applying the tax rates that have been substantially enacted by the Balance Sheet date.

15. IMPAIRMENT OF ASSET:

The carrying amount of assets are reviewed at each balance sheet date for indication of any impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of the assets exceeds its recoverable amount. Any such impairment loss is recognized by charging it to the profit and loss account. A previously recognized impairment loss is reversed where it no longer exists and the asset is restated to that effect.

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