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Accounting Policies of Elecon Engineering Company Ltd. Company

Mar 31, 2014

A) Fixed Assets

i) Tangible Assets: Fixed Assets are recorded at cost of acquisition / construction less accumulated depreciation and impairment losses, if any. Cost comprises of the purchase price and attributable cost of bringing the Assets to its working condition for its intended use, but excludes Canvas / Service Tax / VAT credit availed.

ii) Intangible Assets: Intangible Assets are recognised when it is probable that the future economic benefits that are attributable to the asset will fowl to the enterprise and the cost of the asset can be measured reliably.

b) Borrowing Cost

Borrowing Costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds and exchange differences arising from foreign currency borrowing to the extent that they are regarded as an adjustment to interest costs.

Financing Costs relating to borrowed funds attributable to construction or acquisition of fixed assets for the period up to the completion of construction or acquisition of fixed assets are included in the cost of the assets to which they relate.

c) Depreciation & Amortisation

Depreciation on tangible fixed assets is provided, on straight line method on Plant and Machinery and on written down value method on all other fixed assets, on the basis of the depreciation rates prescribed in Schedule XIV of the Companies Act, 1956 or based on useful life of the asset, whichever is higher.

Intangible Assets are amortised using the Straight-Line Method over estimated useful life as under :- i) Software & Licenses : over a period of six years ii) Technical Know-How : over a period of six years from the date of actual production

d) Inventories

Inventories are valued at lower of cost or estimated net realizable value. Cost of Inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

The Cost of Inventories is arrived at on the following basis:

Raw Materials and Stores : Weighted Average Cost.

Stock-in-Process : Raw Materials at Weighted Average Cost & absorption of Labour and Overheads.

Finished Goods : Raw Materials at Weighted Average Cost & absorption of Labour and Overheads.

e) Investments

Investments are generally of Long Term nature and are stated at cost unless there is other than temporary diminution in their value as at the date of Balance Sheet.

Investments in Overseas Associates / Subsidiary are stated at cost of acquisition.

f) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outfow of resources. Contingent liabilities are not recognized but are disclosed in the notes to the financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.

g) Research and Development Expenses

All revenue expenditure related to R&D, including expenses in relation to development of product/processes, are charged to the Statement of Profit and Loss in the period in which they are incurred. Capital Expenditure on Research and Development is classified separately under tangible/intangible assets and depreciated on the same basis as other fixed assets.

h) Revenue Recognition

i) Revenue from sale of goods is recognised when the significant risks and rewards of ownership of goods are transferred to the customer, which is generally on dispatch of goods. Sales are net of discounts, VAT/sales tax and returns; excise duties collected.

Credits are taken for claims in respect of cost escalation and extra work as and when and to the extent admitted by customers.

ii) Interest revenues are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

iii) Dividend from investments in Shares is accounted for when the right to receive dividend is established.

iv) Export incentives are accounted for as and when the claims thereof have been admitted by the authorities.

v) Revenue in respect of other income is recognised when a reasonable certainty as to its realisation exists.

i) Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

Monetary items denominated in foreign currencies at the year-end are restated at the year-end rates. In case of items, which are covered by forward exchange contracts, the difference between the year-end rate and the rate on the date of contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract. Non-monetary foreign currency items are carried at cost.

Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.

j) Retirement Benefits

Defend Contribution Plan : The Company''s contributions paid/payable for the year to Provident Fund and ESIC are charged to the Statement of Profit and Loss for the year.

Defend Benefit Plan : The Company''s liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognised on a straight-line basis over the average period until the amended benefits become vested. Actuarial gain and losses are recognised immediately in the Statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation.

k) Impairment of Assets

Fixed Assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is then recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount, which is the higher of an asset''s net selling price and value in use.

l) Accounting for Tax

(a) Current Tax is accounted on the basis of estimated taxable income for the current accounting year and in accordance with the provisions of Income Tax Act, 1961.

(b) Deferred Tax resulting from "timing differences" between accounting and taxable Profit for the period is accounted by using tax rates and laws that have been enacted or substantially enacted as at the Balance Sheet date. Deferred Tax Assets are recognised only to the extent there is reasonable certainty that the assets can be realized in future. Net Deferred Tax Liability is arrived at after setting of Deferred Tax Assets.


Mar 31, 2013

A) Fixed Assets

i) Tangible Assets: Fixed assets are recorded at cost of acquisition / construction less accumulated depreciation and impairment losses, if any. Cost comprises of the purchase price and attributable cost of bringing the assets to its working condition for its intended use, but excludes Cenvat / Service Tax / VAT credit availed.

ii) Intangible Assets: Intangible assets are recognised when it is probable that the future economic benefts that are attributable to the asset will fow to the enterprise and the cost of the asset can be measured reliably.

b) Borrowing Cost

Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds and exchange diferences arising from foreign currency borrowing to the extent that they are regarded as an adjustment to interest costs.

Financing costs relating to borrowed funds attributable to construction or acquisition of fxed assets for the period up to the completion of construction or acquisition of fxed assets are included in the cost of the assets to which they relate.

c) Depreciation & Amortisation

Depreciation on tangible fxed assets is provided, on straight line method on Plant and Machinery and on written down value method on all other fxed assets, on the basis of the depreciation rates prescribed in Schedule XIV of the Companies Act, 1956 or based on useful life of the asset, whichever is higher.

Intangible assets are amortised using the straight-line method over estimated useful life as under :- i) Software & Licenses : over a period of six years ii) Technical know-how : over a period of six years from the date of actual production

d) Inventories

Inventories are valued at lower of cost or estimated net realizable value. Cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories is arrived at on the following basis:

Raw Materials and Stores : Weighted Average Cost.

Stock-in-Process : Raw Materials at Weighted Average Cost & absorption of Labour and Overheads.

Finished Goods : Raw Materials at Weighted Average Cost & absorption of Labour and Overheads.

e) Investments

Investments are generally of long term nature and are stated at cost unless there is other than temporary diminution in their value as at the date of Balance Sheet.

Investments in Overseas Associates / Subsidiary are stated at cost of acquisition.

f) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outfow of resources. Contingent liabilities are not recognized but are disclosed in the notes to the fnancial statements. Contingent assets are neither recognized nor disclosed in the fnancial statements.

g) Revenue recognition

i) Revenue from sale of goods is recognised when the signifcant risks and rewards of ownership of goods are transferred to the customer, which is generally on dispatch of goods. Sales are net of discounts, VAT/ Sales Tax and Returns; Excise Duties collected.

Credits are taken for claims in respect of cost escalation and extra work as and when and to the extent admitted by custome''

ii) Interest revenues are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

iii) Dividend from investments in shares is accounted for when the right to receive dividend is established.

iv) Export incentives are accounted for as and when the claims thereof have been admitted by the authorities.

v) Revenue in respect of other income is recognised when a reasonable certainty as to its realisation exists.

h) Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

Monetary items denominated in foreign currencies at the year-end are restated at the year-end rates. In case of items, which are covered by forward exchange contracts, the diference between the year-end rate and the rate on the date of contract is recognised as exchange diference and the premium paid on forward contracts is recognised over the life of the contract.

Non-monetary foreign currency items are carried at cost.

Any income or expense on account of exchange diference either on settlement or on translation is recognized in the Statement of Proft and Loss.

i) Retirement Benefts

Defned Contribution Plan : The Company''s contributions paid/payable for the year to Provident Fund and ESIC are charged to the Statement of Proft and Loss for the year.

Defned Beneft Plan : The Company''s liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of beneft entitlement and measures each unit separately to build up the fnal obligation. Past services are recognised on a straight-line basis over the average period until the amended benefts become vested. Actuarial gain and losses are recognised immediately in the Statement of Proft and Loss as income or expense. Obligation is measured at the present value of estimated future cash fows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defned beneft obligation.

j) Impairment of Assets

Fixed Assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is then recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount, which is the higher of an asset''s net selling price and value in use.

k) Accounting for Tax

(a) Current Tax is accounted on the basis of estimated taxable income for the current accounting year and in accordance with the provisions of Income Tax Act, 1961.

(b) Deferred Tax resulting from "timing diferences" between accounting and taxable proft for the period is accounted by using tax rates and laws that have been enacted or substantially enacted as at the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realized in future. Net deferred tax liability is arrived at after setting of deferred tax assets.


Mar 31, 2012

A) Fixed Assets

i) Tangible Assets: Fixed Assets are recorded at cost of acquisition / construction less accumulated depreciation and impairment losses, if any. Cost comprises of the purchase price and attributable cost of bringing the assets to its working condition for its intended use, but excludes CENVAT/Service Tax/ VAT credit availed.

ii) Intangible Assets: Intangible Assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

b) Borrowing Cost

Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds and exchange differences arising from foreign currency borrowing to the extent that they are regarded as an adjustment to interest costs.

Financing costs relating to borrowed funds attributable to construction or acquisition of fixed assets for the period up to the completion of construction or acquisition of fixed assets are included in the cost of the assets to which they relate.

c) Depreciation & Amortization

Depreciation on tangible fixed assets is provided, on straight line method on Plant and Machinery and on written down value method on all other fixed assets, on the basis of the depreciation rates prescribed in Schedule XIV of the Companies Act, 1956 or based on useful life of the asset, whichever is higher.

Intangible assets are amortized using the straight-line method over estimated useful life as under:-

i) Software & Licenses: over a period of six years

ii) Technical know-how : over a period of six years from the date of actual production.

d) Inventories

Inventories are valued at lower of cost or estimated net realizable value. Cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories is arrived at on the following basis:

Raw Materials and Stores : Weighted Average Cost

Stock-in-Process : Raw Materials at Weighted Average Cost & absorption of Labour and Overheads.

Finished Goods : Raw Materials at Weighted Average Cost & absorption of Labour and Overheads.

e) Investments

Investments are generally of Long Term nature and are stated at cost unless there is other than temporary diminution in their value as at the date of Balance Sheet.

Investments in Overseas Associates / Subsidiary are stated at cost of acquisition.

f) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to the financial statements. Contingent assets are neither recognized nor disclosed in the financial statements.

g) Revenue recognition

i) Revenue from sale of goods is recognized when the significant risks and rewards of ownership of goods are transferred to the customer, which is generally on dispatch of goods. Sales are net of discounts, VAT/sales tax and returns; excise duties collected.

ii) Income on turnkey contracts (including erection charges) is accounted for on the basis of billings made on customers against mutually agreed billing schedules.

Advances received from customers in respect of contracts, which are not in relation to work performed thereon, are shown as "Advance from Customers.

Amounts retained by customers until satisfaction of conditions specified in the contract for release of such amounts are reflected as Sundry debtors.

Credits are taken for claims in respect of cost escalation and extra work as and when and to the extent admitted by customers.

iii) Interest revenues are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

iv) Dividend from investments in Shares is accounted for when the right to receive dividend is established.

v) Export incentives are accounted for as and when the claims thereof have been admitted by the authorities.

vi) Revenue in respect of other income is recognized when a reasonable certainty as to its realization exists.

h) Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

Monetary items denominated in foreign currencies at the yearend are restated at the yearend rates. In case of items, which are covered by forward exchange contracts, the difference between the yearend rate and the rate on the date of contract is recognized as exchange difference and the premium paid on forward contracts is recognized over the life of the contract.

Non-monetary foreign currency items are carried at cost.

Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit and loss.

i) Retirement Benefits

Defined Contribution Plan : The Company's contributions paid/payable for the year to Provident Fund and ESIC are charged to the statement of profit and loss for the year.

Defined Benefit Plan : The Company's liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight-line basis over the average period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the statement of profit and loss as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

j) Impairment of Assets

Fixed Assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is then recognized for the amount by which the carrying amount of the assets exceeds its recoverable amount, which is the higher of an asset's net selling price and value in use.

k) Accounting for Tax

(a) Current Tax is accounted on the basis of estimated taxable income for the current accounting year and in accordance with the provisions of Income Tax Act, 1961.

(b) Deferred Tax resulting from "timing differences" between accounting and taxable profit for the period is accounted by using tax rates and laws that have been enacted or substantially enacted as 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. Net deferred tax liability is arrived at after setting off deferred tax assets.


Mar 31, 2011

A) Basis of Accounting

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles ["GAAP') except for the revaluation of certain fixed assets, in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government. However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account.

The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the periods, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the periods in which the results are known.

b) Fixed Assets

Fixed Assets are recorded at cost of acquisition / construction less accumulated depreciation and impairment losses, if any. Cost comprises of the purchase price and attributable cost of bringing the Assets to its working condition for its intended use, but excludes CENVAT / Service Tax / VAT credit availed.

c) Borrowing Cost

Financing costs relating to deferred credits or borrowed funds attributable to construction or acquisition of fixed assets for the period up to the completion of construction or acquisition of fixed assets are included in the cost of the assets to which they relate.

d) Depreciation

Plant & Machineries are depreciated on Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956.

In respect of all other Fixed Assets, depreciation is provided on Written Down Value Method, at the rates specified in Schedule XIV to the Companies Act, 1956.

Depreciation is provided on pro-rata basis:

i) From the date of addition, in case of additions during the year to the Fixed Assets; and

ii) Up to the date of disposal, in case of disposals during the year of the Fixed Assets.

e) Inventories

Materials and other supplies are usually held for use in the production of finished goods. These are not written down below cost if the finished goodRs. in which they will be consumed are expected to be sold at or above cost.

Inventories are valued at lower of cost or estimated net realizable value. The cost of inventories is arrived at on the following basis:

Raw Materials and Stores : Weighted Average Cost

Stock-in-Process : Raw Materials at Weighted Average Cost &

absorption of Labour and Overheads

Finished Goods : Raw Materials at Weighted Average Cost &

absorption of Labour and Overheads

f) Investments

Investments are generally of Long Term nature and are stated at cost unless there is other than temporary decisions in their value as at the date of Balance Sheet.

Investments in foreign companies are stated at cost of acquisition.

g) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confirmed only by the future event not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation can not be made. Contingent Assets are not recognized in the financial statements.

h) Revenue Recognition

i) Sale of goods is generally recognized on dispatch to customers and is shown net of recoveries.

ii) Income on turnkey contracts is accounted for on the basis of billings made on customers against mutually agreed billing schedules.

Advances received from customers in respect of contracts, which are not in relation to work performed th i eon, are shown as "Advance from Customers".

Amounts retained by customers until satisfaction of conditions specified in the contract for release of such amounts are reflected as Sundry debtors.

Credits are taken for claims in respect of cost escalation and extra work as and when and to the extent admitted by customers.

Provision is made in full for claims or penalties payable arising out of delays in completion or from any other causes as and when admitted.

iii) Interest revenues are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

iv) Dividend from investments in Shares is accounted for on the basis of the date of declaration of dividend falling within the accounting year.

(v) Consistent with past practice, export incentives are accounted for as and when the claims thereof have been admitted by the authorities.

i) Foreign Currency Transactions

i) Transactions in foreign currencies are generally recorded by applying to the foreign currency amount, the exchange rate existing at the time of the transaction. However, where Forward Exchange Contracts are entered into, the forward rates specified in the related Forward Exchange Contracts have been used as the basis of measuring and recording the transactions.

ii) Gains or losses on settlement, in a subsequent period of transactions entered into in an earlier period are credited or charged to the Profit and Loss Account.

j) Miscellaneous Expenditure

Expenditures like Technical Know How Expenditures, which are having the benefits of enduring nature, are treated as miscellaneous expenditure and are being written off over a period as may be decided by the management.

k) Retirement Benefits

Retirement benefits to employees are being provided for byway of payments to Gratuity and Provident Funds.

a. The rate of escalation in Salary (p.a.) considered in actuarial valuation is worked out after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Mortality rates are obtained from the relevant data of Life Insurance Corporation of India.

b. The liability for the Gratuity Rs. 516.20 Lacs (Previous Year Rs. 574.57 Lacs.) as shown in the balance sheet is after adjusting the Fair value of plan assets (Invested with L1C/SBI) as at March 31, 2011 ofRs. 590.80 Lacs (Previous Year Rs. 472.86 Lacs.)

(ii) Liability in respect of Superannuation benefits extended to eligible employees is contributed by the Company to Life Insurance Corporation of India against a Master Policy @ 15% of the basic Salary of all the eligible employees. The Company is providing for the outstanding Liability amount allocable to the broken period beyond the balance sheet date.

iii) Liability in respect of Provident Fund is provided for on actual contribution basis.

1) As regards Insurance premium and Guarantee Commission, the Company is providing for prepaid amount allocable to period falling beyond the date of Balance Sheet under review.

m) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the year in which the asset is identified as impaired. The impairment loss recognized in prior periods is reversed if there has been a change in the estimate of recoverable amount.


Mar 31, 2010

A) Basis of Accounting

The accounts have been prepared on the basis of historical costs. The Company adopts the accrual system of accounting and the accounts are prepared on a going concern concept.

b) Fixed Assets

Fixed Assets are recorded at cost of acquisition /construction less accumulated depreciation and impairment losses, if any. Cost comprises of the purchase price and attributable cost of bringing the assets to its working condition for its intended use, but excludes Cenvat / Service Tax / VAT credit availed.

c) Borrowing Cost

Financing costs relating to deferred credits or borrowed funds attributable to construction or acquisition of fixed assets for the period up to the completion of construction or acquisition of fixed assets are included in the cost of the assets to which they relate.

d) Depreciation

Plant & Machinery are depreciated on Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956.

In respect of all other Fixed Assets, depreciation is provided on Written Down Value Method, at the rates specified in Schedule XIV to the Companies Act, 1956.

Depreciation is provided on pro-rata basis:

i) From the date of addition, in case of additions during the year to the Fixed Assets; and

ii) Up to the date of disposal, in case of disposals during the year to the Fixed Assets.

e) Inventories

Materials and other supplies are usually held for use in the production of finished goods. These are not written down below cost if the finished good in which they will be consumed are expected to be sold at or above cost.

Inventories are valued at lower of cost or estimated net realizable value. The cost of inventories is arrived at on the following basis:

Raw Materials and stores : Weighted Average Cost Stock-in-process : Raw Materials at Weighted Average Cost & absorption of Labour and Overheads Finished Goods : Raw Materials at Weighted Average Cost & absorption of Labour and Overheads

f) Investments

Investments are generally of Long Term nature and are stated at cost unless there is other than temporary diminution in their value as at the date of Balance Sheet.

Investments in foreign companies are stated at cost of acquisition.

g) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confirmed only by the future event not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation can not be made. Contingent Assets are not recognized in the financial statements.

h) Revenue Recognition

i) Sale of goods is generally recognized on dispatch to customers and is shown net of recoveries.

ii) Income on turnkey contracts is accounted on the basis of billings made on customers against mutually agreed billing schedules.

Advances received from customers in respect of contracts, which are not in relation to work performed thereon, are shown as "Advance from Customers".

Amounts retained by customers until satisfaction of conditions specified in the contract for release of such amounts are reflected as Sundry Debtors.

Credits are taken for claims in respect of cost escalation and extra work as and when and to the extent admitted by customers.

Provision is made in full for claims or penalties payable arising out of delays in completion or from any other causes as and when admitted.

iii) Interest revenues are recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

iv) Dividend from investments in shares is accounted for on the basis of the date of declaration of dividend falling within the accounting year.

(v) Consistent with past practice, export incentives are accounted for as and when the claims thereof have been admitted by the authorities.

i) Foreign Currency Transactions

i) Transactions in foreign currencies are generally recorded by applying to the foreign currency amount, the exchange rate existing at the time of the transaction. However, where Forward Exchange Contracts are entered into, the forward rates specified in the related Forward Exchange Contracts have been used as the basis of measuring and recording the transactions.

ii) Gains or losses on settlement, in a subsequent period of transactions entered into in an earlier period are credited or charged to the Profit and Loss Account.

j) Deferred Revenue Expenditure

Expenditures like Technical Know How Expenditures, which are having the benefits of enduring nature, are treated as deferred revenue expenditure and are being written off over a period as may be decided by the management.

k) Retirement Benefits -

Retirement benefits to employees are being provided for by way of payments to Gratuity and Provident Funds.

a. The rate of escalation in Salary (p.a.) considered in actuarial valuation is worked out after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Mortality rates are obtained from the relevant data of Life Insurance Corporation of India.

b. The liability for the gratuity Rs. 574.57 Lacs (Previous Year Rs. 680.58 Lacs.) as shown in the Balance Sheet is after adjusting the Fair value of plan assets (Invested with LIC/SBI) as at March 31, 2010 of Rs. 472.86 Lacs (Previous Year Rs. 293.14 Lacs.)

(ii) Liability in respect of Superannuation benefits extended to eligible employees is contributed by the Company to Life Insurance Corporation of India against a Master Policy @ 15% of the basic salary of all the eligible employees. The Company is providing for the outstanding liability amount allocable to the broken period beyond the Balance Sheet date.

iii) Liability in respect of Provident Fund is provided for on actual contribution basis.

l) As regards insurance premium and guarantee commission, the Company is providing for prepaid amount allocable to period falling beyond the date of Balance Sheet under review.

m) Impairment of Assets

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the year in which the asset is identified as impaired. The impairment loss recognized in prior periods is reversed if there has been a change in the estimate of recoverable amount.

 
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