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Accounting Policies of Diamond Power Infrastructure Ltd. Company

Mar 31, 2016

1 Background

Diamond Power Infrastructure Limited is a public limited company domiciled and headquartered in India and incorporated on 26 August 1992 under the provisions of the Companies Act,1956. Its shares are listed on two stock exchanges in India. The Company is engaged in manufacturing and selling of conductor, cables and transmission towers.

2 Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements.

2.1 Basis of preparation of financial statements

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (‘Indian GAAP'') under the historical cost convention on the accrual basis. Indian GAAP comprises mandatory Accounting Standards (‘AS'') as prescribed under Section 133 of the Companies Act, 2013 (‘the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Act. The financial statements are presented in Indian rupees rounded off to the nearest lakhs.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013. Operating cycle is the time from acquisition of asset for processing / start of the project to their realization in cash or cash equivalents.

2.2 Going concern

The Company had undertaken its expansion project which got delayed due to land acquisition and various other factors. The adverse economic scenario of the country and more particularly in the power sector, coupled with delay in expansion project led to serious financial dent in the company. The lenders in the year 2015, had approved financial restructuring package for revival of the company including completion of the project with cost overrun. The lenders have recognized the challenges faced by the Company and taken a decision to invoke Strategic Debt Restructuring (SDR) coupled with induction of strategic investor which would give long term solution to the financial requirements of the Company. The Company got such investor and informed the lenders about the term sheet signed with the proposed investor The investors are in the process of taking approval from their respective authorities and the Company is hopeful of receiving the same shortly. Considering all the facts stated above, the accounts for the year ended 2016 are prepared on a going concern basis.

2.3 Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles (‘GAAP'') in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. The estimates and assumptions used in the accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates used in preparing the accompanying financial statements. Any revision to accounting estimates is recognized prospectively in current and future periods.

2.4 Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Assets under installation or under construction as at the Balance Sheet date are shown as capital work in progress.

If signifi cant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components), plant and equipment.

Assets costing up to Rupees five thousand are fully depreciated in the year of purchase

2.5 Depreciation

Depreciation is charged on straight line basis as per useful life prescribed under schedule II to the Companies Act, 2013. With effect from 1 April 2014, pursuant to the requirements of Schedule II to the Companies Act, 2013, the Company has reassessed the useful life of the assets.

2.6 Impairment of assets

In accordance with AS 28 on ‘impairment of assets'', fixed assets are reviewed at each reporting date to determine if there is any indication of impairment. For assets in respect of which any such indication exists, the asset''s recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets (cash generating unit or CGU) that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. The recoverable amount of an asset or CGU is the greater of its value in use and its net selling price. 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 or CGU.

Impairment losses are recognized in statement of profit or loss. However, an impairment loss on a revalued asset is recognized directly against any revaluation surplus to the extent that the impairment loss does not exceed the amount held in the revaluation surplus for that same asset.

If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists or has decreased, the assets or CGU''s recoverable amount is estimated. The impairment loss is reversed to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Such a reversal is recognized in the statement of profit or loss; however, in the case of revalued assets, the reversal is credited directly to revaluation surplus except to the extent that an impairment loss on the same revalued asset was previously recognized as an expense in the statement of profit or loss.

2.7 Borrowing costs

Borrowing costs are interest and other costs (including exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred by the Company in connection with the borrowings of funds. Borrowing costs directly attributable to acquisition or construction of those tangible fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.

2.8 Revenue recognition

Revenue from sale of goods in the course of ordinary activities is recognized when property in the goods or all significant risks and rewards of their ownership are transferred to the customer and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods and regarding its collection.

Revenue from services is recognized under the proportionate completion method provided the consideration is reliably determinable and no significant uncertainty exists regarding the collection of the consideration.

The amount recognized as revenue is exclusive of sales tax, value added taxes (VAT) and service tax, and is net of returns, trade discounts and quantity discounts.

Dividend income is recognized when the right to receive payment is established.

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable. Discount or premium on debt securities held is accrued over the period to maturity.

2.9 Inventories

Inventories which comprise raw materials, work-in-progress, finished goods, stock-in-trade, stores and spares are carried at lower of cost and net realizable value.

Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. The Company follows weighted average cost method for its valuation purpose.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value.

The comparison of cost and net realizable value is made on item-by-item basis.

2.10 Operating leases

Lease where the less or effectively retains substantially all the risks and benefit of ownership of the leased item are classified as operating lease. Operating lease payments are recognized as an expense on a straight-line basis over the non cancellable period of the lease term and charged to the statement of profit and loss unless other systematic basis is more representative of the time pattern of the benefit. Any modifications in respect of lease terms or assumptions are recorded prospectively

2.11 Investments

Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. Long-term investments are stated at cost. Provision for diminution in value is made only when in the opinion of the management there is a diminution other than temporary in the carrying value of such investments determined separately for each investment. Current investments are valued at lower of cost and market value. Any reduction in the carrying amount and any reversals of such reductions are charged or credited to statement of profit and loss.

2.12 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. These benefits include salaries and wages, bonus, ex-gratia and compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered

by employees is recognized as an expense during the

period.

Long term employment benefits:

(i) Defined contribution plans:

The Company''s Employee State Insurance and Provident fund schemes are defined contribution plans.

The Company''s contribution paid/payable under the Schemes is recognized as expense in the statement of profit and loss during the period in which the employee renders the related service. The Company makes specified monthly contributions towards employee provident fund and Employees'' State Insurance Scheme.

(ii) Defined benefit plans:

The Company''s gratuity benefit scheme is a defined benefit plan. The Company''s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation by an independent actuary at each balance sheet date using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, are based on the market yields on Government securities as at the balance sheet date.

Actuarial gains and losses are recognized immediately in the statement of profit and loss.

(iii) Other long term employment benefits:

Company''s liabilities towards compensated absences to employees are determined on the basis of valuations, as at balance sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognized immediately in the statement of profit and loss.

2.13 Earnings per share (EPS]

Basic EPS is computed by dividing the net profit

attributable to shareholders by the weighted average number of equity shares outstanding during the year Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year-end, except where the results would be anti dilutive.

2.14 Foreign Currency Transactions

Foreign exchange transactions are recorded into Indian rupees using the average of the opening and closing spot rates on the dates of the respective transactions.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated into Indian rupees at the closing exchange rates on that date. The resultant exchange differences are recognized in the statement of profit and loss except that :

a. exchange differences pertaining to long term foreign currency monetary items are accumulated in ‘Foreign Currency Monetary Item Translation Difference Account'' (FCMITDA), and are amortized over the balance period of the relevant foreign currency item.

b. exchange differences arising on other long-term foreign currency monetary items are accumulated in ‘Foreign Currency Monetary Item Translation Difference Account'' (FCMITDA), and are amortized over the balance period of the relevant foreign currency item.

A foreign currency monetary item is classified as long-term if it has original maturity of one year or more.

Exchange differences arising on a monetary item that, in substance, forms part of the Company''s net investment in a non-integral foreign operation are accumulated in a foreign currency translation reserve until the disposal of the net investment, at which time the accumulated amount is recognized as income or expense.

The premium or discount on a forward exchange contract taken to hedge foreign currency risk of an existing asset / liability is recognized over the period of the contract. The amount so recognized in respect of forward exchange contracts which are taken to hedge long-term foreign currency monetary items is added to / deducted from the carrying amounts of depreciable assets or accumulated in FCMITDA as discussed above. In respect of other forward exchange contracts, it is recognized in the Statement of Profit and Loss

The forward exchange contracts taken to hedge existing assets or liabilities are translated at the closing exchange rates and resultant exchange differences are recognized in the same manner as those on the underlying foreign currency asset or liability.

Derivative Instruments

Apart from forward exchange contracts are taken to hedge existing assets or liabilities, the Company also uses derivatives to hedge its foreign currency risk exposure relating to firm commitments and highly probable transactions. In accordance with the relevant announcement of the Institute of Chartered Accountants of India, the company provides for losses in respect of such outstanding derivative contracts at the balance sheet date by marking them to market. Net gain, if any is not recognized. The contracts are aggregated category-wise, to determine net gain/loss.

2.15 Taxes on income Income tax

Income tax expense comprises current tax and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). Current tax provision is made based on the tax liability computed after considering tax allowances and exemptions, in accordance with the Income tax Act, 1961.

Deferred tax

Deferred tax charge or credit and the corresponding deferred tax liability or asset is recognized for timing differences between the profits/losses offered for income taxes and profits/ losses as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realized.

2.16 Provisions and contingencies

A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognized at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. The provision are measured on an undiscounted basis.

A Contingent liability exists when there is a possible but not probable obligation, or a present obligation that may but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognized nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs.

(B) Rights, preferences and restrictions attached to equity shares

(i) The Company has a single class of equity shares. Accordingly all equity shares rank equally with regard to dividends and share in the Company''s residual assets. The equity shares are entitled to receive dividend as declared from time to time subject to payment of dividend to preference shareholders. The voting rights of shareholders are in proportion to its share of paid up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

(ii) Failure to pay any amount called up on shares may lead to forfeiture of shares

(iii) On winding up of the Company the holders of equity shares will be entitled to receive the residual assets of the Company remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

(iv) Each holder of Equity share is entitled to one vote for share.

0.1% Redeemable cumulative preference shares

(i) 0.1 % C cumulative redeemable Preference Shares of Rs. 10 each were privately placed with Diamond Projects Limited and Madhuri Fin serve Private Limited on 30 September 2013 at a premium of Rs. 171 per share. These shares are redeemable after 10 years from the date of issue. The holders of these shares are entitled to a cumulative dividend of 0.1%.

(ii) Preference shares carry a preferential right as to dividend over equity shareholders. Where dividend on cumulative preference shares is not declared for a financial year, the entitlement thereto is carried forward. The preference shares are entitled to one vote per share at meetings of the Company on any resolutions of the Company directly affecting their rights. However, a cumulative preference shareholder acquires voting rights on par with an equity shareholder if the dividend on preference shares has remained unpaid for a period of not less than two years. In the event of liquidation, preference shareholders have a potential right over equity shareholders to be repaid to the extent of capital paid-up and dividend in arrears on such shares.

(E) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date :

During the five year period ended 31 March 2016

a) 12,402,124 equity shares of Rs. 10 each, fully paid up have been allotted as bonus shares in financial year 2013-14.

b) No shares have been allotted pursuant to a contract without payment being received in cash.

c) No shares have been bought back

(F) Forfeited shares

Out of total 5,500,000 share warrants, the company has issued equity shares against 3,000,000 share warrants and the balance 2,500,000 share warrants are forfeited due to unpaid call during the year

(G) Shares pledged (refer note 5)

18,745,449 (previous year 18,745,449) unencumbered equity shares and 4,141,500 (previous year 4,141,500) preference shares of the Company are pledged in favor of all existing lenders by directors, relatives of directors and enterprises over which such directors and their relatives exercise significant influence.

* Amount disclosed under other current liabilities


Mar 31, 2014

1. Method of Accounting: The Financial Statements have been prepared on historical cost convention. The Company follows the accrual basis of accounting. The Financial Statements are prepared in accordance with the accounting standards specified in the Companies (Accounting Standards) Rules 2006 notified by the Central Government in terms of Section 211(3C) of the Companies Act 1956.

2. Revenue Recognition: Sales includes inter-divisional transfers sale of scrap Sales, Outsource Products, Sales related to Engineering Procurement and Contract Services, Excise duty Paid, Value Added tax and Invoices for price escalation as per Contracts with the relevant customers on accrual basis.

3. Fixed Assets: Fixed Assets are stated at cost less accumulated depreciation up to the year.

Expenditure incurred on improvement or replacement, which in the opinion of the management is likely to substantially increase the life of the assets and future benefits from it is capitalized. Capital expenditure includes advances for assets under erection/installation are being grouped under capital work in progress.

4. Depreciation on Fixed Assets: Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management or those prescribed under the Schedule XIV to the Companies Act, 1956 whichever is higher. The Company has used the following rates to provide depreciation on its fixed assets.

5. Expenditure during construction period: All pre- operative project expenditure (net of income accrued) including interest on borrowings incurred up to the date of installation is capitalized are added pro-rata to the cost of fixed assets. Foundation costs are allocated as certified by management.

6. Investment: Long-term investments are valued at cost. Provision is made for diminution other than temporary in the value of investments.

7. Inventories:

a) Inventories of finished goods are valued at

lower of costs or net realizable value inclusive of excise duty. Work in process (including finished stock pending QC inspection) is valued at cost representing material labour and apportioned overheads as certified by the management. Other inventories are valued at cost. Materials related to Projects under implementation are valued at standard cost.

b) Cost of work-in-progress and finished goods includes material cost, labour cost and manufacturing overheads absorbed on the basis of normal capacity of production.

8. provident Fund and Retirement Benefits: Contribution to Provident Fund is accounted on actual liability basis. Provision for Gratuity and Leave Encashment is made based on actuarial valuation.

9. excise Duty: Excise Duty payable on finished goods held as stock in the works is included in the expenditure and in such stocks as per the provisions of Section 145 of the Income tax Act 1961.

10. Amortisation: Expenditure on Fire Resistant Low Smoke Project (FRLS) & High Sensitivity & High Conductivity Conductors (HSHC) have been amortized over a period of five years. One- fifth portion of the expenses deferred on Aerial Bunch Cable Project (ABC Project) have been charged to the revenue for the financial period.

11. Foreign Currency Transactions: The Company has no Branch offices outside India. The Foreign currency transaction are recorded on initial recognition in the reporting currency by applying the exchange rate prevailing at the date of transaction .Any Income or Expense on account of exchange rate difference is recognized in the Income and Expenditure Account

12. borrowing Costs: Borrowing costs that are attributable to the acquisition construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

13. Income tax: Provision for Current Income Tax is made after considering Company''s claims under the Income Tax Act, 1961. This Liability is calculated at the applicable tax rate or Minimum Alternate Rate under Section 115JB of the Income Tax Act, 1961 as the case may be.

14. Deferred tax: Deferred Tax is Calculated at the tax rates and Laws that have been enacted or substantially enacted as of Balance Sheet date and is recognized on timing differences that originated in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets subject to consideration of prudence are recognized and carried forward only to the extent that they can be released.

15. Impairment of Assets: The Company has examined carrying cost of its identified Cash Generating Units (CGU) by comparing present value of estimated future cash flows from such CGUs in terms of Accounting Standard-28 on impairment of Assets and in absence of any indication of being potential impairment of Assets no provision for impairment is required as assets of none of CGUs are impaired during the financial year under consideration.

16. uses of estimates: The preparation of financial statement in conformity with India GAAP requires the management to make judgments estimates and assumptions that affect the reported amounts of revenues expenses assets and liabilities and the disclosure of contingent liabilities at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions uncertainly about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

17. Derivative Contracts: Company as such in the current financial year has not entered into any such Derivative Contracts.

18. Operating Cycle : Assets and liabilities other than those relating to long-term contracts (i.e. supply or turnkey contracts) are classified as current if it is expected to realise or settle within 12 months after the balance sheet date. In case of long-term contracts the time between acquisition of assets for processing and realisation of the entire proceeds under the contracts in cash or cash equivalent exceeds one year. Accordingly for classification of assets and liabilities related to such contracts as current duration of each contract is considered as its operating cycle part B Notes to Accounts

1. Contingent Liabilities

(a) Letter of Credit opened Rs.1933.09 Million (Previous Year Rs. 3879.16 Million); materials under all letters of credit have been received and accounted for as Creditors. Buyer''s credit opened Rs. 74.76 Million (Previous Year Rs. NIL) materials under all Buyer''s credit have been received and accounted for as Creditors.

(b) Outstanding Inland Bank Guarantees as of March 31 2014 is Rs. 1403.11 Million (Previous Year Rs.1775.00 Million) and outstanding Foreign Bank Guarantees as of March 312014 is $ 5.51 Million (Previous Year NIL)

(c) Income tax demands being in appeal not provided for Rs. NIL (previous year Rs Nil).

(d) There are no outstanding Claims against the Company.

(e) Corporate guarantees issued to wholly owned subsidiary - Diamond Power Transformers Ltd. In favour of Indian Overseas Bank

2. The company has been sanctioned the fund based and non- fund based working capital facilities of Rs. 1280 Millions from the Axis Bank Ltd. ; Rs. 3500 Million from the Bank of India; Rs. 1590 Million from the ICICI Bank Ltd.: Rs. 2860 Million from the Bank of Baroda Rs 2100 Million from Allahabad Bank &

Rs 840.7 Millions from Dena Bank Rs. 622 Millions from Indian Overseas Bank Rs 500 Millions from State Bank of Mysore

& Rs. 1000 Millions against the security of first pari passu charge on the entire current assets of the company by way of Hypothecation agreement and the second pari passu charge on the entire fixed assets of the company.

3. Balance confirmation letters were sent out to various debtors and creditors. The confirmation of most of the Debtors and creditors is received.

4. The method of valuation of inventories adopted by the company is in accordance with the requirements of

Accounting Standard 2 (Valuation of Inventories and as revised from time to time) issued by the Institute of Chartered Accountants of India.

5. In the opinion of the Management all the current assets loans and advances and deposits are realizable at value stated in the ordinary course of the business which are at least equal to the amount at which they are stated in the books unless otherwise explicit.

6. Segmental Reporting:

The company is primarily engaged in the manufacture of conductors, cables and selling out- sourced products and EPC Contracts. As the company''s manufacturing facilities are inter woven/ inter- mix due to the nature of its business with the EPC business it is not possible to directly and specifically attribute or allocate on a reasonable basis the expenses assets & liabilities in different Segments. The segmental Sales product wise are as follows:

7. Share Holding in Various Companies :

The Company holds the following shares

(1) 99.60% in its Subsidiary Diamond Power Transformers Ltd.

(2) 100% in its Subsidiary Diamond Power Global Holding Ltd - Dubai

Note: The above Information regarding Small Scale Industrial undertaking has been determined to the extent such parties has been identified on the basis of information available with the company. The same has been relied upon by the Auditors, to confirm names/figures

11. Sales include an amount of Rs Nil (Net of Duty) of inter- unit Transfer (Previous year Rs NIL).

12. Aggregate directors'' Remuneration is Rs. 59.67 Million (Previous year Rs. 17.12 Million). The remuneration of directors is as per the approval accorded by Remuneration Committee shareholders and Central Government as per the provisions of section 311 read with Schedule XIII of the Companies Act, 1956.

13. Aggregate Auditor''s Remuneration is fixed at Rs. 1.62 Million (Previous year Rs 1.62 Million) which includes Rs 1.50 Million as Audit Fees (Previous year Rs 1.50 Millions).

14. As per Accounting Policy (10) on excise duty the excise duty payable on finished goods in stocks at works amounting to Rs 7.13 Million (previous year Rs 104.43 Million) has been included in the expenditure and in such stocks. However the same has no impact on the profit for the year.

15. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.


Mar 31, 2012

1. Method of Accounting: The Financial Statements have been prepared on historical cost convention. The Company follows the accrual basis of accounting. The Financial Statements are prepared in accordance with the accounting standards specified in the Companies (Accounting Standards) Rules, 2006 notified by the Central Government in terms of Section 211(3C) of the Companies Act, 1956.

2. Revenue Recognition: Sales includes inter-divisional transfers, sale of scrap, Sales Outsource Products, Sales related to Engineering Procurement and Contract Services, Excise duty Paid, Value Added tax and Invoices for price escalation as per Contracts with the relevant customers on accrual basis.

3. Fixed Assets: Fixed Assets are stated at cost less accumulated depreciation up to the year. Expenditure incurred on improvement or replacement, which in the opinion of the management is likely to substantially increase the life of the assets and future benefits from it, is capitalized. Capital expenditure includes advances for assets under erection/ installation are being grouped under capital work in progress.

4. Depreciation: Depreciation is charged on Straight Line basis at rates specified in Schedule XIV of the Companies Act.1956. Depreciation on addition / deletion or discarded Fixed Assets during the year is charged on pro - rata basis.

5. Expenditure during construction period: All pre-operative project expenditure (net of income accrued), including interest on borrowings incurred up to the date of installation is capitalized are added pro-rata to the cost of fixed assets. Foundation costs are allocated as certified by management.

6. Investment: Long-term investments are valued at cost. Provision is made for diminution, other than temporary, in the value of investments.

7. Inventories:

a) Inventories of finished goods are valued at lower of costs or net realizable value inclusive of excise duty. Work in process (including finished stock pending QC inspection) is valued at cost representing material, labour and apportioned overheads as certified by the management.

Other inventories are valued at cost. Materials related to Projects under implementation are valued at standard cost.

b) Cost of work-in-progress and finished goods includes material cost, labour cost, and manufacturing overheads absorbed on the basis of normal capacity of production.

8. Provident Fund and Retirement Benefits: Contribution to Provident Fund is accounted on actual liability basis. Provision for Gratuity and Leave Encashment is made based on actuarial valuation.

9. Excise Duty: Excise Duty payable on finished goods held as stock in the works is included in the expenditure and in such stocks as per the provisions of Section 145 of the Income tax Act, 1961.

10. Foreign Currency Transactions: The Company has no Branch offices outside India. The Foreign currency transaction are recorded on initial recognition in the reporting currency by applying the exchange rate prevailing at the date of transaction. Any Income or Expense on account of exchange rate difference is recognized in the Income and Expenditure Account.

11. Borrowing Costs: Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

12. Income Tax: Provision for Current Income Tax is made after considering Company's claims under the Income Tax Act, 1961. This Liability is calculated at the applicable tax rate or Minimum Alternate Rate under Section 115JB of the Income Tax Act 1961 as the case may be.

13. Deferred Tax : Deferred Tax is Calculated at the tax rates and Laws that have been enacted or substantially enacted as of Balance Sheet date and is recognized on timing differences that originated in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent that they can be released.

14. Impairment of Assets: The Company has examined carrying cost of its identified Cash Generating Units (CGU) by comparing present value of estimated future cash flows from such CGUs, in terms of Accounting Standard-28 on impairment of Assets, and in absence of any indication of being potential impairment of Assets, no provision for impairment is required as assets of none of CGUs are impaired during the financial year under consideration.

15. Uses of Estimates: The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which results are known/materialised.

16. Derivative Contracts: Company as such in the current financial year has entered into any such Derivative Contracts.

17. Operating Cycle: Assets and liabilities other than those relating to long- term contracts (i.e. Supply or turnkey contracts) are classified as current if it is expected to realise or settle within 12 Months after the balance sheet date.

In case of long-term contracts, the time between acquisition of assets for processing and realisation of the entire proceeds under the contracts in cash or cash equivalent exceeds one year. Accordingly for classification of assets and liabilities related to such contracts as current, duration of each contract is considered as its operating cycle


Mar 31, 2011

1. Method of Accounting: The Financial Statements are prepared as a going-concern under historical cost convention on an accrual basis except those with significant uncertainty and comply with the Accounting Standards prescribed by Companies (Accounting Standards) Rules, 2006, as amended, other pronouncements of the Institute of Chartered Accountants of India (ICAI) and the relevant provisions of the Companies Act, 1956, (the 'Act') to the extent applicable. Accounting Policies not stated explicitly otherwise are consistent with generally accepted accounting principles (GAAP).

2. Revenue Recognition: Sales includes inter- divisional transfers, sale of scrap, Sales of Outsource Products, Sales related to Engineering Procurement and Contract Services, Excise duty Paid, Value Added tax and Invoices for price escalation as per Contracts with the relevant customers on accrual basis.

3. Fixed Assets: Fixed Assets are stated at cost less accumulated depreciation up to the year. Expenditure incurred on improvement or replacement, which in the opinion of the management is likely to substantially increase the life of the assets and future benefits from it, is capitalized. Capital expenditure includes advances for assets under erection/ installation are being grouped under capital work in progress.

4. Depreciation: Depreciation is charged on Straight Line basis at rates specified in Schedule XIV of the Companies Act.1956. Depreciation on addition / deletion or discarded Fixed Assets during the year is charged on pro - rata basis.

5. Expenditure during construction period: All pre-operative project expenditure (net of income accrued), including interest on borrowings incurred up to the date of installation is capitalized and added pro-rata to the cost of fixed assets. Foundation costs are allocated as certified by management.

6. Investment: Long-term investments are valued at cost.

7. Inventories: Inventories of finished goods are valued at lower of costs or net realizable value inclusive of excise duty. Work in process (including finished stock pending QC inspection) is valued at cost representing material, labour and apportioned overheads as certified by the management. Other inventories are valued at cost. Materials related to Projects under implementation are valued at standard cost.

8. Provident Fund and Retirement Benefits:

Contribution to Provident Fund is accounted on actual liability basis. Provision for Gratuity and Leave Encashment is made based on actuarial valuation.

9. Excise Duty: Excise Duty payable on finished goods held as stock in the works is included in the expenditure and in such stocks as per the provisions of Section 145 of the Income tax Act, 1961.

10. Miscellaneous Expenditure: Expenditure on Fire Resistant Low Smoke Project (FRLS) & High Sensitivity & High Conductivity Conductors (HSHC) have been amortized over a period of five years. One- fifth portion of the expenses deferred on Aerial Bunch Cable Project (ABC Project) have been charged to the revenue for the financial period.

11. Foreign Currency Transactions: The Company has no Branch offices outside India. The Foreign currency transactions are recorded on initial recognition in the reporting currency by applying the exchange rate prevailing at the date of transaction .Any Income or Expense on account of exchange rate difference is recognized in the Income and Expenditure Account.

12. Borrowing Costs: Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

13. Income Tax: Provision for Current Income Tax is made after considering Company's claims under the Income Tax Act, 1961 .This Liability is calculated at the applicable tax rate or Minimum Alternate Rate under Section 115JB of the Income Tax Act 1961 as the case may be.

14. Deferred Tax : Deferred Tax is Calculated at the tax rates and Laws that have been enacted or substantially enacted as of Balance Sheet date and is recognized on timing differences that originated in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent that they can be released.

15. Impairment of Assets: The Company has examined carrying cost of its identified Cash Generating Units (CGU) by comparing present value of estimated future cash flows from such CGUs, in terms of Accounting Standard-28 on impairment of Assets, and in absence of any indication of being potential impairment of Assets, no provision for impairment is required as assets of none of CGUs are impaired during the financial year under consideration.

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